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.RATIOSFord Motor Co General Motors CoANALYSISProfitability Ratios (%) Gross Margin 15.0117.9 EBITDA Margin 8.6615.55 Operating Margin 23 Pre-Tax Margin 2.715.81 Effective Tax Rate 14.965.54 Financial Strength Quick Ratio1.040.73 Current Ratio 1.20.92 LT Debt to Equity 2.81.88 Total Debt to Equity 7.145.85 Interest Coverage 4.5414.05 Valuation Ratios Price/Earnings Ratio 4.935.6 Price to Sales P/S0.22.2 Price to Book P/B0.91.2 Free Cash Flow per Share2.26-6.95 Management Effectiveness (%) Return On Assets 1.433.6 Return On Investment 2.186.02 Return On Equity 10.3821.43 Efficiency Receivable Turnover2.54.74 Inventory Turnover12.6811.78 Total Asset Turnover 0.620.67 Free Cash Flow/Net Income1.97-1.28

Profitability ratios indicate earning strengths of the company and financial ratios indicate…

Answered: Compare the two companies based on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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
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

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