>> Managerial Accounting
Review of the Cash Budget
Review the 2014 Statement of Cash Flow budget. Based on your research, write a report that indicates whether you believe the cash from operations will increase or decrease. In addition, predict the increase or decrease in cash from investing and financing activities. Identify specific accounts that are likely to increase or decrease and explain why you believe there will be differences from the prior year. Provide the basis for your conclusions in a memo to management. Include your references.
Review of the Balance Sheet
Review the 2014 balance sheet. Based on your research, include in your report whether or not you believe inventory, accounts receivable, and accounts payable will increase or decrease. Explain why. Predict whether long-term debt will increase or decrease. Also, predict whether Ford will increase, decrease, or maintain current dividends to shareholders as in the past year. Provide the basis for your conclusions. Include your references. Your analysis will be part of your final report.
Competitive Analysis and Benchmarking
Review the advantages of benchmarking. Ford competes with both domestic and foreign automobile companies. Review the annual reports of Toyota and Honda. Select three (3) key performance measures. At least one performance measure is a financial measure. Assess how Ford automotive performs compared to these two international companies. Consider whether or not Toyota and Honda use international accounting standards to prepare their financial statements. Determine if the data you used is comparable. Write a memo to management that (1) explaining how benchmarking assists management and (2) summarizes your analysis and conclusion. Include your assessment of whether or not the international financial statements you used allowed you to make meaningful comparisons. Identify the limitations.
Attachment:- Statement of Cash Flows - Balance Sheet.rar
The Assignment is about the analysis of the increase or decrease of the various items on the Cash Flow Statement and Balance Sheet of Ford. It moves on to compare the performance with Honda and Toyota and lastly explains the importance of bench marking and comparison of the financial statements prepared using IFRS and the limitations of the same.
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The Cash Flow from Operating Activities includes items like depreciation and amortizations, Provision for Credit and Insurance Losses, Pension & OPEB Expenses, foreign currency adjustments, stock compensations, provision for deferred income taxes and the increase or decrease in the current assets and current liabilities.
A change in the accounting method is adopted from the year 2015 will is likely to cause a few changes. Pension and Other Post Retirement Employee Benefits (OPEB) are recognized by measurement of gains and losses immediately in the income statement and the fair value is used to calculate the expected return on plan assets (Annual Report, 2015). Under the previous method, the market value of plan assets was being used to calculate the expected returns. This change in the accounting method better recognizes the current performance of pension and OPEB plans and will significantly decrease these expenses to be accounted in the Income Statement for the year 2015.
The effect of this change in the accounting method will be retrospectively applied to all the prior periods (Wild, John Paul, 2006). Employee Benefits is another area focused on by the company and it makes continuous efforts towards the same. A new agreement is signed with the UAW in 2015 covering 53,000 employees and provides for a lump-sum ratification bonus amount per employee. This will lead to an increase in the said expenses.