Ford Motor Co. has recently released its 10-K report, offering a detailed look at the company's financial performance and operations. The company develops, delivers, and services Ford trucks, sport utility vehicles, commercial vans and cars, and Lincoln luxury vehicles worldwide. It operates through Ford Blue, Ford Model e, Ford Pro, and Ford Credit segments. The company sells Ford and Lincoln internal combustion engine and hybrid vehicles, electric vehicles, service parts, accessories, and digital services for retail customers, as well as develops software. It also engages in vehicle-related financing and leasing activities. The company was incorporated in 1903 and is based in Dearborn, Michigan.
In the 10-K report, Ford Motor Co. discusses the nature of estimates required for its operating leases in Ford Credit’s portfolio. Each operating lease represents a vehicle owned by Ford Credit and leased to a customer. The company establishes expected residual values for the vehicles at the time of purchase, based on factors such as recent auction values, return volumes for leased vehicles, industrywide used vehicle prices, and vehicle quality data. The report also includes assumptions used for accumulated depreciation on vehicles subject to operating leases, such as auction value and return volume. It provides a sensitivity analysis for returned vehicles, highlighting the potential impact of changes in assumptions on future auction values and return volumes.
The report also delves into the quantitative and qualitative disclosures about market risk. Ford Motor Co. discusses its exposure to various risks, including changes in foreign currency exchange rates, commodity prices, and interest rates, as well as risks to availability of funding sources, hazard events, and specific asset risks. It outlines its risk management program, including regular reports to a central management committee and the use of derivative instruments to manage exposures. The report provides detailed insights into the company's market risk exposure, including foreign currency risk, commodity price risk, and interest rate risk, along with sensitivity analyses for each category.
Furthermore, the 10-K report discusses Ford Credit's market risk, particularly related to interest rate risk. It details Ford Credit’s assets and debt structures, and how the company manages volatility in cash flows and economic value from changes in interest rates. The report includes Ford Credit’s interest rate sensitivity analysis, pre-tax cash flow sensitivity to interest rate movements, and the use of interest rate swaps to manage exposure within approved thresholds.
As a result of these announcements, the company's shares have moved -1.52% on the market, and are now trading at a price of $13.60. Check out the company's full 10-K submission here.
