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Module 7: Valuation Using the Residual Enterprise Income Valuation Model

Module 7: Valuation Using the Residual Enterprise Income Valuation Model. 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

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Module 7: Valuation Using the Residual Enterprise Income Valuation Model

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  1. Module 7: Valuation Using the Residual Enterprise Income Valuation Model The Ford Motor Company By: Paula Casini

  2. 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

  3. Products and Services • Brand Name Vehicles: Ford and Lincoln • Retail Sales • Fleet Sales • Vehicle Financing • Automotive Components • Market Share = 14.0%

  4. Residual Enterprise Income

  5. Discounted Cash Flow

  6. Conclusion • REI enterprise value = DCF enterprise value • Sales growth rate is a constant 2.5% • No need to forecast extra years in order to get consistent growth rates between the two models • Value is too high • 2013 10k has not yet been released • WACC needs more investigation • EPAT & EATO assumptions need more investigation

  7. Questions?

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