Join Jim Stice for an in-depth discussion in this video The DuPont framework: Ford and General Motors, part of Finance for Non-Financial Managers.
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- Okay, we looked at Uncertain and Benchmark,…now let's look at a real company, let's look at Ford…and we're going to compare Ford and General Motors.…In 2014 Ford's return on equity was 12.9%.…Again, that's in the good range but now let's compare…their 2014 performance to their 2013 performance.…We see in 2013 their return on equity was 27.6%.…Now what's the obvious question, why?…Why did it drop from 27.6% down to 12.9%?…Well we can answer that question…again by using the DuPont framework.…
As you can see here we have…the DuPont framework for 2014 and 2013.…We've got Ford's performance broken down…by profitability, efficiency and leverage.…Let's just take a look at these comparisons…and see what we can conclude.…First of all let's look at leverage.…In 2013 their leverage was 7.7, in other words they had…7.7 dollars in assets for every dollar's worth of equity.…In 2014 that had increased to 8.4, in other words…the company had borrowed more money in 2014…relative to the amount invested by owners…but that would cause return on equity to increase,…
- Interpret financial reports and make decisions based on available data
- Manage inventory and receivables
- Create an accurate budget
- Cost a product or service
- Analyze customers
- Understand your income taxes
- Communicate your contribution to the bottom line
Skill Level Appropriate for all
1. Understanding Finance and Accounting
2. Most Common Financial Reports
3. Techniques for Using Financial Reports
4. Short-Term Financial Management
5. Costing a Product or Service
Drafting a budget4m 59s
7. Income Taxes
Next steps1m 38s
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