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Using Financial Ratios to Better Ford's Performance

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Based on your analysis of the key ratios, describe the strategies you would recommend to Ford's management team to improve its financial performance. Explain your rationale. Please provide references.

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The solution uses financial ratios to better Ford's performance.

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MANAGEMENT STRATEGIES TO IMPROVE FORDS PERFORMANCE
BASED ON FINANCIAL RATIOS

The common sources of information indicating the financial performance of the company are its financial statements - the balance sheet and the income statement. The balance sheet shows a snap shot of a company at any point in time - its assets or resources that are current (cash or not cash but may be converted to cash within a short period of time) and fixed (assets that are not intended to be converted into cash within a short period of time). Through the balance sheet, one would easily determine how these assets have been financed - through debts or equity.
The income statement shows the result of the company's operations - whether at a loss or at a profit. It would also show how marketable the company's products and services have been (through the entry on sales) and at the same time, how the company has been spending in order to generate sales and the bottom line, to generate income.
According to Kuratko and Hodgetts (2004), financial statements report both a firm's position at a point in time and its operations over some past period.
To analyze the financial statements, particularly the relationships among the financial statement accounts, financial ratios may be utilized.

The following are among the indicators of a company's financial performance and the corresponding ...

Solution provided by:
Elisa Valdez, PhD
Education
  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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