Effect of revenue increase to Ford Motor Company’s working capital policy.
Ford Motor Company working capital is a measurement of efficiency and health in a short term. The working capital is Current Assets less the Current Liabilities, and 20% increase indicates Ford Motor Company should pay off short-term liabilities. Ford Motor Company shows a 20% increase in revenue that brings the revenue up from $128,954 to $154,745 million. With the increase Ford Motor Company should invest in labor structure and dealer network because one of the largest supply bases in the industry the fair segment that the domestic companies cannot fund. The recent crisis deliberation is the North American reorganize in the automotive industry. Ford Motor Company is a dynamic contributor in the debate. Ford Motor Company is aware that the domestic competitors are successively out of cash in a matter of months therefore needs to make sure capital is available for their industry. If the competitors collapse Ford could be threaten and be next. For the best interest of Ford Motor Company as well as North America to invest in the manufacturing sector of the economy. Ford Motor Company also should payoff as much of the short-term loans as possible to stay with the industry. This can also benefit the consumers by providing resources priced at a reasonable price in capital and provide more credit to customer and dealers. Also the company can use present business markets to finance recurring needs like short-term loans and long-term liquidness. If Ford Motor Company or a competitor goes bankrupt this will cause a disruption to the creditors, dealers, and supply base. With the worldwide economic breakdown this is generating a supplementary cash demand and the financial failure is better than forecasted Ford Motor Company should invest in paying off short-term loans and long-term loans. Ford standards in fuel economy are placing huge financial and engineering problems on...
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