Ford Financial Ratio

Topics: Financial ratios, Balance sheet, Generally Accepted Accounting Principles Pages: 2 (736 words) Published: October 26, 2014

Ford Financial Ratio
Kenneth Baker
Ford Financial Ratio
In 2013 Ford delivers strong financial results achieving 18 straights quarters of operating profits and its fourth year in a row of positive net income. Ford had sales revenue of $146 billion in 2013 which was a $13.3 billion dollar increase from 2012 and reported net income after tax of $7.1 billion dollars which was an increase of $1.5 billion dollars from 2012.This resulted in earnings per share of $1.76 for the shareholders of Ford whish was a $0.34 increase from 2012. What is equally impressive is that Ford generated positive cash flow of $6.1 billion in 2013 which was $2.7 billion dollars more that in 2012. Now these results certainly can give the indication that Ford is a financially strong company however further analysis is need before final conclusion can be drawn. Following is a look at the financial ratios of Ford from 2011, 2012, and 2013. Current Ratio, Current Ratio = Current Assets / Current Liabilities, 2011 2012 2013

120905/75519=1.6 125759/72652=1.7 132351/73141=1.8
If the ratio is below 1, it raises a warning sign as to whether the company is able to pay its short term obligations when due. Here we see that Ford is doing well over the last 3 years as the ratio continues to rise. The benchmark for Current Ratio is 1.7 and Ford is right on track . Debt/Equity Ratios

Total Debt/Equity Ratio = Total Liabilities / Shareholders Equity Long Term Debt/Equity Ratio = Long Term Debt / Shareholders Equity Short Term Debt/Equity Ratio = Short Term Debt / Shareholders Equity 2011 2012 2013

Total Debt/Equity Ratio
163277/178348= .9 173095/189406= .9 175279/202026= .9
Long Term Debt/Equity Ratio
35921/178348= .2 32436/189406= .2 40543/202026= .2
Short Term Debt/Equity Ratio
2841/178348= .02 N/A N/A
There are different variations of the debt to equity ratios, but the objective of these financial ratios is to determine how a company has been financing its...
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