financial analysis of the ford motor company



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The Ford Motor Company is an American company that designs, manufactures, and markets cars. It also offers parts and accessories for vehicles. It has three segments, which include Automotive, Mobility, and Ford Credit.

Henry Ford purchased 58.5 percent of the stock in the Ford Motor Company in 1906 and then bought out the other stockholders. He then began building the company's River Rouge plant in Dearborn, Michigan. In 1919, he named his son Edsel Ford president. By 1942, the company had stopped building civilian cars and concentrated on making military vehicles.

The company has manufacturing operations around the world. In Russia, it has a cooperation agreement with the automaker GAZ. The company also repurchased 30 million shares. The company also expanded production in Mexico and South Korea through Kia Motors. In addition to the cars and trucks it produces, Ford also offers loans to car dealers for working capital, real estate, and dealer vehicle programs.

This report is prepared to analyse the financial performance of the Ford Motor Company over 2018, and 2019. This analysis is conducted by using various ratios related to profitability, efficiency, leverage, and liquidity. The data for the analysis has been taken from the annual reports of the company for the years 2017, 2018, and 2019. 

2. Analysis of company’s current position

The ratios computed using data from the annual reported have been presented in the table below:

Financial Ratios









    Current ratio (times)






    Quick or Acid-test ratio (times)









    Accounts receivable turnover (times)






    Inventory turnover (times)






    Total assets turnover









    Debt ratio (%)






    Times interest earned (times)









    Operating income %






    Return on assets (%)  [before tax]






    Return on equity (%)  [before tax]






    Earnings per common share (EPS)







The above table is evident that the current position of the company is worse than the earlier years. If talked about liquidity, it is observed that both current and quick ratios have declined in the year 2019 which indicates that the liquidity position of the company is deteriorating. When it comes to efficiency, accounts receivable turnover and inventory turnover ratios have been increased while total turnover ratio has declined in the year 2019. Higher inventory turnover ratio indicates that the company has made strong sales in the year 2019 and higher accounts receivable turnover ratio indicates that the company has become more aggressive in making collections form its receivables. On the other hand, lower total assets turnover ratio indicates that the company has not made efficient use of its asset in the generation of sales. Overall, it can be said that the efficiency of the company has improved in the year 2019. If talked about leverage ratios, it is observed that debt ratio has increased and times interest earned ratio has declined. Hence, the solvency of the company ahs been deteriorated in the year 2019. The table shows that all the profitability ratios have been declined in the year 2019 which is indicative of the fact that the profitability position the company is not good. 

3. Issues revealed by the financial analysis

The financial analysis has revealed that company failed to generate net profit in the year 2019 which can affect the interest of the shareholders and other stakeholders of the company. Although the company has incurred net loss but it has managed to earn operating profit in the current year which means that the company has spent a lot on indirect expenses or non-operating expenses.

4. Focus to improve financial position    

One of the most pressing issues facing the Ford Motor Company is competition from foreign automakers. The company is pursuing innovative solutions to these problems. They have formed cross-functional teams to develop new ideas for cars and trucks. Each team is given 90 days to develop one idea. It is believed that this will help improve sales of Ford cars.

The Ford Motor Company was founded in 1903 by Henry Ford and today it is one of the most successful companies in the automotive industry. This company has a global presence and operates in two distinct sectors - automotive industry and financial services. Its automotive industry sector markets Ford vehicles while its financial service provides financing to auto dealers and commercial customers. The company's success is a testament to its innovative thinking.

In the next few years, the company will switch from building cars with internal combustion engines to fully electric cars. It is aiming to generate half of its worldwide sales from fully electric cars by 2030. However, this move comes with a price. Some employees will lose their jobs.      

5. Conclusion

 The company has failed to generate profits in the year 2019 which has led to a decline in the profitability ratios. The non-operating expenses of the company have increased which needs to be controlled in order to earn profits and improve its financial position in the future. The company should adopt strategies like focusing on electrification for the future of the company. 


Reports & Filings (no date) Ford Motor Company - Investors – Reports & Filings. Available at:  (Accessed: November 11, 2022).