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Analysis of Inventory
Difficulty: Advanced
Inventory Disclosure
Ford Motor Co., Statement of Financial Position, Inventory
USD $ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Inventories under FIFO | |
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| LIFO adjustment | |
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| Inventories | |
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Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
| Item | Description | The company |
|---|---|---|
| Raw materials, work-in-process, and supplies | The aggregate carrying amount as of the balance sheet date of items held by the entity which are partially completed at the time of measurement and unprocessed items that will go through the production process and become part of the final product. Includes supplies used directly or indirectly in the manufacturing or production process. This element may be used when the reporting entity combines work in process and raw materials into an aggregate amount. | Ford Motor Co.'s raw materials, work-in-process, and supplies declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
| Finished products | Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale. | Ford Motor Co.'s finished products increased from 2015 to 2016 and from 2016 to 2017. |
| Inventories | Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer). | Ford Motor Co.'s inventories increased from 2015 to 2016 and from 2016 to 2017. |
Adjustment to Inventory: from LIFO to FIFO
Adjusting LIFO Inventory to FIFO (Current) Cost
USD $ in millions
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
Ford Motor Co.'s inventory value on Dec 31, 2017 would be $11,176 (in millions) if the FIFO inventory method was used instead of LIFO. Ford Motor Co.'s inventories, valued on a LIFO basis, on Dec 31, 2017 were $10,277 . Ford Motor Co.'s inventories would have been $899 higher than reported on Dec 31, 2017 if the FIFO method had been used instead.
Adjusted Ratios: LIFO vs. FIFO (Summary)
Ford Motor Co., adjusted ratios
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
| Ratio | Description | The company |
|---|---|---|
| Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by current liabilities. | Ford Motor Co.'s adjusted current ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level. |
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Ford Motor Co.'s adjusted net profit margin deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Ford Motor Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Ford Motor Co.'s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017. |
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. | Ford Motor Co.'s adjusted ROE deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level. |
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Ford Motor Co.'s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level. |
Adjusted Current Ratio
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
2017 Calculations
1 Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by current liabilities. | Ford Motor Co.'s adjusted current ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level. |
Adjusted Net Profit Margin
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
2017 Calculations
1 Net profit margin = 100 × Net income attributable to Ford Motor Company ÷ Automotive sales
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributable to Ford Motor Company ÷ Automotive sales
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Ford Motor Co.'s adjusted net profit margin deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
Adjusted Total Asset Turnover
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
2017 Calculations
1 Total asset turnover = Automotive sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Automotive sales ÷ Adjusted total assets
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Ford Motor Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Financial Leverage
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
2017 Calculations
1 Financial leverage = Total assets ÷ Equity attributable to Ford Motor Company
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to Ford Motor Company
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Ford Motor Co.'s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
2017 Calculations
1 ROE = 100 × Net income attributable to Ford Motor Company ÷ Equity attributable to Ford Motor Company
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributable to Ford Motor Company ÷ Adjusted equity attributable to Ford Motor Company
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. | Ford Motor Co.'s adjusted ROE deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-13), 10-K (filing date: 2014-02-18).
2017 Calculations
1 ROA = 100 × Net income attributable to Ford Motor Company ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributable to Ford Motor Company ÷ Adjusted total assets
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Ford Motor Co.'s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level. |
