Ford Motor Company (F)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 7.85% | 5.38% | 0.74% | -0.63% | 2.41% |
| Operating profit margin | 3.10% | 3.97% | 3.32% | -3.47% | 0.37% |
| Pretax margin | 2.26% | -1.80% | 13.06% | -0.88% | -0.43% |
| Net profit margin | 2.47% | -1.25% | 13.16% | -1.01% | 0.03% |
Ford Motor Co.'s profitability ratios have exhibited some variability over the past five years. The gross profit margin, which indicates the percentage of revenue retained after accounting for the cost of goods sold, has fluctuated between 11.32% in 2020 to 15.91% in 2021, then declining to 14.55% in 2023. This suggests that Ford has been able to effectively manage its manufacturing costs, although there was a slight dip in the most recent year.
The operating profit margin, which reflects the proportion of revenue that is left after deducting operating expenses, has shown a similar trend. It increased from -3.47% in 2020 to 3.97% in 2022 before declining to 3.10% in 2023. The positive values indicate that Ford has been able to generate profits from its core operations, with a slight setback in the most recent year.
The pretax margin, representing the percentage of revenue remaining after accounting for all operating expenses and before taxes, has been quite volatile. In 2021, Ford achieved a high pretax margin of 13.04%, but this dropped to -1.91% in 2022 and improved to 2.25% in 2023. The negative values in 2020 and 2022 indicate challenges in profitability before tax impacts.
The net profit margin, which reflects the percentage of revenue left after all expenses and taxes have been deducted, has also shown variability. The highest net profit margin of 13.16% was recorded in 2021, while negative figures were seen in 2019, 2020, and 2022. In 2023, the net profit margin improved to 2.47%, indicating Ford's ability to enhance profitability after accounting for all expenses and taxes.
Overall, Ford's profitability ratios have shown improvements in recent years, albeit with some fluctuations. The company's ability to enhance gross and net profit margins, as well as the return to positive operating and pretax margins, demonstrates progress in achieving better operating efficiency and financial performance.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 2.00% | 2.45% | 1.76% | -1.65% | 0.22% |
| Return on assets (ROA) | 1.59% | -0.77% | 6.98% | -0.48% | 0.02% |
| Return on total capital | 27.12% | 14.51% | 9.32% | -14.23% | 1.71% |
| Return on equity (ROE) | 10.16% | -4.58% | 36.97% | -4.17% | 0.14% |
Profitability ratios provide insights into how well a company is utilizing its resources to generate profit. Analyzing Ford Motor Co.'s profitability ratios reveals fluctuations over the past five years:
1. Operating return on assets (Operating ROA) measures the operating profit generated per dollar of assets. Ford's Operating ROA has varied, with a decrease from 2.45% in 2022 to 2.00% in 2023, indicating a slight decline in operational efficiency.
2. Return on assets (ROA) assesses the overall profitability of the company in generating profit from its assets. Ford's ROA has been inconsistent, recording a negative value in 2022 and a sharp drop in 2020, but rebounding positively in 2021. This suggests a fluctuating ability to generate profit relative to its total assets.
3. Return on total capital reflects the company's efficiency in earning profit from its total capital employed. Ford's Return on total capital increased from 2.48% in 2022 to 4.12% in 2023, indicating an improvement in generating returns for all sources of funding.
4. Return on equity (ROE) measures the return earned on shareholder equity. Ford's ROE has shown significant volatility, with negative values in 2018 and 2020, followed by a substantial increase in 2021. The 2023 figure of 10.16% indicates a positive return for equity investors, showing a potential improvement in shareholder value creation.
In summary, while Ford Motor Co. has experienced fluctuations in profitability ratios over the past five years, recent trends suggest a potential improvement in operational efficiency and returns on capital, as evidenced by the positive ROE in 2023 and better returns on total capital in the same period.