Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Ford Motor Co., liquidity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.07 | 1.16 | 1.20 | 1.20 | 1.20 | |
| Quick ratio | 0.90 | 0.98 | 1.01 | 1.02 | 1.03 | |
| Cash ratio | 0.33 | 0.36 | 0.40 | 0.45 | 0.55 |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The liquidity position, as indicated by the presented ratios, demonstrates a consistent, albeit gradual, decline over the five-year period. All three measured ratios – current, quick, and cash – exhibit downward trends, suggesting a decreasing ability to meet short-term obligations using readily available assets.
- Current Ratio
- The current ratio remained stable at 1.20 for the first three years. A slight decrease to 1.16 is observed in 2024, followed by a further reduction to 1.07 in 2025. This indicates a diminishing cushion of current assets relative to current liabilities.
- Quick Ratio
- The quick ratio follows a similar pattern of decline, starting at 1.03 in 2021 and decreasing to 0.90 in 2025. The rate of decline appears to accelerate in the later years. This suggests a weakening ability to cover immediate liabilities with the most liquid assets, excluding inventory.
- Cash Ratio
- The cash ratio shows the most pronounced decline, decreasing from 0.55 in 2021 to 0.33 in 2025. This indicates a consistent reduction in the proportion of current assets held as cash and cash equivalents, representing a decreasing capacity to cover short-term liabilities with the most liquid assets available.
Collectively, these trends suggest a potential increase in liquidity risk over time. While the ratios remain above one for the current and quick ratios throughout the period, the consistent downward movement warrants monitoring and further investigation into the underlying causes, such as changes in working capital management or increased short-term debt.
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Current Ratio
Ford Motor Co., current ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 123,487) | 124,474) | 121,481) | 116,476) | 108,996) | |
| Current liabilities | 114,890) | 106,859) | 101,531) | 96,866) | 90,727) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.07 | 1.16 | 1.20 | 1.20 | 1.20 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| General Motors Co. | 1.17 | 1.13 | 1.08 | 1.10 | 1.10 | |
| Tesla Inc. | 2.16 | 2.02 | 1.73 | 1.53 | 1.38 | |
| Current Ratio, Sector | ||||||
| Automobiles & Components | 1.25 | 1.26 | 1.21 | 1.20 | 1.18 | |
| Current Ratio, Industry | ||||||
| Consumer Discretionary | 1.18 | 1.22 | 1.20 | 1.15 | 1.25 | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Current ratio = Current assets ÷ Current liabilities
= 123,487 ÷ 114,890 = 1.07
2 Click competitor name to see calculations.
The current ratio remained relatively stable between 2021 and 2023, then exhibited a declining trend in the subsequent two years. This indicates a potential shift in the company’s short-term liquidity position.
- Current Ratio Trend
- The current ratio was consistent at 1.20 from 2021 through 2023. A slight decrease to 1.16 was observed in 2024, followed by a more pronounced decline to 1.07 in 2025. This suggests a weakening ability to cover short-term obligations with short-term assets over the analyzed period.
Concurrent with the ratio’s decline, both current assets and current liabilities increased over the five-year period. However, current liabilities grew at a faster rate than current assets, contributing to the observed reduction in the current ratio.
- Asset and Liability Changes
- Current assets increased from US$108,996 million in 2021 to US$123,487 million in 2025, representing a net increase of approximately 13.3%. Current liabilities experienced a more substantial increase, rising from US$90,727 million in 2021 to US$114,890 million in 2025, a net increase of approximately 26.6%.
The decreasing current ratio, coupled with the faster growth of current liabilities, warrants further investigation into the composition of both current assets and current liabilities. Understanding the specific components driving these changes is crucial for a comprehensive assessment of the company’s short-term financial health.
- Implications of the Trend
- A current ratio approaching 1.00 may indicate increasing liquidity risk. While a ratio of 1.00 suggests the company has enough current assets to cover current liabilities, a lower ratio provides a smaller margin of safety and could potentially lead to difficulties in meeting short-term obligations. Continued monitoring of this trend is recommended.
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Quick Ratio
Ford Motor Co., quick ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 23,356) | 22,935) | 24,862) | 25,134) | 20,540) | |
| Marketable securities | 15,131) | 15,413) | 15,309) | 18,936) | 29,053) | |
| Ford Credit finance receivables, net of allowance for credit losses | 49,130) | 51,850) | 46,425) | 38,720) | 32,543) | |
| Trade and other receivables, less allowances | 15,398) | 14,723) | 15,601) | 15,729) | 11,370) | |
| Total quick assets | 103,015) | 104,921) | 102,197) | 98,519) | 93,506) | |
| Current liabilities | 114,890) | 106,859) | 101,531) | 96,866) | 90,727) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.90 | 0.98 | 1.01 | 1.02 | 1.03 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| General Motors Co. | 0.92 | 0.90 | 0.83 | 0.86 | 0.84 | |
| Tesla Inc. | 1.53 | 1.42 | 1.13 | 0.94 | 1.00 | |
| Quick Ratio, Sector | ||||||
| Automobiles & Components | 0.99 | 1.00 | 0.95 | 0.94 | 0.95 | |
| Quick Ratio, Industry | ||||||
| Consumer Discretionary | 0.87 | 0.91 | 0.86 | 0.81 | 0.93 | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 103,015 ÷ 114,890 = 0.90
2 Click competitor name to see calculations.
The quick ratio exhibited a consistent, albeit gradual, decline over the five-year period examined. While remaining above one for the duration of the analysis, the trend suggests a weakening in the company’s ability to meet its short-term obligations with its most liquid assets.
- Quick Ratio Trend
- The quick ratio began at 1.03 in 2021 and decreased to 0.90 in 2025. This represents a cumulative decrease of 12.6% over the five years. The rate of decline accelerated in the later years of the period.
Total quick assets demonstrated a general upward trend, increasing from US$93,506 million in 2021 to US$104,921 million in 2024 before experiencing a slight decrease to US$103,015 million in 2025. However, the growth in quick assets was consistently outpaced by the growth in current liabilities.
- Quick Assets
- Quick assets increased by approximately 11.7% between 2021 and 2024, indicating a growing pool of readily convertible assets. The marginal decrease in 2025 suggests a potential stabilization or slight reduction in these liquid holdings.
- Current Liabilities
- Current liabilities increased more substantially, rising from US$90,727 million in 2021 to US$114,890 million in 2025, representing a 26.6% increase over the period. This faster growth in liabilities is the primary driver of the declining quick ratio.
The decreasing quick ratio, coupled with the increasing current liabilities, indicates a potential increase in short-term financial risk. While the company maintains a quick ratio above one, the trend warrants continued monitoring to ensure sufficient liquidity is maintained to cover short-term obligations.
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Cash Ratio
Ford Motor Co., cash ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 23,356) | 22,935) | 24,862) | 25,134) | 20,540) | |
| Marketable securities | 15,131) | 15,413) | 15,309) | 18,936) | 29,053) | |
| Total cash assets | 38,487) | 38,348) | 40,171) | 44,070) | 49,593) | |
| Current liabilities | 114,890) | 106,859) | 101,531) | 96,866) | 90,727) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.33 | 0.36 | 0.40 | 0.45 | 0.55 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| General Motors Co. | 0.30 | 0.28 | 0.28 | 0.34 | 0.39 | |
| Tesla Inc. | 1.39 | 1.27 | 1.01 | 0.83 | 0.90 | |
| Cash Ratio, Sector | ||||||
| Automobiles & Components | 0.46 | 0.44 | 0.43 | 0.45 | 0.52 | |
| Cash Ratio, Industry | ||||||
| Consumer Discretionary | 0.50 | 0.52 | 0.48 | 0.47 | 0.64 | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 38,487 ÷ 114,890 = 0.33
2 Click competitor name to see calculations.
The cash ratio exhibited a consistent decline over the five-year period from December 31, 2021, to December 31, 2025. While total cash assets decreased, current liabilities increased, contributing to this downward trend. This suggests a weakening in the company’s immediate ability to meet its short-term obligations with only cash and cash equivalents.
- Cash Ratio Trend
- The cash ratio decreased steadily from 0.55 in 2021 to 0.33 in 2025. This represents a 40% reduction in the proportion of current liabilities covered by available cash. The most significant decline occurred between 2022 and 2023, dropping from 0.45 to 0.40, and continued at a similar pace through 2025.
- Total Cash Assets
- Total cash assets experienced a gradual decrease from US$49,593 million in 2021 to US$38,487 million in 2025. The largest year-over-year reduction was observed between 2021 and 2022, with a decrease of US$5,523 million. Subsequent annual declines were more moderate, ranging from approximately US$1,700 to US$2,200 million.
- Current Liabilities
- Current liabilities demonstrated a consistent upward trend throughout the period, increasing from US$90,727 million in 2021 to US$114,890 million in 2025. The rate of increase accelerated over time, with the largest annual increase of US$8,031 million occurring between 2024 and 2025. This suggests a growing reliance on short-term financing or an extension of payment terms to suppliers.
The combined effect of decreasing cash assets and increasing current liabilities resulted in a progressively lower cash ratio. Continued monitoring of these trends is warranted to assess potential risks to short-term liquidity.
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