Assignment 4: Research Application

Assignment 4 Research Application

In this assignment, you will use the Internet and other sources to gather and interpret information related to service and manufacturing organizations. Select either a service or a manufacturing organization of interest to you. Research the organization using the Argosy University online library and the Internet. Based on your research, do the following: Identify and classify the types of expenses associated with the operation of the selected organization. Review the income statement and balance sheet of the selected organization. What is your overall initial impression of the company based on the financial data you reviewed? Write a 2- to 3-page report detailing your findings in MS Word format. Apply current APA standards for writing style to your work. Use the following file naming convention: LastnameFirstInitial_M1_A4.doc. For example, if your name is John Smith, your document will be named SmithJ_M1_A4.doc.

Paper For Above instruction

The purpose of this assignment is to develop a comprehensive understanding of financial analysis within organizations, whether service-based or manufacturing, by examining real-world financial statements and expenses. Selecting an organization of personal interest allows for a more engaging and tailored analysis, facilitating deeper insight into the financial operations and health of the business.

For this exercise, I chose to analyze a prominent manufacturing organization — Ford Motor Company. The initial step involved collecting financial data from the company's most recent income statement and balance sheet, accessible through the company's official reports and the Argosy University online library. This data provided a foundational understanding of the company's financial position, operational expenses, and profitability.

Classification and Analysis of Expenses

Understanding expenses is critical in financial analysis because they directly influence a company's profitability and operational efficiency. Ford's expenses can generally be divided into several key categories: cost of goods sold (COGS), selling, general and administrative expenses (SG&A), research and development (R&D), and interest expenses.

The cost of goods sold for Ford includes raw materials, labor, and manufacturing overhead directly linked to vehicle production. This expense is vital for assessing manufacturing efficiency and gross profit margins. SG&A encompasses marketing, sales, administrative salaries, and other operational costs necessary to support sales and administrative functions. R&D expenses reveal the company's investments in innovation and competitive strategy, which are especially crucial for a manufacturing firm aiming to sustain technological prowess and market share.

Financial Statement Review & Initial Impressions

Reviewing Ford's income statement indicates a resilient revenue stream with a gradual increase in net income over recent fiscal years. The gross profit margins suggest effective cost management in manufacturing, although there is room for improvement in controlling operating expenses. The balance sheet reveals a robust asset base, including significant inventories and property, plant, and equipment, supporting ongoing production capacity.

Ford's liabilities include short-term debts and long-term financial obligations, providing insight into its leverage and financial strategy. The company's current ratio indicates sufficient short-term liquidity, while long-term debt levels suggest strategic leverage for growth investments.

Overall Impression

Based on the financial data, Ford appears financially stable, with profitable operations and manageable debt levels. The company demonstrates a strong asset position and a steady revenue stream, which bodes well for future stability. However, competitive pressures and market shifts in automotive technology—such as electric vehicles and autonomous driving—necessitate continued innovation and strategic investment, particularly in R&D. Overall, Ford's financial health supports its capacity to adapt and compete in the evolving automotive landscape.

Conclusion

This exercise provided valuable insights into the financial structures of manufacturing organizations. Analyzing real financial statements helps in understanding the operational costs and overall health of a company. Applying these analytical skills can aid future decision-making, investment evaluation, and strategic planning for organizations across industries.

References

  • Ford Motor Company. (2022). Annual Report 2022. Retrieved from https://corporate.ford.com/investors/reports-presentations/annual-report.html
  • Financial Accounting Standards Board. (2021). Statements of Financial Accounting Concepts. FASB.
  • Gibson, C. H. (2020). Financial reporting & analysis (14th ed.). Cengage Learning.
  • Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatz, R. (2019). Introduction to financial accounting (17th ed.). Pearson.
  • Investopedia. (2023). Understanding Income Statements. Retrieved from https://www.investopedia.com/terms/i/incomestatement.asp
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate accounting (16th ed.). Wiley.
  • McLaney, E., & Atrill, P. (2019). Financial accounting and reporting (11th ed.). Pearson.
  • Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2021). Corporate finance (12th ed.). McGraw-Hill Education.
  • U.S. Securities and Exchange Commission. (2022). EDGAR Financial Statements Data. Retrieved from https://www.sec.gov/edgar/searchedgar/companysearch.html
  • White, G. I., Sondhi, A. C., & Fried, D. (2018). The analysis and use of financial statements (3rd ed.). Wiley.

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