I would like to request assistance analyzing the financials of Ford Motor Company.
I need to have the results in excel so I may compare them to my answers.
The three questions are as follows:
1) Using the extended DuPont equation to provide a summary and overview of Ford's Financial Condition. (From Profit Margin, Total Asset Turnover, and Equity Multiplier)
2) Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM Method.
3) Estimate the Company's WACC.
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Please see attached file for answers.
The DuPont equation can be broken down into its three components:
1. Profit margin = Net Income / Total Sales
2. Return on assets = Net Income / Total Sales
3. Multiplier = Total Assets / Total Stockholders' Equity
Thus, the DuPont formula is net income divided by total stockholders' equity or simply, the return on stockholders' equity
For Ford, Inc. and for the year ended December 31, 2008, the components of its return on stockholders' equity are:
1. Profit margin = -10.03%
2. Return on assets = -6.72%
3. Multiplier = -12.61 times
Hence, the DuPont ...
The expert uses the extended DuPont equation to provide a summary.