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Ford Motor Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2011 04:30PM

Ford Motor Company (F) filed Quarterly Report for the period ended 2011-03-31. Ford Motor Company has a market cap of $57.04 billion; its shares were traded at around $15.08 with a P/E ratio of 7.4 and P/S ratio of 0.5.



Highlight of Business Operations:

At December 31, 2010, our valuation allowance was $15.7 billion, leaving net deferred tax assets of about $900 million on our balance sheet.

Commodity Price Risk. The net fair value of commodity forward and option contracts (including adjustments for credit risk) as of March 31, 2011 was an asset of $39 million, compared to an asset of $63 million as of December 31, 2010. The potential decrease in fair value of commodity forward and option contracts (excluding adjustments for credit risk), assuming a 10% decrease in the underlying commodity prices, would be $124 million at March 31, 2011, compared with a decrease of $60 million at December 31, 2010. If adjustments for credit risk were to be included, the decrease would be smaller.

Foreign Currency Risk. The net fair value of foreign exchange forward and option contracts (including adjustments for credit risk) as of March 31, 2011 was an asset of $105 million compared to a liability of $35 million as of December 31, 2010. The potential decrease in fair value of foreign exchange forward and option contracts (excluding adjustments for credit risk), assuming a 10% adverse change in the underlying foreign currency exchange rates versus the U.S. dollar, would be $599 million at March 31, 2011 compared with a decrease of $334 million as of December 31, 2010. If adjustments for credit risk were to be included, the decrease would be smaller.

Interest Rate Risk. To provide a quantitative measure of the sensitivity of Ford Credit s pre-tax cash flow to changes in interest rates, Ford Credit uses interest rate scenarios that assume a hypothetical, instantaneous increase or decrease in interest rates of 100 basis points (or 1%) across all maturities, as well as a base case that assumes that interest rates remain constant at existing levels. These interest rate scenarios are purely hypothetical and do not represent Ford Credit s view of future interest rate movements. The differences in pre-tax cash flow between these scenarios and the base case over a twelve-month period represent an estimate of the sensitivity of Ford Credit's pre-tax cash flow. Under this model, Ford Credit estimates that at March 31, 2011, all else constant, such an increase in interest rates would decrease pre-tax cash flow by $3 million over the next twelve months, compared with $22 million at December 31, 2010. The sensitivity analysis presented above assumes a one-percentage point interest rate change to the yield curve that is both instantaneous and parallel. In reality, interest rate changes are rarely instantaneous or parallel and rates could move more or less than the one percentage point assumed in Ford Credit s analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.

Read the The complete Report



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