GENERAL MOTORS CORPORATION

Erika L. LaMarch

Finance 362

Professor Fitzwater

Executives

• G. Richard (Rick) Wagoner Jr.

Chairman

CEO• Frederick A. (Fritz) Henderson

Vice Chairman

CFO• Ralph J. Szygenda

Group VP

Information Systems and Services

CIO

Company Profile

• NYSE

• 335,000 Employees

• 2005 Growth– 0.5% in Sales– 3.4% in Employees

#1 Producer

• Buick• Cadillac• Chevrolet• GMC• Pontiac• Saab• Saturn

Investments

• Inventory Subsidiaries– Holden– Opel– Vauxhall– CAMI Automotive, Inc.

GM of Canada Limited

– Allison Transmission

• GMAC Finances– Suzuki Motor– GM Daewoo Auto&

Technology– Fiat– Fuji Heavy Industries

(Subaru)– Locomotive

Manufacturing

Profit Margin=Net Income/Sales

0

0.05

0.1

GM Ford Honda Toyota

2003

2004

2005

Sales are lowest for Honda, about equal for Toyota and Ford, and highest for General Motors. In relation to net income, General Motors (and Ford proportionately) have more staggered profit from these sales due to GM’s distinctive investment policy involving mostly financed cars and mortgages through GMAC as opposed to wide ranging alternatives.

Debt Make-Up Projections

2005 Debt Breakdown

Debt (See Investments Slide)

Capital Lease Obligations

Operating Lease Obligations

Contractual Commitments for Capital Expenditures

Post Retirement Benefits

2008-2009 Debt Breakdown 2010+ Debt Breakdown

2006-2007 Debt Breakdown

Assess deviation of investments for different years, and influence of financed assets.

ROA Return on Assets

0

0.1

0.2

0.3

0.4

GM Ford Honda Toyota Industry

2002

2003

2004

2005

Again the financing of cars and mortgages in deviating amounts and mystifying patterns causes GM to show a staggered in the area of overall assets’ benefits.

ROE Return on Equity

0

0.2

0.4

0.6

0.8

GM Ford Honda Toyota Industry

2002

2003

2004

2005

GM’s built up 2005 dividends were dispersed in the first quarter of 2006.

Receivables Turnover

0

10

20

30

GM Ford Honda Toyota Industry

2002

2003

2004

2005

GMAC is doing a good job collecting receivables. Honda and Toyota, with longer lasting vehicles, offer lower payments for longer terms as well.

Average Collection Period

0

50

100

150

GM Ford Honda Toyota

2003

2004

2005

This slide proves that Honda and Toyota’s financing plans offer longer terms for their longer lasting vehicles.

Inventory Turnover Ratio

0

5

10

15

20

GM Ford Honda Toyota

2003

2004

2005

GM has more cars leftover in inventory between 2005 and 2006 then it did in the past two years.

Total Asset Turnover Ratio

0

0.5

1

GM Ford Honda Toyota Industry

2002

2003

2004

2005

Again GM has a investment policy saying, “These assets consist principally of office buildings, warehouses, and machinery and equipment. The use of such entities allows the parties providing the financing to isolate particular assets in a single entity and thereby syndicate the financing to multiple third parties. This is a conventional financing technique used to lower the cost of borrowing and thus, the lease cost to the lessee such as GM (Annual Report 51)”.

Fixed Asset Turnover Ratio

0

1

2

3

4

GM Ford Honda Toyota Industry

2002

2003

2004

2005

Differs from total asset turnover ratio, because fixed asset turnover ratio compares sales to the same areas of assets except long term investments, property plant and equipment, goodwill, intangible assets, and accumulated amortization. In other words in the pie graph shown before this section only evaluates the debt section.

Current Ratio

0

0.5

1

1.5

GM Ford Honda Toyota Industry

2002

2003

2004

2005

Companies with a current ratio greater than one have more assets then liabilities. Whereas the companies that have a less than one current ratio have more liabilities than assets right now. This ratio is to indicate the liquidity of the firm.

Quick Ratio

0

0.5

1

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Industry

2002

2003

2004

2005

Since inventory is meant for sale its function in the current ratio can be taken away to offer the quick ratio which measures all of the assets versus liabilities in the absence of inventory.

Debt to Total Assets Ratio

0

0.5

1

1.5

2

GM Ford Toyota Honda

2003

2004

2005

Companies with a debt to total assets ratio greater than one have more liabilities then assets. Whereas the companies that have a less than one current ratio have more assets than liabilities right now. This ratio is to indicate the leverage.

Debt to Equity Ratio

0

2

4

6

8

GM Ford Honda Toyota

2003

2004

2005

Companies with a debt to total assets ratio greater than one have more equity then liability. Whereas the companies that have a less than one current ratio have more liability than equity right now. This ratio is to indicate the leverage.

Times Interest Earned

0

0.5

1

1.5

2

GM Ford Industry

2002

2003

2004

2005

• Cultural value differences cause Honda and Toyota to have much higher Times Interest Earned. So severe was the difference that I removed these columns.

Fixed Charge Coverage

0

50

100

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

East

West

North

Taxes and interest are just getting more expensive relative to GM’s Income before fixed charges and taxes.

Gross Profit Margin

0.168 0.17 0.172 0.174 0.176 0.178 0.18 0.182

General Motors2005

2004

2003

There is a fear of the car industry slowing based on Wall Street Journal articles as of late which explain the plunging sales of 2005. All things considered GM managed to adjust its other areas to sales to maintain a reasonable profit margin.

Operating Profit Margin

0

0.05

0.1

0.15

GM Ford Honda Toyota

2003

2004

2005

Same as gross profit margin minus expenses in General Motors case the expenses at hand are in an account called selling general and administrative.

Debt Repayment in Millions

0

5000

10000

15000

20000

25000

30000

Long-Term DebtPayable

2006

2007

2008

2009

2010+

Future Endeavors

• Need Liquid– Selling Controlling Interest in

GMAC– 4 Adjusted Cadillac Body Styles

in China– Developing Hybrids– 2007 Line Price Increase

• Acquired AT&T’s Controller• Sponsoring On-Demand• Improving Accessories

Suggested Future Endeavors

• Merger with Honda or Toyota– Gain Money– Improve Consistency of Financial Analysis &Planning– Take Advantage of Market Surge

• Acquire Cultural Advantage• Increase Sales from Increased Product Line

• Do NOT pay Dividends Until Stock Value Rises– Lowering Value encourages stockholders to sell– Stockholders will sell if they don’t expect dividend

payout

Works Citedhttp://www.hoovers.com/general-motors/--ID__10640--/free-co-factsheet.xhtmlhttp://finance.yahoo.com/q/is?s=TM&annualhttp://finance.yahoo.com/q/bs?s=TM&annualhttp://finance.yahoo.com/q/cf?s=TM&annualhttp://finance.yahoo.com/q/is?s=HMC&annualhttp://finance.yahoo.com/q/bs?s=HMC&annualhttp://finance.yahoo.com/q/cf?s=HMC&annualhttp://finance.yahoo.com/q/is?s=F&annualhttp://finance.yahoo.com/q/bs?s=F&annualhttp://finance.yahoo.com/q/cf?s=F&annualhttp://finance.yahoo.com/q/is?s=GM&annualhttp://finance.yahoo.com/q/bs?s=GM&annualhttp://finance.yahoo.com/q/cf?s=GM&annual

Works Cited• http://web.ebscohost.com/ehost/detail?vid=20&hid=16&sid=297ce265-c258-4

5b5-966d-8c8121a66f1b%40sessionmgr102• http://web.ebscohost.com/ehost/detail?vid=17&hid=16&sid=297ce265-c258-

45b5-966d-8c8121a66f1b%40sessionmgr102• http://web.ebscohost.com/ehost/detail?vid=16&hid=16&sid=297ce265-c258-

45b5-966d-8c8121a66f1b%40sessionmgr102• http://web.ebscohost.com/ehost/detail?vid=20&hid=16&sid=297ce265-c258-

45b5-966d-8c8121a66f1b%40sessionmgr102• http://web.ebscohost.com/ehost/detail?vid=24&hid=16&sid=297ce265-c258-

45b5-966d-8c8121a66f1b%40sessionmgr102• http://web.ebscohost.com/ehost/detail?vid=27&hid=16&sid=297ce265-c258-

45b5-966d-8c8121a66f1b%40sessionmgr102• http://www.gm.com

For More Information

General Motors Corporation

300 Renaissance Center

Detroit, MI 48265-3000

http://www.gm.com

313-556-5000

FAX 313-556-5108

Questions?