Deciphering Financial Statements (Ford Motor Company)
The following note is taken from Ford Motor Company’s 2004 annual report:
|
|
Amortized |
Unrealized |
Book/Fair |
|
|
|
Cost |
Gains Losses |
Value |
|
|
Available for sale securities |
|
|
|
|
|
US government and agency |
$1,179 |
$ 3 |
$10 |
$1,172 |
|
Other debt securities |
1,100 |
15 |
10 |
1,105 |
|
Equity |
50 |
37 |
3 |
84 |
|
Total |
$2,329 |
$55 |
$23 |
$2,361 |
Investments in available for sale securities at December 31, 2003, were as follows (in millions):
|
|
Amortized |
Unrealized |
Book/Fair |
|
|
|
Cost |
Gains Losses |
Value |
|
|
Available for sale securities |
|
|
|
|
|
US government and agency |
$1,402 |
$ 6 |
$ 5 |
$1,403 |
|
Other debt securities |
972 |
21 |
8 |
985 |
|
Equity |
47 |
31 |
3 |
75 |
|
Total |
$2,421 |
$58 |
$16 |
$2,463 |
The proceeds and net gains/(losses) from available for sale securities sales were as follows (in millions):
|
Proceeds |
Gains/(Losses) |
||
|
2004 |
2003 |
2004 |
2003 |
|
$8,402 |
$9,376 |
$(6) |
$23 |
1. What amount of gains and losses on available for sale securities is reported in the 2004 income statement? How much is realized? How much is unrealized?
2. What is the amount of the net adjustment for unrealized holding gains and losses on available for sale securities as of the end of 2004?
3. Using the amounts of realized and unrealized gains and losses, estimate the total economic return on Ford’s available for sale portfolio during 2004 (ignoring interest and dividends).