Explore BrainMass

Global Strategic Management


I need to list 3 or 4 financial ratios for the Ford Motor Company. My first question is how do I properly define financial ratios? We haven't been asked to deal with this before.

Talk about what the financial ratio means and tell how For is doing in regard to the ratio. The ratios can be compared to previous years or to competition. He doesn't want to see the actual number just the final numbers.

I am looking at-

Please look at these 3 sites and pick 3-4 financial ratios out and discuss accordingly.

Solution Preview

The response addressed the query is posted in 448 words with references

// Financial ratios can be considered as some crucial tools which are frequently used for the purpose of revealing financial and strategic performance of the organization. In context to this, the presented section reflects the financial performance of Ford Company in comparison to the industry in which it deals//
Ratio / Year / Company / Industry
Return on Assets (TTM)  / 2015 / 1.49 / 8.08
Payout Ratio(TTM) / 2015 / 65.73 / 3.16
Gross Profit margin / 2015 / 12.83 / 19.87
Return on Investment   / 2015 / 7.39 / 18.5

(Source: Ford Motor Co (F) 2015).
The financial Ratio can be defined as a relative magnitude of different figures, which have been retrieved with the help of financial accounts of the company. The financial ratios can be considered as one of the major tools for evaluating financial performance of the organization in the most effective manner (Troy 2008). There are different types of ratios, which can be divided into different categories. These ratios are aimed to deliver some effective and efficient information related to the performance of the organization in comparison to its peers and industry as a whole (Leach, 2010). For instance, the above mentioned table has reflected four specific ratios which are from different categories and compared with the industry ratios. In regard to this, return on asset ratio for the company, i.e. Ford Motor Co is 1.49, which is way behind that of the industry, i.e. 8.08. This shows that in comparison to the industry the company is required to undertake some intensive amount of efforts to enhance its return generated on employed assets. In the same manner, another ratio for the company is payout ratio, which shows the ration of dividend payout and earnings earned by the company. In this context, the performance of the company is quite ahead of its industry standard. The gross profit margin ratio for the company is 12.83% which lesser then that of the industry, i.e. 19.87%. In addition to this, for the purpose of reflecting the management efficiency of the company, return on investment ratio needs to be revealed, which shows the overall returns gained by the company on the total investments made. The return on investment for the ...

Solution Summary

800 words with caculations