Ford Motor Company (F)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 10.37 | 10.62 | 11.22 | 11.84 | 14.11 |
| Receivables turnover | 2.84 | 2.90 | 3.10 | 2.43 | 2.48 |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 8.83 | 8.06 | 7.46 | 6.50 | 9.80 |
Ford Motor Co.'s inventory turnover ratio has been relatively stable over the past five years, averaging around 9 to 10 times. This suggests that the company efficiently manages its inventory by quickly selling and replenishing it.
The receivables turnover ratio has shown some fluctuations but generally indicates that Ford collects its accounts receivable efficiently. The higher the ratio, the faster the company is collecting payments from its customers, with a decreasing trend noted since 2020.
The payables turnover ratio reflects the speed at which Ford pays its suppliers. The ratio has steadily decreased over the years, implying that the company is taking longer to settle its payables.
Unfortunately, no data is available for the working capital turnover ratio, which could have provided insights into how effectively Ford is utilizing its working capital to generate sales revenue. This missing information limits a comprehensive analysis of Ford’s activity ratios.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 35.18 | 34.36 | 32.54 | 30.83 | 25.88 |
| Days of sales outstanding (DSO) | days | 128.49 | 125.74 | 117.56 | 150.41 | 147.24 |
| Number of days of payables | days | — | — | — | — | — |
Activity ratios such as Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables provide insight into how efficiently a company is managing its inventory, collecting receivables, and paying its suppliers.
From the data provided for Ford Motor Co. over the past five years, we observe the following trends:
1. Days of Inventory on Hand (DOH):
- Ford's DOH has fluctuated over the years, ranging from 29.23 days in 2019 to 38.41 days in 2021.
- In general, an increase in DOH may indicate slower inventory turnover, potentially tying up capital in inventory for a longer period.
2. Days of Sales Outstanding (DSO):
- DSO has also varied, with the lowest being 21.63 days in 2019 and the highest at 36.32 days in 2022.
- A higher DSO suggests that it takes Ford longer to collect the cash from its sales, which could impact cash flow and liquidity.
3. Number of Days of Payables:
- The number of days of payables has fluctuated as well, ranging from 56.02 days in 2019 to 71.88 days in 2020.
- An increase in the number of days of payables could indicate that Ford is taking longer to pay its suppliers, potentially improving its working capital position in the short term.
In analyzing these activity ratios, it is important to consider industry benchmarks and compare Ford's performance with its competitors to assess its efficiency in managing inventory, receivables, and payables. Additionally, trends in these ratios over time can provide insights into Ford's operational performance and potential areas for improvement in its working capital management.
See also:
Ford Motor Company Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.32 | 4.24 | 3.67 | 3.43 | 4.27 |
| Total asset turnover | 0.64 | 0.62 | 0.53 | 0.48 | 0.60 |
The fixed asset turnover ratio measures the efficiency with which a company utilizes its fixed assets to generate sales. Ford Motor Co. has shown a consistent improvement in this ratio over the past five years, with values ranging from 3.43 to 4.32. This indicates that the company is effectively using its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio reflects how efficiently a company utilizes all its assets to generate sales. Ford Motor Co. has also shown improvement in this ratio over the years, with values increasing from 0.48 in 2020 to 0.64 in 2023. This suggests that the company is becoming more efficient in generating sales relative to the size of its asset base.
Overall, the upward trend in both the fixed asset turnover and total asset turnover ratios for Ford Motor Co. indicates an improvement in the company's operational efficiency and effectiveness in utilizing its assets to generate revenue. This trend is a positive signal for investors and stakeholders, as it signifies better utilization of resources and potential for increased profitability in the long term.