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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

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

FINANCIAL ACCOUNTING
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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