The period should ideally be as small as possible to avoid probability of bad debts.Creditors collection period specifies the average number of days in which the company pays its debts. The period should ideally match with debtors collection period so that liquidity problems do not arise.As shown from above, Ford’s creditors collection period is closer to industry average. It is neither too late nor too quick, although the collection period has been shortened as compared to 2007 figures. This shows that Ford paid its debts relatively quickly as compared to 2007.As shown from above, Ford’s equity is wiped out. This is extremely dangerous situation for company’s financial well being. The company is highly geared as shown above. Considering that the liquidity position is alarming, it is highly likely that the company will not be able to pay its obligations and in fact, may become insolvent in near future.Automobile industry has been badly affected due to current global economic crisis. This is evident from above ratio analysis as well. However, Ford’s performance has deteriorated to the extent that there are doubts whether the company will be able to continue its operations. There is a need to take prompt and strong measures to rescue Ford. The company management is confident that they can improve the situation using ONE Ford plan (Ford, 2009).As per the annual report, the inventories ‘are stated at the lower of cost and the market. United States inventories are measured on Last-In-First-Out (LIFO) method. Cost of other inventories. Accouting of Ford Motor Company.
Ford. 2009. Ford Motor Company – 2008 Annual Report. Ford
BMW. 2009. BMW – Annual Report 2008. BMW Group.
General Motor Corporation. 2009. Form 10-K – General Motor Corporation. March 5, 2009.
Toyota. 2008. Annual Report 2008. Toyota Motor Corporation.
Honda. 2008. Annual Report 2008. Honda Motor Company.
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