Microsoft Excel LibreOffice Calc

Ford Motor Co. (F)

Analysis of Inventory

Difficulty: Advanced

Inventory Disclosure

Ford Motor Co., Statement of Financial Position, Inventory

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Raw materials, work-in-process, and supplies 4,397  3,843  4,005  3,822  3,613 
Finished products 6,779  5,943  5,254  5,022  5,058 
Inventories under FIFO 11,176  9,786  9,259  8,844  8,671 
LIFO adjustment (899) (888) (940) (978) (963)
Inventories 10,277  8,898  8,319  7,866  7,708 

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
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or 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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Adjustment to Inventories
Inventories at LIFO (as reported) 10,277  8,898  8,319  7,866  7,708 
Add: Inventory LIFO reserve 899  888  940  978  963 
Inventories at FIFO (adjusted) 11,176  9,786  9,259  8,844  8,671 
Adjustment to Current Assets
Current assets (as reported) 115,902  108,461  102,587  52,071  55,138 
Add: Inventory LIFO reserve 899  888  940  978  963 
Current assets (adjusted) 116,801  109,349  103,527  53,049  56,101 
Adjustment to Total Assets
Total assets (as reported) 257,808  237,951  224,925  208,527  202,026 
Add: Inventory LIFO reserve 899  888  940  978  963 
Total assets (adjusted) 258,707  238,839  225,865  209,505  202,989 
Adjustment to Equity Attributable To Ford Motor Company
Equity attributable to Ford Motor Company (as reported) 34,890  29,170  28,642  24,805  26,383 
Add: Inventory LIFO reserve 899  888  940  978  963 
Equity attributable to Ford Motor Company (adjusted) 35,789  30,058  29,582  25,783  27,346 
Adjustment to Net Income Attributable To Ford Motor Company
Net income attributable to Ford Motor Company (as reported) 7,602  4,596  7,373  3,187  7,155 
Add: Increase (decrease) in inventory LIFO reserve 11  (52) (75) (23) 14 
Net income attributable to Ford Motor Company (adjusted) 7,613  4,544  7,298  3,164  7,169 

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.

Ford Motor Co., Financial Data: Reported vs. Adjusted

Adjusted Ratios: LIFO vs. FIFO (Summary)

Ford Motor Co., adjusted ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Current Ratio
Reported current ratio (LIFO) 1.23 1.20 1.25 0.68 0.74
Adjusted current ratio (FIFO) 1.23 1.21 1.26 0.69 0.76
Net Profit Margin
Reported net profit margin (LIFO) 5.22% 3.25% 5.25% 2.35% 5.13%
Adjusted net profit margin (FIFO) 5.23% 3.21% 5.19% 2.33% 5.14%
Total Asset Turnover
Reported total asset turnover (LIFO) 0.56 0.59 0.62 0.65 0.69
Adjusted total asset turnover (FIFO) 0.56 0.59 0.62 0.65 0.69
Financial Leverage
Reported financial leverage (LIFO) 7.39 8.16 7.85 8.41 7.66
Adjusted financial leverage (FIFO) 7.23 7.95 7.64 8.13 7.42
Return on Equity (ROE)
Reported ROE (LIFO) 21.79% 15.76% 25.74% 12.85% 27.12%
Adjusted ROE (FIFO) 21.27% 15.12% 24.67% 12.27% 26.22%
Return on Assets (ROA)
Reported ROA (LIFO) 2.95% 1.93% 3.28% 1.53% 3.54%
Adjusted ROA (FIFO) 2.94% 1.90% 3.23% 1.51% 3.53%

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.

Ford Motor Co., Ratios: Reported vs. Adjusted

Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Current assets 115,902  108,461  102,587  52,071  55,138 
Current liabilities 94,600  90,281  82,336  77,141  74,131 
Ratio
Current ratio1 1.23 1.20 1.25 0.68 0.74
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted current assets 116,801  109,349  103,527  53,049  56,101 
Current liabilities 94,600  90,281  82,336  77,141  74,131 
Ratio
Adjusted current ratio2 1.23 1.21 1.26 0.69 0.76

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
= 115,902 ÷ 94,600 = 1.23

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 116,801 ÷ 94,600 = 1.23

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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Ford Motor Company 7,602  4,596  7,373  3,187  7,155 
Automotive sales 145,653  141,546  140,566  135,782  139,369 
Ratio
Net profit margin1 5.22% 3.25% 5.25% 2.35% 5.13%
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Ford Motor Company 7,613  4,544  7,298  3,164  7,169 
Automotive sales 145,653  141,546  140,566  135,782  139,369 
Ratio
Adjusted net profit margin2 5.23% 3.21% 5.19% 2.33% 5.14%

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 × 7,602 ÷ 145,653 = 5.22%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Ford Motor Company ÷ Automotive sales
= 100 × 7,613 ÷ 145,653 = 5.23%

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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Automotive sales 145,653  141,546  140,566  135,782  139,369 
Total assets 257,808  237,951  224,925  208,527  202,026 
Ratio
Total asset turnover1 0.56 0.59 0.62 0.65 0.69
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Automotive sales 145,653  141,546  140,566  135,782  139,369 
Adjusted total assets 258,707  238,839  225,865  209,505  202,989 
Ratio
Adjusted total asset turnover2 0.56 0.59 0.62 0.65 0.69

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
= 145,653 ÷ 257,808 = 0.56

2 Adjusted total asset turnover = Automotive sales ÷ Adjusted total assets
= 145,653 ÷ 258,707 = 0.56

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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Total assets 257,808  237,951  224,925  208,527  202,026 
Equity attributable to Ford Motor Company 34,890  29,170  28,642  24,805  26,383 
Ratio
Financial leverage1 7.39 8.16 7.85 8.41 7.66
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted total assets 258,707  238,839  225,865  209,505  202,989 
Adjusted equity attributable to Ford Motor Company 35,789  30,058  29,582  25,783  27,346 
Ratio
Adjusted financial leverage2 7.23 7.95 7.64 8.13 7.42

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
= 257,808 ÷ 34,890 = 7.39

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to Ford Motor Company
= 258,707 ÷ 35,789 = 7.23

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)

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Ford Motor Company 7,602  4,596  7,373  3,187  7,155 
Equity attributable to Ford Motor Company 34,890  29,170  28,642  24,805  26,383 
Ratio
ROE1 21.79% 15.76% 25.74% 12.85% 27.12%
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Ford Motor Company 7,613  4,544  7,298  3,164  7,169 
Adjusted equity attributable to Ford Motor Company 35,789  30,058  29,582  25,783  27,346 
Ratio
Adjusted ROE2 21.27% 15.12% 24.67% 12.27% 26.22%

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 × 7,602 ÷ 34,890 = 21.79%

2 Adjusted ROE = 100 × Adjusted net income attributable to Ford Motor Company ÷ Adjusted equity attributable to Ford Motor Company
= 100 × 7,613 ÷ 35,789 = 21.27%

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)

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Ford Motor Company 7,602  4,596  7,373  3,187  7,155 
Total assets 257,808  237,951  224,925  208,527  202,026 
Ratio
ROA1 2.95% 1.93% 3.28% 1.53% 3.54%
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Ford Motor Company 7,613  4,544  7,298  3,164  7,169 
Adjusted total assets 258,707  238,839  225,865  209,505  202,989 
Ratio
Adjusted ROA2 2.94% 1.90% 3.23% 1.51% 3.53%

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 × 7,602 ÷ 257,808 = 2.95%

2 Adjusted ROA = 100 × Adjusted net income attributable to Ford Motor Company ÷ Adjusted total assets
= 100 × 7,613 ÷ 258,707 = 2.94%

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.