Thursday, January 31, 2019

General Motors - Financial Ratio Analysis Essay -- Business Finance Ac

General Motors - Financial Ratio abstractI. General Motors History HighlightsIn its primeval twelvemonths the automobile labor consisted of hundreds of firms, eachproducing a few models. William Durant, who bought and reorganized a failingBuick Motors in 1904, determined that if several automobile makers would unite,it would increase the protection for the group. He organize the General MotorsCompany in Flint, Michigan, in 1908.Durant had bought 17 companies (including Oldsmobile, Cadillac, and Pontiac) by1910, the year a bankers syndicate forced him to step down. In a 1915 melodyswap, he regained control through Chevrolet, a company he had make with racecar driver Louis Chevrolet. GM created the GM Acceptance connection (autofinancing) and acquired a number of businesses, including Fisher Body,Frigidaire (sold in 1979), and a small drift company, Hyatt Roller Bearing.With the Hyatt acquisition came Alfred Sloan, an administrative genius who wouldbuild GM into a corporate co lossus.Sloan, president from 1923 to 1937, implemented a decentralized managementsystem, nowadays emulated worldwide. The auto maker competed by run intoering modelsranging from luxury to economy, colors anyhow black, and yearly stylemodifications. By 1927 it had become the industry leader.GM introduced a line of front-wheel-drive compacts in 1979. Under Roger Smith,CEO from 1981 to 1990, GM laid off thousands of workers as part of a massivecompanywide restructuring and cost cutting program.In 1984 GM formed NUMMI with Toyota as an experiment to see if Toyotasmanufacturing techniques would work in the US. The joint ventures first car wasthe Chevy Nova. GM bought Ross Perots Electronic selective information Systems (1984) and HughesAircraft (1986). In 1989 the company bought 50% of Saab Automobile.In 1990 GM launched Saturn, its first unexampled nameplate since 1926, reflecting a newcompanywide emphasis on quality. Two years by and by it made the largest stockoffering in US hist ory, raising $2.2 billion. Culminating a period of boardroomcoups (relating to the companys lagging effort to reduce costs) in the early1990s, John Smith replaced Robert Stempel as CEO.NBC apologized in 1993 for improprieties in its expose alleging that GM pickupsequipped with sidesaddle gas tanks tended to explode upon side impact. Thegovernment even asked the ... ...better.The stock holders equity has increase dramatically indicating thebetter management of the companies equity.The EBIT has improved for the last two year mainly because the level ofinterest paying has rock-bottom ascribable to the reduction of liabilities.ProfitabilityThe Gross Profit allowance has increased from 1993 to 1994 as the cost ofgoods sold did not increase at the same level that the sales increased. TheOperating Profit Margin ratio was stable in 1995 when compared to 1994 and theNet Profit Margin has also been up(a) for the last two years.The Return on Total Assets has increased due the increase i n thecompanies profitability, while Return on Equity has decreased on the last twoyears as the stockholders equity increasedOverallIt is clear that the profitability of the company has been increasingfor the last 2 years, mainly due to the decrease in liabilities, improvement inaccounts due and better management of the company debt..The company also demonstrates that the profitability bottom be improvedeven further by having better size up management and productivity maximizationon their fixed assets.

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