Debt Ratios

The Ford Motor Company (F) designs, manufactures, markets, and sells cars, trucks, and sport utility vehicles (SUVs). Ford is a major competitor of General Motors Company (GM). The following data (in millions) were adapted from recent financial statements of Ford Motor Company:

		Year 2		Year 1
Total assets		$258,537		$256,540
Total liabilities		225,352		220,608
Total stockholders' equity		33,185		35,932

1. Compute the debt ratio for Years 1 and 2. Round to one decimal place.

	Year 2	Year 1
Debt ratio	_____ %	_____ %

2. Given your answer to part (1), what is the ratio of stockholders' equity to total assets? Round to one decimal place.

	Year 2	Year 1
Ratio of stockholders' equity to total assets	______ %	_____ %

3. Are Ford's operations financed primarily with debt or equity?

Debt or Equity

4. Total liabilities have

increased or decreased

as a percent of total assets in Year 2; thus, creditors would feel

less or more safe.