Ford Liquidity
Ford’s liquidity has improved over the past 3 years. From 2007 to 2008, liquidity went down, but improved in 2009 better than 2007. Ford has the ability to pay for its current liabilities 1.39 times and without assets, Ford has the ability to pay for its current liabilities 1.28 times, which means they do not have to rely on sales of inventory. For 2009, Ford’s quick ratio was 1.28 and their current ratio was 1.39 which both we better than the industry average which was .90 and 1.17, respectively. Ford’s liquidity in 2009 was better than most of their peers which means their liquidity position is strong.
Ford’s inventory ratio is 12.37 which is a decline from previous years, but still above the average of 6.64. That means Ford holds on to its inventory 29.52 days and the competition is an average of 64.56 days. Ford’s inventory management is a strength because they are more successful at turning over inventory than the competition. Even though the downturn in the economy , Ford is still out performing the competition in turning over industry.
DuPont analysis: Profit Margin X Total Assets Turnover X Equity Multiplier = ROE
Ford 2.3 x .62 x =
Daimler x x =
Honda x x =
Nissan x x =
Porsche x x =
Toyota x x =
Volkswagen x x =
Ford: 2.3 X 0.62 X -.3 = -4.29%
Daimler: -3.34 X 0.62 X 4.02 = -8.32%
Honda: 1.37 X 0.86 X 5.47 = 6.44%
Nissan: -2.77 X 0.83 X -.69 = 1.59%
Porsche: -4.42 X 0.27 X 13.93 = -16.63%
Toyota: -2.13 X 0.71 X -1.36 =
Ford’s inventory ratio is 12.37 which is a decline from previous years, but still above the average of 6.64. That means Ford holds on to its inventory 29.52 days and the competition is an average of 64.56 days. Ford’s inventory management is a strength because they are more successful at turning over inventory than the competition. Even though the downturn in the economy , Ford is still out performing the competition in turning over industry.
DuPont analysis: Profit Margin X Total Assets Turnover X Equity Multiplier = ROE
Ford 2.3 x .62 x =
Daimler x x =
Honda x x =
Nissan x x =
Porsche x x =
Toyota x x =
Volkswagen x x =
Ford: 2.3 X 0.62 X -.3 = -4.29%
Daimler: -3.34 X 0.62 X 4.02 = -8.32%
Honda: 1.37 X 0.86 X 5.47 = 6.44%
Nissan: -2.77 X 0.83 X -.69 = 1.59%
Porsche: -4.42 X 0.27 X 13.93 = -16.63%
Toyota: -2.13 X 0.71 X -1.36 =