3. The income statement from Ford\'s annual report appears as follows in summary

Question

3. The income statement from Ford's annual report appears as follows in summary form. (This information was obtained from the company's Web site, http://www.ford.com.) (1.1, 1.2 Ford Motor Co. Consolidated Income Statement for the Years Ended December 31 in millions) 2010 2009 128,954 116,283 Revenue Expenses Cost of goods sold Selling, administrative, and other costs Interest expense Other income (expenses) (104,451) (11,909) (6,152) (98,866) (13,029) (6,790) (1815,119 $6,261 2,717 Net income The financial information in the company's annual report was prepared primarily for shareholders and creditors in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP). Does the income statement provide enough detailed information for managers at Ford? Explain. Provide at least three additional detailed pieces of financial information that would help managers evaluate performance at Ford Provide at least two nonfinancial measures that would help managers evaluate performance at Ford a. b. c.

Explanation / Answer

a. A managerial decision is never based solely on one financial statement, because one financial report will not provide the complete picture required to make a decision. Therefore, it is required that in addition to Income Statement, we also see the Balance Sheet of the company as well as Cash Flow Statement.

Now, Ford is a manufacturing company and hence other than the cost of goods sold, we need to know cost of raw materials used in production and cost of goods manufactured. Then only an informed decision could be made

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