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Since I have been choosing General Electric for the earlier posts and how they have been performing as a company on the market, I chose to have a greater look at their performance with some of the ratios discussed this week. For instance the market price per common share for General Electric today opened at $26.08 while the earnings per share was at 1.22 giving us a price earnings ratio of $21.38. Another closer look at the ratios for General Electric and how their performance can be broken further down is by analyzing their debt ratio, equity ratio, and debt-to-equity ratio.  For instance General Electric has $1,038,000 of liabilities with 3,049,012 worth of assets. 1,038,000/3,049,012=gives us a debt ratio of 0.34.  Another ratio we can use is the equity ratio. We can determine this ratio by total equity/total assets. 1,048,985/3,049,012=0.34 equity ratio as well.  The last ratio we are going to look at for General Electric Company (GE) is the debt-to-equity ratio. This ratio is determined by dividing total liabilities by total equity. The total liabilities was 1,038,000 and a total equity of 1,048,985 which will give us a debt-to-equity ratio of 0.99 debt versus equity financing measurable.

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Ratios are the lifeblood of investing, whether you’re evaluating the price/earning ratios, or the current ratio; the end product desired is a ratio that best benefits your bottom dollar.  The company that I will briefly review, utilizing the aforementioned ratios, is the Ford Motor Company.  The price/earning ratio (market price per common share / earnings per share = P/E Ratio), is the ratio of a company’s current market value per share to its earnings per share.  With Ford, the P/E Ratio is currently 10.83, reflecting a common share price of 17.40 and an earning per share of 1.61.  This 10.83 would represent a “fair value” and would indicate that Ford should preform as expected under normal market conditions.  The current ratio (current assets / current liabilities = current ratio), is the ratio that represents the working capital of a company.  A positive working capital would reflect the company’s ability to meet current debts, to carry significant inventories, and to take advantage of cash discounts.  In the case of Ford, this would be expressed as current assets of 131,585,000 with current liabilities of 19,531,000.  The current ratio would equal 6.74.  This high current ratio would suggest that Ford s well positioned to meet all of its current obligations, however, a high ratio indicates a high level of current assets which do not typically generate a high return on investment.  With those two facts I would more than likely not invest in Ford Motor Company as the company is remained stagnant as of late in regards to it’s P/E Ratio and the overall rate of return on investment is low. 

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