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Disclosure Analysis: Ford Motor

Free «Disclosure Analysis: Ford Motor» Essay Sample


The current paper provides an in-depth analysis of Ford Motor’s most recent financial statements in regards to the notes disclosures; cash and cash equivalents, receivables and inventories. Consequently, it also identifies a list of components that makes cash and cash equivalents.

Cash and Cash Equivalents

Ford Motor ascertains that all of the items that exhibit a highly-liquid investment with an immediate maturity of about three months or less in the course of purchase fall under the cash and cash equivalents section of its balance sheet (Ford Motor Annual Report , 2013). These investment items should be readily convertible into a given known amount of cash resource at any given moment. They are also subjected to an insignificant level of risk of alteration in their immediate values due to such aspects as interest rates, the underlying quoted prices or in other cases the penalty that is accrued in the course of early withdrawal (Ford Motor Annual Report, 2013).  A debt security is categorized as being an item of cash equivalent in the event that it meets the aforementioned criterion and also, in case it depicts a remaining timeframe to maturity of three or less months from their immediate date of acquisition (Ford Motor Annual Report, 2013). Therefore, it is important to note that all amounts that are on deposits and are always available for withdrawal or utilization upon demand or able to be negotiated in order to avail routine liquidity of the firm without any form of penalty application are categorized as cash and cash equivalents (Ford Motor Annual Report, 2013). Their resultant cost is thus approximated at their immediate fair values (Ford Motor Annual Report, 2013).


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Ford Motor’s cash and cash equivalents, which have been restricted for purposes of withdrawal or utilization under a given notification agreement are immediately posted in the “other assets” section of the balance sheet (Ford Motor Annual Report, 2013).

Consequently, restricted cash items involve a required minimum balance or in other cases cash securing debts that are usually issued through a securitization form of transactions (Ford Motor Annual Report, 2013).

Receivables/Trade Receivables

The company’s receivables, which are posted within the balance sheet as “other Receivables, net”  basically, compose of automotive sector receivables for such commodities as vehicles, spare parts and the resultant accessories (Ford Motor Annual Report , 2013).  These receivables are posted within the balance sheet at their immediate transaction amounts. Subsequently, the firm records all allowances for doubtful debts after a thorough analysis of possible recoveries that might have been received within the period at hand have been ascertained (Ford Motor Annual Report, 2013). All possible additions for the doubtful accounts are effected through the posting of charges to a bad debt expense account that has been reported within the “automotive costs of sales account” (Ford Motor Annual Report, 2013). Notwithstanding, receivables are thereafter charged to the allowance for a doubtful account in the event that any account is deemed to be completely uncollectible in any manner possible (Ford Motor Annual Report, 2013).

Impaired financial receivables involve the accounts, which have already been rewritten or in other cases modified in the course of affecting reorganization of proceedings that might be pursuant to the U.S Bankruptcy Code (Ford Motor Annual Report , 2013). On the other hand, non-accrual receivables are, in most cases, discontinued, at the immediate time whenever the receivable account is perceived as being uncollectible, or whenever it falls under the bankruptcy notification statuses or in case it surpasses 120 days from the due date. It is important to realize that Ford Motor’s finance receivables are, in most cases, recorded at an immediate origination period for which a purchase was made at their respective fair values and thereafter reported at their respective amortized costs that is net of any possible allowances that might have been allowed for credit losses (Ford Motor Annual Report, 2013).


For Ford Motor, all of their immediate inventories are reflected at their lowest cost or market values. The immediate cost for a significant portion of the inventories placed within the United States of America is ascertained on a distinctive methodology, Last-In, First-Out technique (Ford Motor Annual Report, 2013). It should be further noted that the aforementioned technique was put in use for a 20 percent and 18 percent of the total level of inventories present as in December 31 of both 2013 and 2012 financial years respectively. Subsequently, the costs of other forms of inventories are ascertained by way of applying a costing methodology that approximates a first-in, first-out (FIFO) technique (Ford Motor Annual Report, 2013).

Cash and Cash Equivalents Components

  1. Corporate debt
  2. US Government financial instruments
  3. US Government-sponsored enterprises
  4. Non-US Government agencies

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