Need help with this worksheet please using Ford Motor Company\'s 2016 annual rep
ID: 2805621 • Letter: N
Question
Need help with this worksheet please using Ford Motor Company's 2016 annual report.
https://corporate.ford.com/microsites/sustainability-report-2016-17/doc/sr16-annual-report-2016.pdf
Ratio Analysis Formula Explanation Good/Bad? Current Ratio: Current Assets A measure of short-term Current Liabilities liquidity or how often current assets cover current liabilities Quick Ratio: Current Assets - Inventory Eliminates inventory because Current Liabilities it's the least liquid current asset Cash Ratio: Cash This ratio shows how much cash Current Liabilities a firm has to cover current liabilities (short-term creditor) Total Debt Ratio: Total Assets - Total Equity we want lower liabilities Total Assets compared to our assets Debt-Equity Ratio: Total Debt we want lower liabilities Total Equity compared to our equity Equity Multiplier Total Assets we wants lots of assets Total Equity compared to our equity Times Interest EBIT Measures how well a firm has Earned Ratio: Interest its interest obligations covered Cash Coverage EBIT + Depreciation More accurate way to measure Ratio: Interest how well a firm has its interest obligations covered Inventory TO Ratio: COGS this tells us the # of times we Ave Inventory sell all of our inventory Average days in inv: 365 this tell us how many DAYS Inv TO Ratio it takes us to sell our inventory Receivables turnover: Sales this tells us how many times Average A/Rec each year we collect our a/rec Payables Turnover: COGS this tells us how many times Accounts Payable each year we pay our a/pay Days' Sales in Receiv: 365 this tells us how many DAYS Receivables Turnover it takes us to collect our a/rec Days' costs in Payables: 365 this tells us how many DAYS Payables Turnover it takes us to pay our a/pay Total Asset Turnover: Sales we want as much sales as Total Assets possible compared to our assets Capital Intensity: Total Assets Measures how much in assets Sales it takes to generate $1 in sales Profit Margin: Net Income A higher profit margin is Net Sales desirable Return on Assets (ROA) Net income Measures of profit per dollar Total Assets of assets Return on Equity (ROE) Net Income Measures how shareholders Total Equity did throughout the year Price-Earnings Ratio: Price per share* Measures how much investors Earnings per share are willing to pay per dollar of *go find it online! current earnings Price-Sales Ratio: Price per share* Used for companies with some Sales per share revenue, but negative earnings for extended periods Market-to-book ratio: Market value per share Compares the market value of book value per share* the firms investments to their *total equity/# of shares o/s cost DuPont Identity PM * TAT * EM PM This is the same as the ROE… TAT EMExplanation / Answer
1. Current ratio= 1.20
Ford Motor Co.'s current ratio improved from 2014 to 2015 but then slightly deteriorated from 2015 to 2016. But 1.2 is a good ratio overall.
2. Quick ratio= 1.07
Ford Motor Co.'s quick ratio improved from 2014 to 2015 but then slightly deteriorated from 2015 to 2016. In 2015, it was 1.11. But still quick ratio 1.07 is good for the company.
3. Cash ratio = 0.94
A cash ratio lower than 1 does indicate a company is having financial difficulty. A low cash ratio may be an indicator of a company's strategy to have low cash reserves. However, certain industries operate with higher current liabilities and lower cash reserves.
4. Total debt ratio = 0.87 And this is good
5. Debt-equity ratio = 7.16 and this is not at all good. Debt is very very high.
6. Equity multiplier = 8.16 This is very good. The higher the better.