The performance of the company is measured against itself by conducting rend analysis between 2008 and 2007 financial results.For the purpose of this analysis, the consolidated financial statements have been used for all companies but figures for assets and liabilities are used for automotive business only. The industry average is calculated by calculating ratios for Toyota, Honda, BMW, General Motors, and Ford.The above analysis shows that Ford is facing difficulties in generating enough sales volume to cover its costs. The net profit margin in 2007 was negative and it has gone further down in 2008, showing a consistent failure of Ford’s management in meeting its profitability objectives. Companies like Toyota and Honda are leading the industry in terms of profitability.The above analysis shows that Honda and Toyota are leading the automobiles market with positive ROCE. whereas Ford is in genuine trouble. The ROCE for 2007 was negative and it has worsened in 2008. General Motors has depleted its capital resources.Current ratio provides information about an organization’s liquidity situation, vis-à-vis, the amount of cash or cash equivalent securities the company has to meet its short-term obligations. The current ratio of at least 1 is desirable. a ratio close to 2 is preferable.The current ratio of Ford has reduced below 1% in 2008 which is a red flag showing that the company is not able to service its short-term debt. The situation has been deteriorated since 2007 where the current ratio was 1.08.The acid test ratio of Ford has declined from 2007 figure. However, this is the case for all other market players as well. The acid test ratio of Ford is close to the industry average. Thus, the company, although is not able to meet its short-term obligation through its liquid assets yet, is doing the same as all other competitors in the market.
Accouting of Ford Motor Company