Returns on assets, equity, and capital, gross, and SG&A margins, current and quick ratios, total debt/equity, total revenue and gross profit are all parts of a large financial picture that will give us an estimate of the health of a company. Subaru is the eighth largest auto manufacturer in the United States and has carved out a reputation for being a reliable car with legendary all-wheel drive and longevity. Evaluating Subaru’s financial statements gives us a picture of a strong company that is performing exceedingly well given the current market that is geared towards trucks and SUV’s. Subaru will remain a strong competitor well into the future if they remain innovative and aware of changes in the market. Return on assets is the net income divided by the total assets. According to Morningstar Subaru has …show more content…
Short-term assets are those that a company has the ability to turn into cash within 90 days. Subaru currently has a 1.30 ratio, followed by Ford at 1.08 and GM at .86, which is not currently the best outlook for GM. Similar in nature to the current ratio a positive number indicates positive liquidity and is a good sign for investors. Total debt and equity allows us to analyze how much debt compared to the equity that is available. The formula is simple, we take the total debt divided by the total equity and this gives us a ratio that we can use to determine if a company has an excess amount of debt compared to other companies within the industry (Hill, 2017). Subaru has a debt to equity ratio of .02, Ford at 4.42, and GM at 2.69. Ford having a high debt/equity ratio can indicate a large amount of debt being taken on to increase operations and increase its profitability. Subaru having a ratio of almost zero tells us that they are not taking on a lot of debt, which is a great sign for