General Motors (GM) Financial Report

General Motors (GM): Brief Summary

General Motors (GM) is a renowned automotive manufacturer in Detroit, Michigan. With a rich history spanning decades, GM has established itself as a leading car and truck producer, catering to domestic and international markets. The company's expertise lies in its ability to craft innovative designs, manufacture high-quality vehicles, facilitate sales, and provide financing options.

GM boasts an impressive portfolio of popular brands that have captivated consumers worldwide. These include Buick, Cadillac, Chevrolet, GMC, and Wuling, each offering a unique blend of style, performance, and reliability. These brands represent GM's commitment to delivering exceptional vehicles across a diverse range of segments, catering to customers' varying needs and preferences.

A Legacy of Excellence

GM's enduring legacy in the automotive industry can be attributed to its unwavering dedication to excellence. By combining cutting-edge technology with meticulous craftsmanship, the company has consistently produced vehicles that redefine industry standards. From sleek sedans to robust trucks, GM's diverse lineup showcases its commitment to innovation, safety, and customer satisfaction.

Global Reach and Impact

With a strong presence in the United States and worldwide, GM has successfully expanded its operations to cater to a global customer base. The company has established itself as a key player in the international automotive market by strategically leveraging its vast network of manufacturing facilities, distribution channels, and dealerships. GM's commitment to sustainability and environmental stewardship further highlights its aim to contribute positively to the communities it serves.

From a financial perspective, GM’s stock price has fluctuated between $30.33 to $67.21 in the last 52 weeks, ending August 2022.  The company’s last dividend payment was $0.38 back in March 2020.  The market capitalization rate for the company is approximately $57.739 billion.  As for the beta, it is 1.28.  This shows that the firm is moderately more risky of an investment than the overall market.

General Motors (GM) Financial Report Sources

“General Motors (GM) 2019 Financial Report: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by Paul Borosky, MBA., and owner of Quality Business Plan.  In this report, I used GM's 2018 10k, GM's 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and GM's 2019 10k annual report as the basis for information gathering. 

 

Section 1: General Motors (GM) Income Statement Analyzed

In this section, I walk through a broad definition of what an income statement is and why it is essential.  I then discuss and define income statement line items, such as revenues, gross profits, etc., in detail.  After each line item is defined and discussed, I finally offer a summary analysis of GM's significant income statement line item trends from 2015 to 2019 in most cases.

The Importance of Income Statement for General Motors (GM) Financial Analysis

Assessing Performance and Profitability

The income statement is vital in analyzing General Motors' financial health. It provides a comprehensive overview of the company's revenue, expenses, and net income over a specific period. Analysts can evaluate GM's performance and profitability by examining this statement, allowing for informed decision-making.

The income statement helps stakeholders understand GM's revenue sources, such as car and truck sales, financing activities, and aftermarket services. It also reveals the company's expenses, including manufacturing, marketing, and research and development investments. Analysts can assess GM's ability to generate profit and its cost management strategies by comparing revenue and expenses.

Identifying Trends and Financial Stability

The income statement lets analysts identify trends and patterns in GM's financial performance. By examining year-on-year or quarter-on-quarter data, analysts can evaluate growth rates, identify potential areas of concern, and recognize opportunities for improvement. This analysis provides insights into GM's financial stability and its ability to adapt to changing market conditions.

Additionally, the income statement helps in ratio analysis. The income statement can derive key financial ratios like gross profit margin, operating profit margin, and net profit margin. These ratios provide valuable insights into GM's operational efficiency, cost control measures, and profitability.

Sample: GM Revenue Growth.

General Motors ended 2015 with revenues of approximately $135.7 billion.  The following year, the company would increase revenues to approximately $149 billion.  However, revenues fluctuated over the next three years from $147 billion to $137.2 billion in 2019.  This trend indicates that the organization is having difficulty attracting and retaining loyal customers in the automobile market.  On average, GM’s growth rate was .5%.  For a mature company, this would be slightly below average for growth.  From an investor’s perspective, this would be a little bit concerning.  I mean, $137 billion is a lot of money.  However, this is significantly lower than in the previous three years.

General Motors (GM) 2021 Summary Income Statement
Column1	2021	2020	2019	2018	2017
Revenues	127,004	122,485	137,237	147,049	145,588
COGS	100,544	97,539	110,651	120,656	116,229
Gross Profit	26,460	24,946	26,586	26,393	29,359
SG&A	8,554	7,038	8,491	9,650	9,570
Depreciation	12,052	12,815	14,118	13,669	12,261
R & D	-	-	-	-	-
Other	8,582	11,274	12,614	12,298	11,128
Total Operating Expenses	29,188	31,127	35,223	35,617	32,959
EBIT	9,324	6,634	5,481	4,445	10,016
Other Income	-	-	-	-	-
Interest Expense	950	1,098	782	655	575
EBT	12,716	8,095	7,436	8,549	11,863
Taxes	2,771	1,774	769	474	11,533
Net Income	9,945	6,427	6,732	8,014	(3,864)

 

Section 2: GM Balance Sheet Analyzed

For GM's balance sheet, I again review each critical line item from the balance sheet.  In reviewing each line item, I will define GM's balance sheet line items, such as cash, property, plant and equipment, and liabilities.  Next, I then offer a summary analysis of GM's essential balance sheet line items.

The Importance of Balance Sheet for General Motors (GM) Financial Analysis

Assessing Financial Position and Liquidity

The balance sheet is crucial in analyzing General Motors' financial health. It provides a snapshot of the company's assets, liabilities, and shareholder's equity at a specific time. Analysts can assess GM's financial position and liquidity by examining the balance sheet, enabling a comprehensive evaluation.

The balance sheet showcases GM's assets, including cash, inventory, property, plant, and equipment. It also presents liabilities such as debts, accounts payable, and accrued expenses. By comparing assets and liabilities, analysts can gauge GM's ability to meet short-term and long-term obligations and evaluate the company's liquidity position.

Evaluating Capital Structure and Solvency

The balance sheet helps analysts evaluate GM's capital structure and solvency. Shareholders' equity, which represents the company's net worth, is a key balance sheet component. It highlights the portion of GM's assets financed by shareholders' investments and retained earnings. This information assists in understanding the company's financial leverage and its ability to sustain operations in the long run.

Additionally, the balance sheet aids in assessing GM's solvency, as it reveals the proportion of the company's assets financed by external sources, such as debts and loans. By examining debt-to-equity ratios and debt maturity profiles, analysts can gauge the company's ability to manage its debts and meet financial obligations.

GM's Cash Position.

General Motors ended 2015 with approximately $15.2 billion in cash.  The following year, the cash position would fall to $12.6 billion.  However, in the next several years, their cash position would climb to $19 billion in 2019.  The cash position growth indicates that the firm needs more liquid assets to fund operations.  As compared to total assets, cash is approximately 8.4%.  Finally, as a percentage of sales, this would be 13.9%.

General Motors (GM) 2021 Summary Balance Sheet
Column1	2021	2020	2019	2018	2017
Cash	20,067	19,992	19,069	20,844	15,512
Short Term Investment	8,609	9,046	4,174	5,966	8,313
Account Receivable	7,394	34,244	33,398	33,399	28,685
Inventory	12,988	10,235	10,398	9,816	10,663
Other	-	-	-	-	-
Current Assets	82,103	80,924	74,992	75,293	68,744
Net PPE	41,115	37,632	38,750	38,758	36,253
Goodwill	5,087	5,230	5,337	5,579	5,849
Other	-	-	-	-	-
Total Assets	244,718	235,194	228,037	227,339	212,482
Accounts Payable	20,391	19,928	21,018	22,297	23,929
Accrued Expense	20,297	23,069	26,487	28,049	25,996
Accrued Taxes	-	-	-	-	-
Notes Payable	-	-	-	-	-
LT Debt - Current	33,720	36,913	37,400	31,891	26,965
Other		-	-	-	-
Total Current Liabilities	74,408	79,910	84,905	82,237	76,890
LT Debt	75,659	72,981	65,924	73,060	67,254
Other	-	-	-	-	-
Total Liabilities	178,903	185,517	182,080	184,562	176,282
Common Stock	27,076	26,556	26,074	25,563	25,371
Treasury	-	-	-	-	-
Retained Earnings	41,937	31,962	26,860	25,563	17,627
Other	-	-	-	-	-
Total Equity	65,815	49,677	45,957	42,777	36,200
Total Equity & Liability	244,718	235,194	228,037	227,339	212,482

 

Section 3: General Motors (GM) Financial Ratios Analyzed

For this section, I have chosen several financial ratios for GM to review.  In reviewing each of GM's financial ratios, I first start by defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I briefly analyze General Motors' Important Financial ratios.

GM Current Ratio:

General Motors' current ratio ended 2015 at 1.09.  The company was well-balanced in this position because it had slightly more current assets than current liabilities.  Over the next several years, the organization's current ratio would fall to .88 and 2019.  This indicates that the company continually increases its current liabilities compared to current assets.  In doing this, the firm is continually increasing its risk for insolvency.  In some industries, such as retail, having a current ratio below 1.0 is acceptable because of the continuous cash flow.  In GM's case, having a current ratio below 1.0 for a sustained period of time is probably a risk that the organization should not be taken.

GM Total Asset Turnover:

GM ended 2015 with a total asset turnover of .70.  In the next five years, the company's total asset turnover would fall to .60.  This continued decline in total asset turnover shows that the firm is utilizing assets in the company.  The main driver for this problem would be its fixed assets.  In reviewing the fixed asset turnover, this ratio has also been continually declining.  This means that the firm is not optimally using its plants and equipment.  To improve the fixed asset turnover and total asset turnover, the company needs to decide which plant and equipment are underutilized and divest the property accordingly.

GM Return on Assets:

GM's return on assets ended in 2015 at 4.94%.  In the next four years, the return assets would fall to 2.92.  This means that the company is making less money on management-controlled assets.  To improve upon this issue, GM's executive team needs to identify which assets may be divested.  Or, even better, identify how the company can improve sales while maintaining the status quo on assets held.

GM Debt ratio.

General Motors' debt ratio is relatively low.  Starting in 2015, its debt ratio was 22.4%.  In the next three years, their debt ratio would continually climb until it reached 32.1% in 2018.  However, in 2019, General Motors lowered its debt ratio back to 28.9%.  Most large organizations tend to have significant debt as compared to equity.  The organization can make money on borrowed money by having a prominent debt position.

Further, the companies can exploit tax benefits for interest payments made.  A benefit of General Motors' low debt ratio is that they are better positioned to weather recessionary times.  A challenge is that the company needs more equity to maintain operations and have any chance at all for future growth.

The Importance of Financial Ratios for General Motors (GM) Financial Analysis

Assessing Performance and Efficiency

Financial ratios play a vital role in analyzing General Motors' financial health. These ratios provide valuable insights into the company's performance, efficiency, and profitability. By examining these metrics, analysts can better understand GM's financial position and make informed decisions.

Financial ratios such as return on assets (ROA), return on equity (ROE), and return on investment (ROI) help assess GM's ability to generate profits from its assets and investments. These ratios provide a measure of the company's operational efficiency and its ability to utilize resources effectively.

Evaluating Financial Stability and Risk

Financial ratios also aid in evaluating GM's financial stability and risk management. Ratios such as debt-to-equity ratio, current ratio, and interest coverage ratio provide insights into the company's leverage, liquidity, and ability to meet its financial obligations. These ratios help assess GM's solvency and capacity to handle financial risks.

Furthermore, ratios like gross profit margin, operating profit margin, and net profit margin reveal GM's profitability and cost management efficiency. These metrics enable analysts to compare GM's profitability against industry benchmarks and identify areas for improvement.