+ 44 20 8144 3706Introduction:
Ford is the American multinational company that is known for developing innovative cars. In the international financial market some of major changes are observed which is making it hard for the firms to raise finance from the market (Macdonald, 2017). Extent to which these developments affect Ford Motors is also explained. In the middle part of the report, varied platforms from where money is raised by the company and dividend policy of the company are defined. At the end of the report, in order to evaluate company performance ratio analysis approach is used in present work.
Two recent developments in the International financial market:
During 2008 after recession, it was observed that banks do not have strict rules that can be followed to allot debt to the loan applicants. Hence, due to this reason those who do not have a moderate financial position also got a loan. Ultimately, they failed to pay a debt on time due to the subprime mortgage crisis. Hence, NPA increased in the business which negatively affects banks and this badly affect nation economy. Post 2008 banks develop stronger rules and regulations by considering which loan was given to only those who have good financial position. Still also there was problem NPA was there on business. In order to handle such kind of situation, banks use IT system and AI based technology. By using this technology banks to easily identify that which applicants will be able to pay debt on time and which one may probably be defaulted.
There are many companies that are developing such kind of systems like ZestFinance. The mentioned company developed IT based system equipped with AI technology that assess financial position and probability that an individual will pay debts on time based on available information. In future time period it becomes a hard task for Ford Motors to get debt easily from any international bank (Zabai, 2017). This is because by using technology they will make estimation about the probability of Ford Motor become defaulter. Apart from this, banks also use tough parameters to determine whether to give loans to Ford Motor. Hence, firm will face huge difficulty in obtaining bank loans. Ford Motor can raise large amounts through consortium finance.
Conclusion:
Ratio analysis approach is commonly used by the investors and analysts to evaluate firm performance and its efficiency level during the year. Ford Motors financial condition is not good because it’s COGS is very high due to which firm is earning lower gross profit and net profit in the business. Due to earning of the less profit, liquidity position of the company is not good and it needs to make more efforts to improve its performance. Ford must innovate its business operations so that economies of scale can be generated in the business. By doing so, more profit can be earned in the business.
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