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INTRODUCTION General Motors and the Ford Motor Company are the number one and number two automotive manufacturers in the United States respectively Both companies strive for success each and every year The success of these two automotive giants as well as other corporations can be measured by analyzing a few important goals of management the companys solvency liquidity and profitability To enable investors and creditors to analyze these goals each company distributes annual financial statements With these financial statements each company can be measured by analyzing factors such as return on sales current ratio earnings per share EPS debt ratio and their price-earning ratio Liquidity Liquidity can be defined as having enough money on hand to pay bills when they are due and to take care of unexpected needs for cash while profitability refers to the ability of business to earn a satisfactory income Moodys Investor Service a provider of independent credit ratings and financial research information and is a standard in the financial world reported that Fords liquidity remains very strong with 23 billion in cash securities and short-term voluntary employee beneficiary association balances That report is of March 31 2005 GMs liquidity is positioned at 32 billion in balance sheet debt 3 billion in present value of leases and about 9 billion in un-funded pension liabilities mostly international Moodys Investor Services estimated that GMs balance sheet debt should mature within 19 years with only about 3 billion maturing over the next five years Profitability The profit margin which is net income divided by net sales is a measure of how many dollars of net income is produced by each dollar of sales The Ford Motor Company is claiming the higher prices for gasoline raw materials and health care among other things when describing why its 2005 earnings will fall as much as 35 percent from the previous year The automaker also said it no longer expects to post annual
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