Ford Motor Company Vs General Motors

Calculate the ROA to find out how much profit was generated from the assets (Table 5). The existence of unnecessary wasted assets can become an obstacle to the execution of strategy. Conversely, if they can utilize assets without waste, it will be possible to carry out the strategy with less cost. In the total assets, which calculated the management resources by the amount, it is possible to know the profitability and the efficiency on a companywide basis. Figure 6 shows the trend of ROA for five years at Toyota's FY 2011 to 2015. Regarding FY 2011 to 13, it can consider a substantial recovery in net income and an increase in total assets due to an increase in notes receivable. Meanwhile, after FY 2014, the profit margin growth

Net Margin is the ratio of net profits to revenues of a company. It is used as an indicator of a company’s ability to control its costs and how much profit it makes for every dollar of revenue it generates. Net Margin is calculated using the formula: Net Margin = (Net Profit / Revenues ) * 100 Net margins vary from company to company with individual industries having typically expected ranges given similar constraints within the industry. For example, a retail company might be expected to have low net margins while a technology company could generate margins of 15-20% or more. Companies that increase their net margins over time generally see their share price rise over time as well as the company is increasing the rate at which it turns dollars earned into profits.

In terms of industry profitability, it appears that profit margins have a tendency to fall. This is because competition is high and customers tend to buy low-priced high-value items. The average gross margin and net profit margin is 37.1% and 14.3%, respectively (MSN Money, 2010).

Ratio analysis: Perform trend and ratio analysis on current and fixed assets, current and long term liabilities, owner’s equity, sales revenues, EBIT, net income, and earnings per share. Project these trends

This data set is divided into three categories, this paper compares only three ratios for each category; Solvency Ratios: Quick Ratio, Current Ratio, and Current Liabilities to Inventory Ratio; Efficiency Ratios: Collection Period Ratio, Assets to Sales Ratio, and Accounts Payable to Sales Ratio; Profitability Ratios: Return on Sales Ratio, Return on Assets, and Return on Net Worth.

I will be comparing both companies General Motors Company and Ford Motor Company for the past three years. We will be able to see all the trends these two automotive manufacturers have and which one may be better to invest in by looking at the last few year’s ratios and percentages. This will give us a better understanding and the knowledge of who maybe the industry leader and who is the follower. These are both major corporations that strive off customer loyalty and both competing on a global scale to make their mark in the one of the top automotive manufacturers in the world. This analysis will give us an understanding of what lies ahead in the future for these two manufacturers.

Ford’s market share is higher because they are the second largest automobile company in the U.S and fourth largest in the world. Moreover they are the fifth largest vehicle seller.

Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.

The analysis will be base on the most important ratios as, Liquidity, Profitability, and Solvency Ratios.

Gross profit is defined as the difference between Sales and Cost of Sales. The gross margin (or gross profit ratio) expresses the gross profit as a proportion of net sales. The gross profit margin ratio measures how efficiently a company uses its resources, materials, and labour in the production process by showing the percentage of net sales remaining after subtracting the cost of making and selling a product or service. It indicates the profitability of a business before overhead costs. The higher the percentage, the more the business retains of each dollar of sales. So: the higher the gross profit margin ratio, the better.

The Ford Motor Company and General Motors have greatly influenced and shaped the global automobiles industry over the 20th Century. While there are other big car-makers both in the United States and elsewhere in the globe, the two companies have been the commonest and significant players across the entire sector. This research focuses on an argument of how competition between both companies has benefited them.

The Net Profit Margin in 2012 was 10.5% while in 2013 it was 66.6%. This increase in the Net Profit Margin can be attributed to the increase in net profits after taxes despite the fact that there was a slight decrease in revenues.

Profit Margin: -This ratio relates the operating profit to the sales value (Walker, 2009). It tells us the amount of net profit per pound of turnover a business has earned.

The gross profit margin measures the amount of profits that a company generates from its operations without consideration of its indirect costs. Thehigher thegross profit margin, the greater the efficiency of a company’s operations (Besley & Brigham 2007). It means that the company is generating enough income to cover its operating expenses. On the contrary, a lower gross profit margin indicates that the business is not generating adequate income to cover its operating expenses.

Ford Motor Company preserves its place as one of the largest makers of vehicles globally by making changes to its strategies. Ford needs to create a plan of action and ideas that react to the most substantial effects from outside divisors in the motor vehicle industry globally. The Five Forces analysis of Ford Motor Company recognizes the most significant outside elements and how they affect the company, rendering data that helps in management’s decision-making process.