Annual Report (Year ended December 31 2010, Numbers in millions)
Operating Profit as a % of Sales:
Operating Profit= $6,658 Sales= $128,954
$6,658/$128,954=0.0516=5.2%
Net Profit as a % of Sales:
Net Profit=$6,561 Sales=$128,954
$6,561/$128,954=0.0508=5.1%
Return on Equity:
Net Profit=$6,561 Total Stockholder’s Equity= ($673)
$6,561/($673)=(9.74)=(974%)
Current Ratio:
Current Assets=$48,875 Current Liabilities= $60,206
$48,875/$60,206=0.8
Debt to Equity Ratio:
Total Liabilities=$165,360 Total Stockholder’s Equity= ($673)
$165,360/($673) = (245.7)
Ford Motor Company has a negative financial leverage because of the negative stockholder’s equity. This negative debt ratio indicates that the company is facing financial problems in its structure and hence it is not advisable for an investor to invest in this company.
Stock Information found on Yahoo Finance on December 6, 2011 at 1:57pm
Current Price per Share: $11.09
Highest Price per Share: $18.79, week of January 27, 2011
Lowest Price per Share: $9.67, week of September 30, 2011
P/E Ratio:
Current Price per Share=$11.09 Earnings per Share=$1.67
$11.09/$1.67= 6.6
Market Value:
Current Price per Share=$11.09 Shares Outstanding=$3,426,510
$11.09*$3,426,510=$38,000,000
Market Value Added:
Market Value=$38,000,000 Total Stockholder Equity=($673)
$38,000,000-($673)= $38,000,673
In my opinion, Ford Motor Company is not suitable for investment despite having a high market value added. The stock prices are not constant, the return on equity is negative and so is the stockholders’ equity.
Works Cited
Ford Motor Company
http://finance.yahoo.com/q/bs?s=F+Balance+Sheet&annual
http://finance.yahoo.com/q/is?s=F+Income+Statement&annual
