Financial Ratio Analysis Report of Ford Motor Company
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
This is a trend table of Ford's financial ratio for the previous five years:
Ford Motor Co. (DE) Ratios 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000 Return on Equity (%) 22.65 7.9 5.08 -70.04 29.07
Return on Assets (%) 1.19 0.29 0.1 -1.97 1.9
Return on Investment 8.13 5.62 5.87 2.23 11.24
Gross Margin 0.021 0.021 0.023 0.02 0.026
Operating Margin (%) 6.22 4.94 5.56 2.07 10.42
Net Profit Margin (%) 2.03 0.3 -0.6 -3.36 2.04
Quick Ratio 0.29 0.35 0.35 0.22 0.2
Current Ratio 0.47 0.52 0.51 0.37 0.33
Working Capital/Total Assets -0.22 -0.18 -0.16 -0.23 -0.28
Total Debt to Equity 8.61 13 25.67 18.3 6.05
Long Term Debt to Assets 0.35 0.38 0.41 0.44 0.35
Interest Coverage 1.69 1.18 1.11 0.3 1.76
This is a trend table of industrial average financial ratio for the previous five years in comparison:
Industry Averages
This is a trend table of Ford's financial ratio for the previous five years:
Ford Motor Co. (DE) Ratios 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000 Return on Equity (%) 22.65 7.9 5.08 -70.04 29.07
Return on Assets (%) 1.19 0.29 0.1 -1.97 1.9
Return on Investment 8.13 5.62 5.87 2.23 11.24
Gross Margin 0.021 0.021 0.023 0.02 0.026
Operating Margin (%) 6.22 4.94 5.56 2.07 10.42
Net Profit Margin (%) 2.03 0.3 -0.6 -3.36 2.04
Quick Ratio 0.29 0.35 0.35 0.22 0.2
Current Ratio 0.47 0.52 0.51 0.37 0.33
Working Capital/Total Assets -0.22 -0.18 -0.16 -0.23 -0.28
Total Debt to Equity 8.61 13 25.67 18.3 6.05
Long Term Debt to Assets 0.35 0.38 0.41 0.44 0.35
Interest Coverage 1.69 1.18 1.11 0.3 1.76
This is a trend table of industrial average financial ratio for the previous five years in comparison:
Industry Averages
References: Brealey, Meyers & Marcus. (2003). Fundamentals of Corporate Finance (4th ed). NewYork: McGraw-Hill. Ford Web site, retrieved on September 8, 2005, from: http://www.ford.com The North America Automotive Sectors. (2004, November). A Company and Industry Analysis. Industry Report - Automotive, 1-26. Retrieved September 9, 2005, from http://industry.mergent.com.