Financial Ratio Analysis Report of Ford Motor Company Essays
Gross margin tends to remain stable over time. However, this ratio is still crucial to evaluate, because fluctuations can be a sign of fraud or irregular financials. A higher gross margin than other companies in the industry also shows more efficiency. Ford's consistency in this ratio speaks well of the company's stability. The fact that the company is consistently ahead of the industry also speaks highly of Ford's efficiency rate.
Operating margin also measures management's efficiency. It does so by comparing the quality of a company's operations to others in the industry. A higher operating margin tends to mean lower fixed costs and better gross margin. This gives management more flexibility when setting prices, which is particularly important during times of financial hardship. This is another area where Ford is slowing turning things around. It is no surprise, though, that the company is also fairing above industry averages in this area.
Net profit margin is how much profit a company makes for every dollar it generates in revenue. Usually, the higher the company's net profit margin,…