Strategic Analysis of Ford Motors Company
Company Profile
Ford Motor Company was founded in 1903 by automotive and industrial pioneer Henry Ford in Dearborn, Michigan. Being first to implement a moving assembly line for automotive manufacturing, Ford was able to more efficiently mass produce their products than their competitors. In 1908 the Model T was introduced and went on to sell over 15 million vehicles, firmly establishing Ford as the major player in the early automotive industry with 50% market share by the 1920s. The company went public 1956 and since then has grown to be a significant presence in the global automotive market.
Financial ratios are useful indicators of a firm’s performance and financial situation (Friedlob & Schleifer, 2003). Ratios can be used to analyze trends and to compare a firm’s financials to other firms. Although there is an abundant amount of ratios, we will only be looking at the ones that are most important when analyzing Ford Motors activities and results for the last 3years.
Profitability Ratios
Based on the results(See Appendix 1), the recession has really taken its toll on Ford motors. The general decline in nits profitability ratios suggest that the company has not been performing well in recent times. In actual fact, the company's financial conditions began to decline since 2005 which was even before the recession. The negative earnings per share (EPS), profit margin, return on assets raises an alarm. The low profitability is also responsible for the low fixed and total assets turnover ratios. Return on equity however shows a slight improvement which can also be a result of the recent re-engineering process by the company.
Liquidity Ratios
The company's Current ratio is low but not alarming (see financial statement in Appendix 1), the general expectation is for current assets to cover current liabilities at company's quick ratio of 1.26 is quite good as it suggests that the company will be able to meet its urgent current liabilities as they fall due even
Ford Motor Company was founded in 1903 by automotive and industrial pioneer Henry Ford in Dearborn, Michigan. Being first to implement a moving assembly line for automotive manufacturing, Ford was able to more efficiently mass produce their products than their competitors. In 1908 the Model T was introduced and went on to sell over 15 million vehicles, firmly establishing Ford as the major player in the early automotive industry with 50% market share by the 1920s. The company went public 1956 and since then has grown to be a significant presence in the global automotive market.
Financial ratios are useful indicators of a firm’s performance and financial situation (Friedlob & Schleifer, 2003). Ratios can be used to analyze trends and to compare a firm’s financials to other firms. Although there is an abundant amount of ratios, we will only be looking at the ones that are most important when analyzing Ford Motors activities and results for the last 3years.
Profitability Ratios
Based on the results(See Appendix 1), the recession has really taken its toll on Ford motors. The general decline in nits profitability ratios suggest that the company has not been performing well in recent times. In actual fact, the company's financial conditions began to decline since 2005 which was even before the recession. The negative earnings per share (EPS), profit margin, return on assets raises an alarm. The low profitability is also responsible for the low fixed and total assets turnover ratios. Return on equity however shows a slight improvement which can also be a result of the recent re-engineering process by the company.
Liquidity Ratios
The company's Current ratio is low but not alarming (see financial statement in Appendix 1), the general expectation is for current assets to cover current liabilities at company's quick ratio of 1.26 is quite good as it suggests that the company will be able to meet its urgent current liabilities as they fall due even
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