Ford Motor Company (F)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.01 | 0.01 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.01 | 0.01 |
| Financial leverage ratio | 6.39 | 5.92 | 5.30 | 8.71 | 7.79 |
Ford Motor Co.'s solvency ratios indicate the company's ability to meet its long-term financial obligations. The debt-to-assets ratio has been relatively stable over the past five years, ranging from 0.54 to 0.60. This ratio shows that, on average, 55-60% of Ford's assets are financed by debt.
The debt-to-capital ratio has also shown consistency, ranging from 0.74 to 0.84 over the same period. This ratio indicates that around 74-84% of Ford's capital structure is comprised of debt.
The debt-to-equity ratio has fluctuated more significantly, with values ranging from 2.85 to 5.27. This ratio suggests that the company's debt levels have at times been significantly higher than its equity levels, indicating higher financial risk.
The financial leverage ratio, which takes into account all forms of liabilities, has shown a similar trend to the debt-to-equity ratio, with values ranging from 5.30 to 8.71. This indicates that Ford has a relatively high level of financial leverage, meaning a significant portion of its operations are funded through debt.
Overall, Ford Motor Co.'s solvency ratios suggest that the company has maintained a relatively stable financial structure over the years, with a significant portion of its capital being funded by debt. This highlights the importance of monitoring the company's ability to generate sufficient cash flows to service its debt obligations and sustain its operations effectively.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 1.52 | 1.37 | 0.98 | -0.87 | 0.11 |
The interest coverage ratio for Ford Motor Co. has shown a positive trend over the past five years. In 2023, the interest coverage ratio improved to 6.01, indicating the company's ability to cover its interest expenses increased significantly compared to the previous year. This trend suggests that Ford's earnings before interest and taxes (EBIT) are more than sufficient to cover its interest obligations, reflecting a healthier financial position and reduced financial risk.
In 2022 and 2021, the interest coverage ratios were 3.52 and 3.19, respectively, demonstrating a moderate level of coverage for interest expenses. Although these ratios were positive, they indicate that Ford's earnings were able to cover its interest costs but with less cushion compared to 2023.
The interest coverage ratio was negative in 2020 at -2.07, suggesting that Ford's EBIT was insufficient to cover its interest expenses during that period. This negative ratio could be a cause for concern as it indicates that the company struggled to meet its interest obligations using its operating income.
In 2019, the interest coverage ratio was 1.71, showing a marginal ability to cover interest expenses. While the ratio was positive, it indicates a lower margin of safety and implies a higher financial risk compared to the more recent years.
Overall, the improvement in Ford's interest coverage ratio in 2023 is a positive sign of the company's increasing ability to meet its interest obligations with its operating income. Monitoring this ratio over time can provide insights into the company's financial health and its ability to service debt obligations.