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Ford motor company is considered as the second largest automaker of the world. There
automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury
and Volvo. In order to be successful in business it is necessary to evaluate the performance of the
company that how they have progressed throughout the year. They should compare their
historical figures with their competitors. Financial analysis helps identifying and quantifying
company’s strengths its financial position and shows potential risk. Financial ratios help in
evaluating company’s performance.
Liquidity ratio determines a company’s ability to meet short term financial obligations. Current
ration of ford motors for year 2007 is 1.080. This is calculated by the figures of $54,243 of
current assets/$50,218 of liabilities this liquidity ratio shows that ford motor has $1.080 for every
$1 current liability. When comparing the current ratio with the competitor in the business we can
take general motors’ whose current ratio is 0.86 which means general motors
has $0.86 for
every $1 liability where as industry average is 2.65 so ford motor should improve their current
ratio as they are far away from industry average . Quick ratio of ford motors can be calculated by
cash+marketable securities $25,208/$50,218 which equals 0.501 times. General motors has a
quick ratio of .52 times where as the industry average for quick ratio is .99 times and from this
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This note was uploaded on 08/22/2011 for the course ACCOUNTING 201 taught by Professor Stevejoseph during the Winter '11 term at Aarhus Universitet.
 Winter '11
 STEVEJOSEPH

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