Question

Company analysis.  

​for General Motors​ (GM) and Ford Motor Company​ (F), compare these two companies using the following financial​ ratios: times interest earned​ ratio, current​ ratio, total asset​ turnover, financial​ leverage, profit​ margin, and return on equity. Which company would you invest​ in, either as a bondholder or as a​ stockholder?The times interest earned ratio for General Motors is?​(Round to four decimal​ places.)

General Motors Sales $155,447 EBIT $7,703 Interest Expense $299 Net Income $5,299 Current Assets $81,416 Total Assets $166,371 Current Liabilities $62,406 Equity $42,639 Values are expressed in millions of dollars. Ford Motor Company $146,913 $7,705 $762 $7,195 $131,531 $202,046 $19,568 $26,344

Answer 1

( Times interest earned ratio EBIT Total interest Expenses 7 703 General motors = 25.76 General motors have less 299 risk to investors. Ford 77050 = 10.11 762 2) curent ratio cument Assets current liabilities Geneval 8 1416 motors = 1.30 62406 Acceptable cor is 1.5 to 3 Ford 131531 - 19568 - 6.72 klere ford to pay off has more short term ability debts. 3) Tatal Asset turn over Nedsales Average total Assets It indicate how company General motor = 155447 - 166371 = 0.93 146913 = 0.72 assets produces sales Here General motors have more favourable Ford 202046 Оме

(2 4) Financial reverage 11 EBIT EBT 7703 General motors - 1.04 7404 high financial leverage indicate high burden of interest. It is less 1 General motors Ford 7705 El. 10 6943 s Net profit margin Net Income xloo Ned sales General profit motors = 5299 x 100 155 447 – 3.4% It indicates howmach ford 7 195 - x 100 = 146913 4.89.7 earned from the revenue. Here it is beneficial to Ford wwith 4.89% as compared to General Motors 6) ROE Net Income share holders Eaurity = 12.42 7 7 High Rot indicate Ears ability Genevad. motors a 2209 42639 to eam probit without inerea Ford = 7195 I1 26344 = 27.31% sing capital. Here ford has higher Rot