Ford Motor Company
GROUP PROJECT
ACC 505 - FINANCIAL ACCOUNTING 12/01/96
TABLE OF CONTENTS
DESCRIPTION PAGE
INTRODUCTION........................................................1
LIQUIDITY...........................................................1-3
Working Capital...................................................1
Current Ratio & Quick Ratio.......................................2
Receivable Turnover & Average Days' Sales Uncollected.............2-3
Inventory Turnover & Average Days' Inventory on Hand..............3
PROFITABILITY.......................................................3-7
Profit ...
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automotive corporation, strives for
success each and every year. The success of Ford Motor Company, as well as
other corporations, can be measured by analyzing the two most important goals of
management, maintaining adequate liquidity and achieving satisfactory
profitability. Liquidity can be defined as having enough money on hand to pay
bills when they are due and to take care of unexpected needs for cash, while
profitability refers to the ability of business to earn a satisfactory income.
To enable investors and creditors to analyze these goals, Ford Motor Company
distributes annual financial statements. With these financial statements,
liquidity of Ford Motor Company is measured by analyzing factors such as working
capitol, current ratio, quick ratio, receivable turnover, average days' sales
uncollected, inventory turnover and average days' inventory on hand; whereas
profitability analyzes the profit margin, asset turnover, return on assets, debt
to equity, and return on ...
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the current ratio and quick ratio.
Receivable Turnover & Average Days' Sales Uncollected
An examination of trends in Ford Motor Company's receivable turnover and average
days' sales uncollected ratios reveal positive indicators of Ford's liquidity
position. The receivable turnover, a function of net sales and average accounts
receivable, has nearly doubled in the years 1993-1995 versus 1991-1992. This
trend indicates an extensive increase of net sales in relation to accounts
receivable. Receivables were relatively higher in 1994 than in any other of the
five years, affecting the ratio for both 1994 and 1995. However, net sales
increased 30% in 1994 and 34% in 1995 over the average ...
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"Ford Motor Company." Essayworld.com. February 13, 2004. Accessed January 22, 2025. http://www.essayworld.com/essays/Ford-Motor-Company/2979.
"Ford Motor Company." Essayworld.com. February 13, 2004. Accessed January 22, 2025. http://www.essayworld.com/essays/Ford-Motor-Company/2979.
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