This report will deal with the financial analisys of two main competitors of car market. Effectively, Ford and BMW (Bayerish Motoren Werke AG) are two important car manufacturers in the world. Even if they are competing on the same market, we can't say that these two manufacturers are directly in competition. In fact,the two firms are not targetting the same consumer. Ford is a popular brand contrary to BMW which is producing more exclusive cars of higher quality. BMW sells quite expensive cars contrary to Ford which has always produced low price cars. We can remember the fact that Ford was the first car manufacturer to process through mass production with the Ford "T" in 1913. This production process was a great invention which changed the industry world. Ford is present wordwide and is one of the most famous brand of the world. Ford has a very huge range of products because it proposes adapted products to the different markets. For example, Ford is selling pick-ups (long cars) in the US market which represent the main part of its sales. In Europe, Ford proposes small cars at low prices to attract people. Pick-up are not adapted to the European consumers. Ford's best sales in Europe are the "Fiesta" models, which are small cars with poor motors (contrary to the US market where people are fond of big motors, even if it is changing because of the rise of the petrol prices). Contrary to Ford, BMW hasn't any specific offer for different markets. BMW has a unique range of product. This range is quite wide because BMW has diversified its segment market since the end of the 90's. BMW has really grown during the 90's because of its attractive cars which are creating passion among the potential consumers. BMW is the favorite generalist brand of the world (cf: L'automobile Magazine's study). BMW has a great image of quality and sport. Thanks to this notoriety, BMW has become very successful and profitable, what has increased its offer.
[...] It represents the capacity of Ford to pay its liability only with the quick avaible money. The efficiency ratios These ratios represent the efficacity of the use of the assets. It calculates if the investments are productive or not. Asset turnover ratio = sales / average total assets = 149,3533 / (232,9728 + 214,4861) / 2 = 149,3533 / 223,72945 = 0,66 This ratio compares the revenue of the sales with the capital invested in assets. These figures means that every Euro invested in the assets generates 0,66 Euros. [...]
[...] The net profit margin ratio represents of the revenues which is very low (in addition, we can add that these figures seem to be far from the reality because they are published directly by Ford . Concerning the R.O.E ratio, we can say that it constitutes one of the main reason of the difference of profitability between the two firms. Effectivelly, if we make a zoom on Ford's past investments, we see that the American firm has purshased two English car manufacturers. [...]
[...] Part BMW financial analysis The financial analysis of BMW will be exactly done like the Ford's one to allow a good comparison. So, we're going to study like in the first part three different sets of ratios: the liquidity ratios, the efficiency ratios and the profitability ratios. Let's start with the study of the liquididy ratios The liquidity ratios Current ratio = current assets / current liabilities = 27,007 / 28,0813 = 0,9617 = This ratio means that BMW has 0,9617 in current assets for every 1 invested in current liabilities. [...]
[...] Taking advantages of the collapsing of English car industry, BMW bought during the 90's two English brands: Rolls Royce and the Mini liscence of exploitation. Rolls Royce is one of the most luxurious car manufacturer of the world (average sell price is more than Euros!). Like Ford with Aston Martin, BMW wanted to take advantage of the great brand image of Rolls Royce. Today, Rolls Royce range of products has been well developed as the sales and the English brand has become viable. [...]
[...] Conclusion Comparison Ford BMW Liquidity ratios / / Efficiency ratios / / Profitability ratio / / In this global conclusion, we're going to compare the two financial analysis of Ford and BMW. In the first part we have seen that Ford is in trouble because its future appears uncertain. Effectivelly, we have seen that the american brand is not taking advantage of this results. We analysed that Ford's liquidity ratios are more or less acceptable because they are all positive, contrary to BMW. [...]
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