Ford has reacted strongly to a Wall Street analyst’s report which suggests that Ford is accounting for incentives in a way that inflates its $23 billion reserves.
Goldman Sachs analyst Gary Lapidus said in a report issued late last week that Ford was tying up as much as $10 billion in cash and boosting cash flow by paying the cost of vehicle lease and loan incentives to its financing unit over time, instead of all at once when a vehicle is sold.
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In the wake of Enron, Ford has reacted in swift and prickly fashion to the merest hint of improper accounting. In a regulatory filing on Tuesday, Ford said the effect of low-rate financing on its cash “is less than half of the amount indicated in the Goldman Sachs report, and the effect on cash flow is even smaller.” Ford also said it had accounted for incentives in that fashion for years.
According to some reports, Lapidus has since pared down his estimates on how much cash Ford is tying up in this way.
