Page 719 - Accounting Principles (A Business Perspective)

17. Analysis and interpretation of financial statements

Assets
Current Assets
Cash and cash equivalents $ 180.0 $ 159.5
Receivables 374.6 519.5
Total $ 554.6 $ 679.0
Inventories
Raw materials and supplies $ 335.5 $ 331.9
Finished and semifinished products 604.9 534.9
Contract work in process less billings of 17.8 16.1
$10.9 and $2.3
Total inventories $ 958.2 $ 882.9
Other current assets $ 13.0 $ 7.2
Total current assets $ 1,525.8 $ 1,569.1
Property, plant and equipment less $ 2,714.2 $ 2,759.3
accumulated depreciation of $4329.5 and
$4167.8
Investments and miscellaneous assets 112.3 124.2
Deferred income tax asset – net 885.0 903.2
Intangible asset – Pensions 463.0 426.6
Total assets $ 5,700.3 $ 5,782.4
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 381.4 $ 387.0
Accrued employment costs 208.0 165.8
Postretirement benefits other than pensions 150.0 138.0
Accrued taxes 72.4 67.6
Debt and capital lease obligations 91.5 88.9
Other current liabilities 146.3 163.9
Total current liabilities $ 1,049.6 $ 1,011.2
Pension liability $ 1,115.0 $ 1,117.1
Postretirement benefits other than pensions 1,415.0 1,441.4
Long-term debt and capital lease obligations 546.8 668.4
Other 335.6 388.5
Total noncurrent liabilities $ 3,412.4 # 3,615.4
Total liabilities $ 4,462.0 $ 4,626.6
Common stockholders' equity
Preferred stock – at $1 per share par value $ 11.6 $ 11.6
(aggregate liquidation preference of $481.2);
Authorized 20,000,000 shares
Preference stock – at $1 per share par value 2.6 2.6
(aggregate liquidation preference of $88.2);
Authorized 20,000,000 shares
Common stock – at $1 per share par 112.7 111.9
value/Authorized 250,000,000 and
150,000,000 shares; Issued 112,699,869 and
111,882,276 shares
Held in treasury, 1,992,189 and 1,996,715 (59.4) (59.5)
shares at cost
Additional paid-in capital 1,850.6 1,948.6
Accumulated deficit (679.8) (859.4)
Total common stockholders' equity $ 1,238.3 $ 1,155.8
Total liabilities and stockholders' equity $ 5,700.3 $ 5,782.4
a. Perform a horizontal and vertical analysis of Steel's financial statements in a manner similar to Exhibit 133
and Exhibit 134.
b. Comment on the results obtained in part (a).
Alternate problem B Ford Motor Company is the world's second-largest producer of cars and trucks and
ranks among the largest providers of financial services in the United States. The following information pertains to
Ford: (in millions)
(in millions) 1998 1999 2000
Sales $118.017 $135,073 $141,230
Cost of goods sold 104,616 118,985 126,120
Gross margin $ 13,401 $ 16,088 $ 15,110
Operating expenses 7,834 8,874 9,884
Net operating income $ 5,567 $ 7,214 $ 5,226

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