Some Investors Keep Making This Ford Mistake

Metrics and ratios can be great. They take complicated bits of information and put them in a form that allows you to make comparisons among competitors or industries. They can give you valuable insight into company performance and whether management is improving certain aspects of the business. But they can also give you the wrong idea if you don't have proper context or understanding. I recently came across a misunderstanding related to Ford Motor Company's (NYSE: F) debt-to-equity ratio -- here's what it was, and what you can learn from it.I recently came across an article that said something to the effect of: "Ford uses its extensive debt to improve its returns. It has a shockingly high debt-to-equity ratio of 3.46." While this number is technically right, the analysis is unacceptably wrong. To start, let's better explain the debt-to-equity ratio, and why Ford's inputs need adjusting. The debt-to-equity (D/E) ratio evaluates a company's financial leverage and is calculated by dividing total liabilities by shareholder equity.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool