Question

In: Finance

Select any Fortune 1000 company. Access the income statments and balance sheets for your Fortune 1000...

Select any Fortune 1000 company. Access the income statments and balance sheets for your Fortune 1000 company and it's largest competitor here: http://finance.yahoo.com/ (Links to an external site.)Links to an external site.

http://fortune.com/fortune500/list/ (Links to an external site.)Links to an external site.

Analyze the financials year-over-year (2 years) for both firms and explain in your initial post which company is stronger.

Solutions

Expert Solution

I have analyzed two biggest giants in automobile industries. Ford VS General Motors

Lets compare these two companies based on following parameters.

1. Valutation

Investors look for price-to-earnings ratio to determine great buying opportunities. After all, buying a stock makes one a partial owner of that company, so investors are inherently interested in profitability.

Here is a look at the Forward P/E trend for GM and F over the last year:

As investors can see, Ford has consistently traded at a premium to GM over the last year.

2. Perfomance

As an investor one should also be interested in a stock’s recent price performance.

Check out how GM and F have performed since this time last year:

As we can see, General Motors outpaced Ford for almost a full year. But remember if stock is sold significantly , there is a greater risk of investor to flee.

3. Liquidity Ratios

Ratio comparison
Ratio Ford General Motors
31.03.2018 31.03.2018
Current Ratio 2.04% 0.88%
Quick Ratio 1.85% 0.74%

As you can see ford has outperformed in both ratios. If has better capacity to pay its short term obligations. while high quick ratio indicates better capacity to covert inventory into cash.

Hence for me , ford is stronger than general motors


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