Financial Ratio Analysis: Ford Motor Inc.
FIN/575
Financial Ratio Analysis: Ford Motor Inc.
In the following financial ratio analysis, Team C has discussed the financial conditions of Ford Motor Inc. based on the following financial ratio calculations. Profitability ratios, liquidity ratios, activity ratios and solvency ratios, summarizing and defining the key financial ratios for Ford Motor Inc. Included are calculated ratios and how they have determined the financial conditions of the organization. This includes how much Ford Motor Inc. has borrowed and if the debt is likely to cause financial distress. How liquid the organization is and if cash is readily available. How efficient the organization is using its assets and any signs of inefficient use. Also defined is the profitability of the organization and the calculated ROE and breakdown of component parts using the DuPont method. Finally team C has explained how the DuPont method can help understand where the company may be having financial troubles.
Part One: Ratios
Profitability Ratio
The financial condition of Ford Motor Inc. based on its profitability ratios for 2013; show that Ford is currently bringing in about five cents to every dollar as a profit, with a net margin of 4.87%. According to Bloomberg (2014), Toyota was named the top car manufacture for 2013. Toyota is currently bringing in a net margin of 7.10% leaving Ford lagging behind. According to Morningstar (2014), Fords return on investment capital for 2013 was at 6.08%. This is important because it shows how efficiency with managing their assets and investments and how well they are doing to turn it into profit. Overall Ford had a good year in 2013 raising the net margin and return on investment from 2012, however they are three times lower than they were in 2011.
Liquidity Ratios
The use of liquidity ratios help to determine Ford’s ability to meet short-term debt obligations. In 2013, Ford’s liquidity...