Company analysis. Given the financial data in the popup window, E, for General Motors (GM) and Ford Motor Company (F), compare these two companies using the following financial ratios: times interest earned ratio, current ratio, total asset turnover, financial leverage, profit margin, and return on equity. Which company would you invest in, either as a bondholder or as a stockholder? Data Table Click on the following Icon in order to past this table's content into a spreadsheet. General Motors Ford Motor Company Sales $155,463 $146,936 EBIT $7,785 $7,757 Interest Expense $321 $799 Net Income $5,381 $7,093 Current Assets $81,533 $131,536 $201.943 Total Assets $166,315 Current Liabilities $62,402 $19,523 $26,391 Equity Values are expressed in millions of dollars. $42,558
Company analysis. Given the financial data in the popup window, E, for General Motors (GM) and Ford Motor Company (F), compare these two companies using the following financial ratios: times interest earned ratio, current ratio, total asset turnover, financial leverage, profit margin, and return on equity. Which company would you invest in, either as a bondholder or as a stockholder? Data Table Click on the following Icon in order to past this table's content into a spreadsheet. General Motors Ford Motor Company Sales $155,463 $146,936 EBIT $7,785 $7,757 Interest Expense $321 $799 Net Income $5,381 $7,093 Current Assets $81,533 $131,536 $201.943 Total Assets $166,315 Current Liabilities $62,402 $19,523 $26,391 Equity Values are expressed in millions of dollars. $42,558
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Chapter 14, Question 6
Transcribed Image Text:### Company Analysis
Given the financial data displayed in the popup window, compare General Motors (GM) and Ford Motor Company (F) using specific financial ratios: times interest earned ratio, current ratio, total asset turnover, financial leverage, profit margin, and return on equity. Decide which company you would invest in, either as a bondholder or as a stockholder.
#### Data Table
| | General Motors | Ford Motor Company |
|----------------------|----------------|--------------------|
| **Sales** | $155,463 | $146,936 |
| **EBIT** | $7,785 | $7,757 |
| **Interest Expense** | $321 | $799 |
| **Net Income** | $5,381 | $7,093 |
| **Current Assets** | $81,533 | $131,536 |
| **Total Assets** | $166,315 | $201,943 |
| **Current Liabilities** | $62,402 | $19,523 |
| **Equity** | $42,558 | $26,391 |
*Values are expressed in millions of dollars.*
### Analysis Steps
1. **Times Interest Earned Ratio**:
- Calculate by dividing EBIT by Interest Expense.
- GM: \( \frac{7,785}{321} \)
- Ford: \( \frac{7,757}{799} \)
2. **Current Ratio**:
- Determine by dividing Current Assets by Current Liabilities.
- GM: \( \frac{81,533}{62,402} \)
- Ford: \( \frac{131,536}{19,523} \)
3. **Total Asset Turnover**:
- Evaluate by dividing Sales by Total Assets.
- GM: \( \frac{155,463}{166,315} \)
- Ford: \( \frac{146,936}{201,943} \)
4. **Financial Leverage**:
- Assess by dividing Total Assets by Equity.
- GM: \( \frac{166,315}{42,558} \)
- Ford: \( \frac{201,943}{26,391} \)
5. **Profit Margin**:
- Calculate by dividing Net Income by Sales.
- GM: \( \frac{5,381
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