Compare the two companies based on their ratios. Use the last column in the template to detail how each company is doing in relation to the ratios. Explain the significance of how the company ratios compare to each other. RATIOS Ford Motor Co General Motors Co ANALYSIS Profitability Ratios (%) Gross Margin 15.01 17.9 EBITDA Margin 8.66 15.55 Operating Margin 2 3 Pre-Tax Margin 2.71 5.81 Effective Tax Rate 14.96 5.54 Financial Strength Quick Ratio 1.04 0.73 Current Ratio 1.2 0.92 LT Debt to Equity 2.8 1.88 Total Debt to Equity 7.14 5.85 Interest Coverage 4.54 14.05 Valuation Ratios Price/Earnings Ratio 4.9 35.6 Price to Sales P/S 0.2 2.2 Price to Book P/B 0.9 1.2 Free Cash Flow per Share 2.26 -6.95 Management Effectiveness (%) Return On Assets 1.43 3.6 Return On Investment 2.18 6.02 Return On Equity 10.38 21.43 Efficiency Receivable Turnover 2.5 4.74 Inventory Turnover 12.68 11.78 Total Asset Turnover 0.62 0.67 Free Cash Flow/Net Income 1.97 -1.28
Compare the two companies based on their ratios. Use the last column in the template to detail how each company is doing in relation to the ratios. Explain the significance of how the company ratios compare to each other. RATIOS Ford Motor Co General Motors Co ANALYSIS Profitability Ratios (%) Gross Margin 15.01 17.9 EBITDA Margin 8.66 15.55 Operating Margin 2 3 Pre-Tax Margin 2.71 5.81 Effective Tax Rate 14.96 5.54 Financial Strength Quick Ratio 1.04 0.73 Current Ratio 1.2 0.92 LT Debt to Equity 2.8 1.88 Total Debt to Equity 7.14 5.85 Interest Coverage 4.54 14.05 Valuation Ratios Price/Earnings Ratio 4.9 35.6 Price to Sales P/S 0.2 2.2 Price to Book P/B 0.9 1.2 Free Cash Flow per Share 2.26 -6.95 Management Effectiveness (%) Return On Assets 1.43 3.6 Return On Investment 2.18 6.02 Return On Equity 10.38 21.43 Efficiency Receivable Turnover 2.5 4.74 Inventory Turnover 12.68 11.78 Total Asset Turnover 0.62 0.67 Free Cash Flow/Net Income 1.97 -1.28
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.1E
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Compare the two companies based on their ratios. Use the last column in the template to detail how each company is doing in relation to the ratios. Explain the significance of how the company ratios compare to each other.
RATIOS | Ford Motor Co | General Motors Co | ANALYSIS |
Profitability Ratios (%) | |||
Gross Margin | 15.01 | 17.9 | |
EBITDA Margin | 8.66 | 15.55 | |
Operating Margin | 2 | 3 | |
Pre-Tax Margin | 2.71 | 5.81 | |
Effective Tax Rate | 14.96 | 5.54 | |
Financial Strength | |||
Quick Ratio | 1.04 | 0.73 | |
1.2 | 0.92 | ||
LT Debt to Equity | 2.8 | 1.88 | |
Total Debt to Equity | 7.14 | 5.85 | |
Interest Coverage | 4.54 | 14.05 | |
Valuation Ratios | |||
Price/Earnings Ratio | 4.9 | 35.6 | |
Price to Sales P/S | 0.2 | 2.2 | |
Price to Book P/B | 0.9 | 1.2 | |
2.26 | -6.95 | ||
Management Effectiveness (%) | |||
Return On Assets | 1.43 | 3.6 | |
2.18 | 6.02 | ||
Return On Equity | 10.38 | 21.43 | |
Efficiency | |||
Receivable Turnover | 2.5 | 4.74 | |
Inventory Turnover | 12.68 | 11.78 | |
Total Asset Turnover | 0.62 | 0.67 | |
Free Cash Flow/Net Income | 1.97 | -1.28 |
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