I have to find the data online should turn it off during class. Any violatión WI

ID: 2580065 • Letter: I

Question

I have to find the data online

should turn it off during class. Any violatión WIll Be pelainzlu. Case Study: You are writing a paper on General Motor Company for the 2016 fiscal year that ends on December 31, 2016. Write a paper on the following issues from the perspective of financial analysts. The following is the grading guideline: Contents precision is 40%, Interpretation is 30%, and Exposition-grammar, format, and conciseness-is 30%. The paper should be no more than six pages excluding a cover page and be stapled on an upper left corner. Copy and paste from source documents is plagiarism. Free riders and free ridees would receive zero point. The due date is December 7, 2017. The paper must be submitted in class. The electronic version must be emailed to the instructor.

Explanation / Answer

INTRODUCTION

Why do we need to conduct a Financial Analysis?

NEWS: DETROIT — General Motors (NYSE: GM) today reported 252,813 deliveries in the United States in October. Dated , Wed, Nov 01 2017….. For the First Time Since 2011, GM’s Retail Market Share Tops 17 Percent for Three Consecutive Months

Starting with the Income statement of GM for year 2016 it would an idea of how well it is performing:

A quick analysis of the Gross Margin reveals (GP/ SALES) a 13% return.

Operating Income/ Sales shows a healthy 5.7% return in a very competitive market.

The Balance Sheet shows a detailed breakdown as follows:

A look at the ‘Gearing’ ratio of Long Term Debt/ Equity reveals ($55,600,000/ $43,836,000) = 126.8%. Not at all a comforting ratio!

The negative Cash flow at the end of it all are reasons for concern.

Thus an investor would show positive sentiments at first on news it hears regarding the share movements upwards but be quickly brought to realize that all is not too well in the ‘figures’ reported.

But again, it is the ‘risk’ that the individual is willing to undertake. Looking askance, at corresponding similar motor industries a somewhat similar trend seems to be taking place.

Manufacturers

Revenue of market leaders

Volkswagen $240B

USD Toyota Y27.6B

GM $166B

A key worrying factor is the Long Term Debt of GM.

Let us go to what the Management itself of GM has to offer, regarding the future projections:

“Forward-Looking Statements” issued on 1 Nov 2017.

This press release and related comments by management may include forward-looking statements. These statements are based on current expectations about possible future events and thus are inherently uncertain. Our actual results may differ materially from forward-looking statements due to a variety of factors, including: (1) our ability to deliver new products, services and experiences that attract new, and are desired by existing, customers and to effectively compete in autonomous, ride-sharing and transportation as a service; (2) sales of full-size pick-up trucks and SUVs, which may be affected by increases in the price of oil; (3) the volatility of global sales and operations; (4) aggressive competition, including the impact of new market entrants; (5) changes in, or the introduction of novel interpretations of, laws, regulations or policies particularly those relating to free trade agreements, tax rates and vehicle safety and any government actions that may affect the production, licensing, distribution, pricing, or selling of our products; (6) our joint ventures, which we cannot operate solely for our benefit and over which we may have limited control; (7) compliance with laws and regulations applicable to our industry, including those regarding fuel economy and emissions; (8) costs and risks associated with litigation and government investigations; (9) compliance with the terms of the Deferred Prosecution Agreement; (10) our ability to maintain quality control over our vehicles and avoid recalls and the cost and effect on our reputation and products; (11) the ability of suppliers to deliver parts, systems and components without disruption and on schedule; (12) our dependence on our manufacturing facilities; (13) our ability to realize production efficiencies and cost reductions; (14) our ability to successfully restructure operations in various countries; (15) our ability to manage risks related to security breaches and other disruptions to vehicles, information technology networks and systems; (16) our ability to develop captive financing capability through GM Financial; (17) significant increases in pension expense or projected pension contributions; and (18) significant changes in the economic, political, and regulatory environment, market conditions, and foreign currency exchange rates. A further list and description of these risks, uncertainties and other factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and our subsequent filings with the Securities and Exchange Commission. GM cautions readers not to place undue reliance on forward-looking statements. GM undertakes no obligation to update publicly or otherwise revise any forward-looking statements.

Press Release from management

To answer specific questions, Year 2016:

FROM FORM 10K of GM for 2016:

AS AT 31 DEC 2016:

$ 000’S

SECURED DEBT

136

UNSECURED DEBT

9795

CAPITAL ELASES

821

TOTAL AUTOMOTIVE DEBITS

10752

It has very high gearing and high interest which eats into the performance of the company