GM Financial Overview Introduction The General Motors Corporation is a multifaceted company but its primary function is the manufacturing of automobiles and light trucks (SIC 3711). The General Motors stock is listed on the New York Stock Exchange and has approximately 1,426,592,046 outstanding shares on the marketplace, as of 10/14/2001. It is headquartered in Detroit Michigan with offices around the world. General Motors has many other operations besides automobile manufacturing including: General Motors Acceptance Corporation Financial Services, Hughes Electronics Corporation, and the GM Locomotive Group. (Disclosure.com) Financial Statement Analysis Overall, General Motors has had five profitable years with increasing sales during the same period. GM has also paid a fixed dividend to its shareholders over the same period. The one-year, which was below average for GM, was 1998. During this period, GM was restructuring its top management and operations and also incurred a union strike of 54 days. However, GM did return to better performance in 1999 and 2000. GM overall was able to attain a fixed dividend of $2.00 per share and increase the shareholders value over the past five years. The first observation from the financial data in appendix one is that General Motors has a low profit margin and is generally less than the industry average each year. The firm is able to keep a low profit margin because they have such high sales volumes throughout the world. This strategy can be both an asset and liability in business planning. The plus side of the strategy is that GM is able to sell a large number of vehicles in the marketplace due to the lower selling price as compared to the competitor. However, the down side of the strategy is that there is a possibility that if sales volumes decrease, the firm can incur a significant decline in the EPS because the profit margin on each item sold is very low. If the global economy sours, GM can have a very difficult time meeting shareholder expectations. Another observation is that GM looks to use more debt financing that equity financing for funding their activities. The debt to equity ratio has steadily decreased over the past five years and is higher that the industry average. Also, the current and quick ratios are much lower than the industry averages. This again can pose so... ... middle of paper ... .... 1996 edt. (1997) (page 320). Murray Hill, NJ: Dun & Bradstreet. Dun & Bradstreet. Industry Norms and Key Business Ratios. 1995 edt. (1996) (page 327). Murray Hill, NJ: Dun & Bradstreet. General Motors Corp. (2001, October 14). Retrieved on October 20, 2001 from www.disclosure.com. General Motors Corporation 1998 Annual Report. (1998). (pp. 55 – 83). General Motors Corporation 1999 Annual Report. (1999). (pp. 53 - 93). General Motors Corporation 2000 Annual Report. (2000). (pp. 41- 79). Standard & Poor’s. General Motors (GM). (1999) Standard Corporation Descriptions. (pp. 6000 – 6003) New York, NY: McGraw-Hill. Troy, PhD., Leo. Almanac of Business and Industrial Financial Ratios. 32nd edt. (2001) (page 159) Paramus, NJ: Prentice Hall. Troy, PhD., Leo. Almanac of Business and Industrial Financial Ratios. 31st edt. (2000) (page 159) Paramus, NJ: Prentice Hall. Troy, PhD., Leo. Almanac of Business and Industrial Financial Ratios. 30th edt. (1999) (page 159) Paramus, NJ: Prentice Hall. Troy, PhD., Leo. Almanac of Business and Industrial Financial Ratios. 29th edt. (1998) (page 159) Paramus, NJ: Prentice Hall.
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General Electric Company (GE) is a diversified technology, media and financial services company. With products and services ranging from aircrafts engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and industrial products, it serves in more than 100 countries. This analysis will use financial ratios to see just how GE is performing as a Fortune 500 company.
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
The ratio of 1.7 for the last two years indicates consistency, although a lower number is preferred. As a company produces high value product, this could be a satisfactory ratio. By comparing it to 2011 when a ratio was 2.9, in the last two years a ratio improved
For bouth companies, balance sheets and income statements were downloaded from www.marketwatch.com (The Wall street Journal, January 8 2014). In that source, data on 5 years (instead of required 4) were provided, which would enable calculations of some average ratios where values in the beginning end the end of a year are necesarry. This was not used, and all calculated ratios were done with end year data.
General Motors Company (GM) is one of the world largest manufacturers in the automotive industry today. GM value chain of activities include designing and engineering vehicles with state-of-the-art technology, research and develop new models and innovations, as well as creating effective marketing strategies to up sell and compete in its field of industry. With more than 212,000 valued employees working in 396 facilities, GM’s presence had spanned across six continents over the world. GM offers a comprehensive range of vehicle selections for its customers from electric and mini-cars to heavy-duty full sized truck as well as convertibles. Along with its strategic partners, GM produces cars and trucks selling and servicing its vehicle through many recognized brands such as Chevrolet, Buick, GMC, Cadillac,
The article Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy was written in 1968 by Edward I. Altman. The purpose of the article is to address the quality of ratio analysis as an analytical technique. At the time some academicians were moving away from ratio analysis and moving toward statistical analysis. The article attempted to determine if ratio analysis should be continued, eliminated and replaced by statistical analysis or serve together with statistical analysis as cofactors in financial analysis. The example case used by the article was the prediction of corporate bankruptcy.
The Top 15 Financial Ratios. (2010). [e-book] Australia: Australian Shareholders' Association. [Accessed: 23 Mar 2014] Available at: Lincolnindicators .
Brealey, Richard A., Marcus, Alan J., Myers, Stewart C. 1999, Fundamentals of Corporate Finance, 2nd edn, Craig S. Beytien, USA.
General motors in on the of the biggest auto makers in the United States. It holds about one percent of the United States employment. The company which sold over 219,000 vehicles in November of last year only was able to sell 155,000 cars and truck to the American Public declining 41 percent compared to last year. GM car sales of 58,786 were off 44 percent and truck sales of 96,091 were down 39 percent. The steep decline in vehicle sales was largely due to a significant drop in the market’s retail demand compared with last year, and continuing economic uncertainty that has affected consumer confidence. The market shares for General Motors have always been low, but recently it has plunged to a 20 percent starting from 1980. I have included a graph which shows the decline in all of auto industry.
The gross profit margin is at 27% which is a percent higher than industry standards. The company is performing good and meeting industry standards in terms of cost of goods sold and sales volume. The net income margin decreased to 0.7% in 2003 a decrease of 0.3% compared to 2002.