Dissecting Debt: Deere & Company (DE), Caterpillar Inc. (CAT), Ford Motor Company (F)

And finally, Ford
There are many other companies that practice this highly lucrative method of offering loans to customers, but Ford Motor Company (NYSE:F) has one of the biggest programs.

Sifting through Ford Motor Company (NYSE:F)’s financial statement, we find there are two sections — one for the automotive side of the business, and another for the financial side.

It would appear that the financial division of Ford Motor Company (NYSE:F)’s business is larger than its automotive division. As of the most recent 2012 annual report, the company had automotive assets of $86 billion and financial assets of $106 billion.

Nonetheless, a quick glance at Ford Motor Company (NYSE:F)’s liabilities appears to show that the company has $105 billion in debt; break this down, though, and there is a different story.

The automotive side of the business has $13 billion of long-term debt and $1.3 billion of short-term debt due within a year. The financial side of the business has $91 billion in long-term debt.

Here’s how the balance sheet breaks down.


Metric Amount (in Millions)
Cash and marketable securities $24,425
Current debt $1,386
Long-term debt $12,870
Net cash $10,169


Metric Amount (in Millions)
Cash and marketable securities $11,500
Finance receivables $75,000
Investment in operating leases $15,036
Debt $90,800
Net assets (cash and receivables-leases and debt) +$10,700

The automotive side of Ford’s business has a net cash balance. The financial side of the business has nearly $91 billion in long-term debt and $15 billion invested in operating leases.

As with both Deere & Company (NYSE:DE) Caterpillar Inc. (NYSE:CAT), almost all of this financial debt, including operating leases, is offset by financial receivables. Indeed, Ford Motor Company (NYSE:F) is making a profit on this debt, as it is borrowing at a much lower rate than it is lending out to customers.

So rather than taking net debt figures for granted, it pays to do some research and discover the true make-up of company debt.

The article Dissecting Debt originally appeared on Fool.com.

Fool contributor Rupert Hargreaves owns shares of Caterpillar. The Motley Fool recommends and owns shares of Ford.

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