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The Performance of the Ford Motor - Delivering Value to the Shareholders - Statistics Project Example

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This report "The Performance of the Ford Motor - Delivering Value to the Shareholders" examines the firm's economic value added, total shareholder return, net asset value, price to earnings ratio, price to book ratio, discounted free cash flow, and evaluates Ford's role in the competitive world…
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Download file to see previous pages Considering the BTMA Stock Analyzer’s company rating score, the recent score for Ford indicates that the company has been having a score of around 60 percent.  The score is below the 70 percent that is least considered for a good company score (Pereira, 2017, 2). Breaking down the ratings, the company’s score for Return on Equity, 10-year Upward Price per Share, and the ability to recover from the market downturn are high. However, it indicates low scores for return on invested capital, earnings per share, and gross margin percent.
From the findings, it is all clear that Ford over the past five years has been unable to grow earnings consistently. It is however ironical that the price per share has been increasing though, for Ford, there seems no correlation between the price per share and the earnings. This means that the performance of Ford regarding the price per share has been declining over the past five years since 2014 as shown in the figure below. It then translates to the decrease in the market and the demand for the stock experienced in the market.
On the other hand, the earning history indicates that upon the 2008/2009 economic crisis, Ford received close to $5.9 billion in loans from the government. Together with other measures including cutting its costs, and lobbying for and benefitting from the cash-for dunkers' program, it made a swift rebound regarding its earnings per share. However, over the five years, there has been no significant growth in the earnings of the company as indicated in the graph below.
Averagely, Ford Motor Company has tried to main return on equity at a reasonable rate of over 15 percent. Though, there has not been any guarantee on the consistency of the returns over the five years. Elsewhere, the primary concern has been on the return on the invested capital that has been worse over the recent years. It has been very inconsistent making it hard to predict the business of the company or make an accurate value for the shareholders. Thus, over the five years, Ford has not generally been doing well at delivering the value to the shareholders over the invested capital. It has also had much of the inconsistency when it comes to returning the value from the retained equity of the business (Ford Motor Company, 2017, 14). The factual data available for Ford indicates that the company stock shows a lot of weakness and inconsistencies in multiple categories. This is in addition to the business nature and competition from within and foreign level that have been an issue for the company to deliver value to the shareholders over the recent years.
Model of economic profit has been found effective in measuring the value the company has created over a single period. This is the case since the method focuses on the existing link between the cost of capital investment and the return obtained. The model for expressing the economic profit or the Economic Value Added which commonly referred to as EVA is presented as below in simple equation.


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