122 Part 2 Fundamental Concepts in Financial Management
Access the Thomson ONE problems through the CengageNOW™ web site. Use the Thomson ONE—Business School Edition online
database to answer this chapter’s questions.Conducting a Financial Ratio Analysis on Ford Motor Company
In Chapter 3, we looked at Starbucks’! nancial statements. Now we use Thomson ONE to analyze Ford
Motor Company.
Enter Ford’s ticker symbol (F) and select “GO.” Select “Financial Statements” and “Thomson Finan-
cials” to! nd Ford’s key! nancial statements for the past several years. Click on “Financial Ratios” and
then “SEC Ratios.” From here you can select either annual or quarterly ratios.
Under annual ratios, there is an in-depth summary of Ford’s various ratios over the past 3 years.
This information enables you to evaluate Ford’s performance over time for each of the ratio categories
mentioned in the text (liquidity, asset management, debt management, pro! tability, and market-based
ratios).
The text mentions that! nancial statement analysis has two major components: a trend analysis,
where we evaluate changes in the key ratios over time, and a peer analysis, where we compare! nancial
ratios with! rms that are in the same industry and/or line of business. We have already used Thomson
ONE to conduct a trend analysis—next, we use this tool to conduct a peer analysis. Click on “Compara-
bles” to! nd some summary! nancial information for Ford and a few of its peers. By clicking on the Peer
Sets, you can modify the list of peer! rms. The default setup is “Peers set by SIC Code.” To obtain a com-
parison of many of the key ratios presented in the text, click on “Financials” and select “Key Financial
Ratios.”Discussion Questions
- What has happened to Ford’s liquidity position over the past 3 years? How does Ford’s liquidity compare with
that of its peers? (Hint: You may use both the peer key financial ratios and liquidity comparison to answer this
question.) - Take a look at Ford’s inventory turnover ratio. How does this ratio compare with that of its peers? Have there
been any interesting changes over time in this measure? Do you consider Ford’s inventory management to be
a strength or a weakness? Explain. - Construct a DuPont analysis for Ford and its peers. What are Ford’s strengths and weaknesses compared to
those of its competitors?
1. What has happened to Ford’s liquidity position over the past 3 years? How does Ford’s liquidity compare with
that of its peers? (Hint: You may use both the peer key financial ratios and liquidity comparison to answer this
question.)- Take a look at Ford’s inventory turnover ratio. How does this ratio compare with that of its peers? Have there
been any interesting changes over time in this measure? Do you consider Ford’s inventory management to be
a strength or a weakness? Explain. - Construct a DuPont analysis for Ford and its peers. What are Ford’s strengths and weaknesses compared to
those of its competitors?