why is ford rsquo s working capital so high if you were told that ford capital the f 546270
The following is the balance sheet for Ford Motor Company as of December 31, 1994 (in millions).
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why is ford rsquo s working capital so high if you were told that ford capital the f 546270
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Liabilities |
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|
Cash |
$19,927 |
Accounts Payable |
$11,635 |
|
Receivables |
$132,904 |
Debt due within 1 year |
$36,240 |
|
Inventory |
$10,128 |
Other Current Liabilities |
$2,721 |
|
Current Assets |
$91,524 |
Current Liabilities |
$50,596 |
|
Fixed Assets |
$45,586 |
Short Term Debt |
$36,200 |
|
Long Term Debt |
$37,490 |
||
|
Equity |
$12,824 |
||
|
Total Liabilities |
$137,110 |
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The firm had revenues of $154,951 million in 1994 and cost of goods sold of $103,817 million.
a. Estimate the net working capital
b. Estimate the non-cash working capital.
c. Why is Ford’s working capital so high? If you were told that Ford Capital (the financing arm of Ford) was consolidated into this balance sheet, would that help you with your explanation?
d. Estimate non-cash working capital as a percent of revenues. If you were asked to estimate the non-cash working capital needs for a new automobile factory that Ford was constructing, would you use this ratio? Why or why not?
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