Ford motor company Form 10-K review - Essay Example

Ford motor company Form 10-K review al affiliation Ford motor company Form 10-K review Introduction to the Company Ford Motor Company Ford Motor Company got incorporated in Delaware in the year 1919. It had acquired the business of the Michigan company, best referred to as the Ford Motor Company, that had been incorporated during the year 1903 with the aim producing and selling the automobiles that had been designed and engineered by the famous Henry Ford. It can safely be considered as world’s largest producers of trucks and cars. Her and her subsidiaries more often than not also engage in other businesses, such as financing vehicles (Ford Motor Company, 2012). FASB Statement No. 131 launches standards that the public business enterprises are expected to report information about the operating segments found in their annual financial statements, requiring that the specific enterprises report given information concerning the operating segments in the interim financial information delivered to the shareholders. This Statement though, does not apply to the not-for-profit organizations, or nonpublic business enterprises (Coopers & Lybrand, 1980). Requirements of the types of segments to be reported on the annual financial statements. 1. The Statement necessitates that public business enterprise give a detailed report on financial and vivid information concerning its reportable operational segments, which are the components of an enterprise from which a separate financial information is always available which is gauged frequently by principal operating opinion maker in determining the best way to allocate resources and in evaluating performance (Coopers & Lybrand, 1980). 2. This Statement needs that a public business enterprise to give a detailed report on the measure of the segment profit or loss, specific expense items and revenue, and the segment assets. The statement also requires the reconciliations of the entire total segment assets, segment revenues, total segment profit or loss, and additional amounts disclosed for the segments to which correspond to the amounts in the entire company’s financial statements. The statement also require that public company’s give a descriptive report on the information concerning the revenues resulting from the company’s products, services etc. , about countries where the enterprise do earn revenues and also possess assets, and the statement also require a list of major customers (Coopers & Lybrand, 1980). 3. The Statement requires the company to avail report concerning the way in which operating segments got determined, that is the products and services that had been provided by the entire operating segments, the differences in between the measurements applied in reporting the segment information and the once applied in the company’s financial statements, and also necessary changes found in the measurement of the segment amounts for one duration to another (Coopers & Lybrand, 1980). Comparison of the requirements of the financial information and disclosures included in Form 10-K of ford motor company. From the requirement number two Ford’s Industry Sales Volume in different countries, which is an internal estimation based on the openly available data that has been collected from specific private, public and government sources around the world. The chart below show the industry sales volume for the previous four years for certain key markets in each region, and for the total we track within each of our, Ford North America, Ford Europe, Ford Asia Pacific Africa regions and Ford South America (in millions of units) (Ford motor company, 2012): countries Industry sales volume 2011 2010 2009 2008 United states 13.0 11.8 10.6 13.5 Canada 1.6 1.6 1.5 1.7 Mexico 0.9 0.8 0.8 1.1 Ford North America 15.5 14.2 12.9 16.3 Above is just but a disclosure in north America the company also has branches in south America, in Europe and in the Asia and Africa (Ford Motor Company, 2012). . Ford’s North American wholesale The following tables show wholesales and market share by market in North America: countries Wholesales (a) (in thousands) 2011 2010 2009 2008 United states 2,224 1,947 1,563 1,825 Canada 273 278 223 198 Mexico 88 88 80 134 Ford North America 2,686 2,413 1,927 2,329 Data above is inclusion of both the fleet and retail sales. The Fleet comprises sales to both the commercial fleet customers, and the governments; generally speaking, fleet sales are less profitable as compared to the retail sales. During the year 2011, fleet sales rated 32% of the company’s total sales; majority being with the government and the commercial customers, that are much more profitable more than the daily rentals. During the same 2011, the company’s daily rental business rated 12% of the total sales, which was much lower than the company’s average of 13%. And according to the information of the 10-K, commercial buyers are progressively selecting Ford automobiles and crossovers as the company’s improved resale values, in conjunction to a continued favor for Ford vans and trucks (Ford Motor Company, 2012). The credibility of the requirements to the financial information and disclosures included in Form 10-K of ford company. a) Qualitative and Quantitative Disclosures concerning Market Risk The credibility of the company financial information and disclosure can only be certified as a result of Ford Company’s inclusion of information about its exposure to market risk, such as foreign currency exchange risk, interest rate risk, equity price risk or rather the commodity price risk .The company has also gone ahead to disclose clearly how it manages the market risks it encounters. Other supportive risks it has exposed are Counterparty Risk, Interest, Commodity Price Risk; another creditable reason is that the Form 10-k has given its audited financial statements which have been certified by the CFO and the CEO of the company (Ford motor company, 2012). Strengths of the 10-K information and disclosures in terms of whether they provide relevant and reliable information to investors of ford motor company. b) Supplementary data and the Financial Statements According to the presented information in the form 10-k, the company has disclosed the audited financial statements, such as the company’s earnings statement known as the statement of operations, statements of cash flow, balance sheets, and statement of stockholders’ equity. Weaknesses of the 10-K information and disclosures in terms of whether they provide relevant and reliable information to investors of ford motor company. The SEC neither wrote the 10-K nor vouched for its accurateness. The SEC only set the disclosure requirements and then the Security Exchange Commission staff reviewed the company’s form 10-K with the aim of monitoring and enhancing company’s compliance with the necessities. According to Sarbanes-Oxley Act requiring that a company’s CEO and CFO certify the accuracy of the form 10-K. so long as they certify it, it is considered correct and accurate. This might not necessarily be the case (Ford motor company, 2012). Areas of Improvements of the Requirements Instead of the company giving a separate proxy statement about the company’s major accounting fees and services, it should incorporate it in the company’s 10-K as this forms a major component of 10-k, which should be submitted in one piece to the shareholders and investors for evaluation and decision making. Works cited Ford Motor Company.. & United States. (2012). Form 10-K annual report. Washington, D.C: Securities and Exchange Commission. Rockwell Automation. (2011). Annual report & form 10-K. Milwaukee, Wi: Rockwell Automation. Coopers & Lybrand. (1980). The revised SEC disclosure requirements: Including a discussion of the impact of the revisions on the annual report to shareholders and form 10 K. Chicago: Coopers & Lybrand. Read More