ained relatively steady over the last 5 years. 1998’s debt ratio was 82.65%. This shows how they were relying heavily on borrowed funds to finance operations. This is further evinced by Ford’s debt-to-equity ratio of 4.77 in 1998, which is up from past years. Compared to the 1.97 industry average, Ford’s number appears quite high. Ford’s times-interest-earned for 1998 was 3.68, an increase from previous years. This could be due to the $15,955 million gain Ford recorded as a result of the spin-off of their interest in The Associates, Inc. The liquidity of Ford, indicated by its current ratio of .41, shows that they have many current liabilities. This number is much lower than the industry average of 1.8. Ford’s quick ratio has trended upward over the last 4 years, with 1998 finishing at .29. This is, again, below the industry average of .90. With a company as large as Ford, having as many current liabilities as they do is not necessarily an indication of a problem. DupontFord’s efficiency can be determined by examining the asset turnover ratio and the days inventory held ratio. These show how effectively Ford is using its assets. The asset turnover ratio for Ford has averaged .71 times over the last 5 years. 1998 turnover was .79 times. The days inventory held ratio for Ford has fluctuated over the past 5 years. Ford’s reduction from their 1994-1995 average of 25.79 days to 22.25 in 1996 was a significant improvement. Their further reduction to a 1997-1998 average of 19.07 shows a continued effort by Ford to reduce inventory costs. Days sales outstanding (average collection period) in 1994-1997 saw a range of 8.23 days to 9.24 days. Ford improved this number significantly in 1998 to 6.49 days.Ford’s profitability is measured by the net profit margin, rate of return on assets (ROA), payout ratio, and rate of return on common shareholder’s equity (ROE). Ford’s ...
