module 4 simple analysis and parsimonious forecasting n.
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Module 4: Simple Analysis and Parsimonious Forecasting. The Ford Motor Company By: Paula Casini. Ford Motor Company. Automotive Sector – sale of vehicles, service parts and accessories Ford North America Ford South America Ford Europe Ford Asia Pacific Africa Financial Services Sector

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module 4 simple analysis and parsimonious forecasting

Module 4: Simple Analysis and Parsimonious Forecasting

The Ford Motor Company

By: Paula Casini

ford motor company
Ford Motor Company
  • Automotive Sector – sale of vehicles, service parts and accessories
    • Ford North America
    • Ford South America
    • Ford Europe
    • Ford Asia Pacific Africa
  • Financial Services Sector
    • Ford Motor Credit Company – vehicle related financing, leasing and insurance
    • Other Financial Services – holding companies and real estate
return on enterprise operations
Return on Enterprise Operations
  • RNEA = EPAT / avg (NEA)
  • Combination of low EPAT and high avg NEA
breaking apart rnea
Breaking Apart RNEA
  • RNEA = EPM * EATO
  • EPM = EPAT / Sales
  • EATO = Sales / avg (NEA)
parsimonious revenues
Parsimonious Revenues
  • Ford’s sales growth consistently declining
  • Average over last three years = 4.40%
  • Industry expected growth rate 2.4%
  • Analysts predict only small increase in sales for 2014 and 2015
  • Growth Assumption = 2.25% (inflation)
parsimonious epm from sales
Parsimonious EPM (from sales)
  • Ford’s EPM from total EPAT was 3%, 11% and 1% in 2010, 2011 and 2012 respectively
  • Average EPM for automotive industry is 6%
  • EPAT very volatile, sales only expected to grow at the rate of inflation
  • Assumption = 6.5%
parsimonious eato
Parsimonious EATO
  • Stable EATO
  • Assumption = 1.7
parsimonious assumptions
Parsimonious Assumptions
  • Sales Growth = 2.25%
parsimonious assumptions1
Parsimonious Assumptions
  • Sales Growth Rate = 2.25%
  • EPM = 6.5%
parsimonious assumptions2
Parsimonious Assumptions
  • Sales Growth Rate = 2.25%
  • EPM = 6.5%
  • EATO = 1.7