General Motor Project 1a 173B 09/10/2018 Team 2 Huy Phan Emily Machala Monique Luong Mark Hidalgo Mengying Li All calculation and number are in Million 1 General Information: 1. Company: General Motor 2. Headquarter: Detroit, Michigan 3. Fiscal year end: ​December 31, 2017 4. Primary Products or services: Automotive and General Motor Financial. 6​.​ The trend of General Motor common stock price over the past 2 years is almost mirror for high and low. In term of year over year we can see that the stock is improve significantly with a upward improvement of 21 percent increase.GM stocks high point and low point are both gradually increase over time mimicking each other trend. 2 7​. ​Stock price in 2016 was much more volatile as it fluctuate up to 26 percent while in 2017 it only fluctuate around 18 percent but it is still a considerably wide range. Internet Information 1. Corporate Website: ​https://www.gm.com/ 2. Stock information, Sales, Investor Home, News, Earning releases, events, Sec Filings, Shareholder Information, Corporate Governance, FAQs and contacts. 3. Describe the corporation, advertise corporate products and services, facilitate the sale of company products or services, provide product financing information, identify the location of retail sale sites, provide customer service information, publicize corporate citizenship, corporate events, promote the industry they are in and provide employment information. 4. The Securities and Exchange Commission’s EDGAR Database 1. December 31st, 2017 2. SIC: 3711 3. Central Index Key: 0001467858 Income Statement 1. ($145,588-$149,184)/$149,184 = -2.4% 2. 3 3. The revenue of company have been decreasing for the last few years due to the fact that they are facing decrease in industry car sales by 1.5% comparing to 2016 but consumer vehicles sale increase by 0.1% in sale due to an increase in market share in U.S. This explain why the decline in sale wasn’t that much of a significant comparing to 3 years ago. 4. ($330-$9269)/$9269 = -96% Common-Size Analysis. 1. Product or Service Cost Control : a. Even though R&D increase the cost of sales for automotive decrease in 2017 compare to 2016 due to material cost decrease (big portion for the cost of sales), thanks to they using local resources and outsourcing labour in their Asia market. 2. Operating Cost Control: a. There is an increase in operating expense due to some minor restructuring of company facility, but later on it is going to be offset by an increase in vehicle income. 4 3. Debt Servicing: a. Their debt interest expense is increase was minimal due to the fact that the account payable outstanding is about the same as last year and there was no significant increase. 4. Tax Burden: a. Their tax expense is increased by 6 percent due to the facts that they have to pay some of their deferred tax but in the next fiscal year is going to be lessen because of the new tax cut policy. 5. Profitability: a. ​Their Income decrease by 9% due to their automotive sale decrease since they lost some of market share in Asia. Also their cost of sale increase because of minor restructuring of company facility so their operating and other expense increase hence their income decrease. 6. Other Income Statement Items; a. There wasn’t any other income line item but in fiscal year 2017 they do have a significant decrease in discontinued operation income due to the fact that they have realize their loss on their discontinued operation. Balance Sheet. Asset Growth. 1. ($212,482 - $221,690)/$221,690 = -4% 2. Their Asset decrease by 4% due to the fact that they no longer have anything under Non-current assets held for sale, because they got rid of it all last fiscal year therefore their total asset decrease despite the fact that their PPE increase. Common Size Analysis 5 3. The Balance sheet account that change the most year over year is the long term investment, we can see that there is a 5 percent increase in long term investment as they are expanding and restructuring their factory in different market. Cash Flow Statement 1. 2. 3 significant sources of cash: ● Proceeds from issuance of debt (original maturities greater than three months): $52,187M ● Principal collections and recoveries on finance receivables: $12,578M ● Provision for deferred taxes: $10,880M 6 3. 3 significant uses of cash: ● Payments on debt (original maturities greater than three months): ($33,592M) ● Purchases of finance receivables, net: ($19,325M) ● Purchases of leased vehicles, net: ($19,180M) 4. 5. The biggest difference between the income statement to the statement of cash flows is that due to the income loss realization in the disco continued income operation (-$ 4,212M). As well as their Automotive sales decrease. Statement of Changes in Stockholders’ Equity Shares Outstanding 7 The number of common shares Have been decreasing gradually over time due to stock buy back as they are not raising any additional equity finance in the past 3 years. Retained Earnings Notes and Supporting Schedules to the Financial Statements Cash and Cash Equivalents The corporation defines their cash equivalents “as short-term, highly-liquid investments with original maturities of 90 days or less. Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash. We are required to post cash as collateral as part of certain agreements that we enter into as part of our operations. Restricted cash is invested in accordance with the terms of the underlying agreements and include amounts related to various deposits, escrows 8 and other cash collateral. Restricted cash is included in Other current assets and Other assets in the consolidated balance sheets” (10-K p. 51). Accounts Receivable Percent Uncollectible 2017: 278 / (8,164+278) = 3.3% 2016: 212 / (8,700+212) = 2.4% Receivable Turnover 2017: 145,588 / ((8,164+8,700)/2) = 17.3 times 2016: 149,184 / ((8,700+8,337)/2) = 17.5 times GM account receivable turnover ratio decrease but a small amount since last year, due to the fact that in 2017 their accounts receivables increase. And the reason why percent uncollectible this year is higher than last year because gross accounts receivables is increasing faster than allowance for uncollectibles in 2017. Inventories Inventories are classified into productive material, supplies, work in process and finished products. Inventory Group Inventory Flow Method Domestic Inventories Just-in-time Foreign Inventories Just-in-time Inventory Turnover 2017: 114,869 / ((10,663+11,040)/2) = 10.6 times 9 2016: 120,499 / ((11,040+13,764)/2) = 9.7 times Inventory turnover is higher by 0.9 times in 2017 could be by a strong sell expansion in North American as well as Asian (China). As their market in china have been increase by quite a bit. Property and Depreciation Fixed Asset Group Depreciation Method Land Not depreciable Buildings and Improvement Straight-line Machinery and Equipment Straight-line Special Tools Straight-line In 2017 they had to account for 199 million dollar of impairment charges, due to the discontinued operation in some factory. Percentage of Fixed Asset Depreciation 2017: -24,081 / 52,499 = -45.9% 2016: -20,666 / 47,189 = -43.8% There wasn’t a significant changes in fixed asset depreciation from last year to current year. The small increase could be explain by the fact that their gross depreciable fixed asset increase along with accumulated depreciation. Fixed Asset Turnover Ratio 2017: 145,588 / ((36,253+32,603)/2) = 4.2 times 10 2016: 149,184 / ((32,603+21,653)/2) = 5.5 times Long-term Debt Instrument Rate Amount Secured Debt 2.37% $22000 Unsecured Debt 4.5% $3000 Credit facility 2.10% $2900 Year- 2018 Amount to be paid- $28,900 M Income Taxes Income tax expense 2017 in income statement: $11,533M Deferred income tax expense: $23,544 Effective tax rate: 21.1% Gross deferred tax asset: $24,009M Gross deferred tax liability: $1,153M Net deferred tax amount: $22,856M Significant activities for deferred tax liabilities: Intangible assets $735M Significant activities for deferred tax assets: U.S. operating loss and tax credit carryforwards $8,578M Warranties, dealer and customer allowances, claims and discounts $5,675M Non-U.S. operating loss and tax credit carryforwards $5,103M Segmental and Geographic Information pg 83 10k 11 Operating Segments Geographic Areas GMNA North America GMI Other than North America, Asia GM Financial North America Contingencies In 2014 GM announced various recalls relating to safety and other matters. Those recalls included recalls to repair ignition switches that could under certain circumstances unintentionally move from the run position to the accessory or off position which could prevent airbag to turn on. According to GM 10-K “In August 2017 the Southern District granted GM motion to dismiss the successor liability claims of plaintiffs in seven of the sixteen states. In December 2017 the Southern District granted GM's motion and dismissed successor liability claims of plaintiffs in an additional state, but found that there are genuine issues of material fact that prevent summary judgment for GM in eight other states. In January 2018, GM moved for reconsideration of certain portions of the Southern District's summary judgment ruling”. Majority of these account is being adjusted in GM liabilities. 12 Interim (Quarterly) Financial Data The reason why in Q3 of 2017 Gm have such a huge dip in revenue is due to the fact that they have some discontinued operation that result in the decrease in their revenue. Report of the Independent Auditors Auditor: Deloitte & Touche LLP City where auditor is located: Detroit, Michigan 1. Unqualified opinion 2. The responsibility of Deloitte & Touche LLP is to express their opinion on the Company’s internal control over financial reporting based on their audit. 13 3. Deloitte uses the guidelines of Public Company Accounting Oversight Board (PCAOB). 4. Deloitte believed the the financial statements were presented fairly in accordance with accounting principles generally accepted in the United States and the Public Company Accounting Oversight Board (PCAOB). According to the Report of Independent Registered Public Accounting Firm in General Motor’s 2017 10-K, Deloitte stated that “In our opinion, the financial statements present fairly, in all material respects, the financial portion of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America”. Using the standards of PCAOB, Deloitte “expressed an unqualified opinion on the Company’s internal control over financial reporting”. Concluding that Deloitte assures to shareholders and the Board of Directors that the financial statements are free from error or fraud. Report on Internal Control 1. The Public Company Accounting Oversight Board proved the criteria for establishing internal controls of this audit. 2. It is the responsibility of the General Motors’ management to material ineffective internal controls over financial statement preparation. 3. Deloitte believes that the corporation maintained adequate internal over financial reporting, meeting the standards of GAAP and PCAOB. 14 Ratio Analysis Profit Margin 2016: $9,269 / 149,184 = 6.2% 2017: $330 / 145,588 = 0.2% Return on Assets 2016: $9,269 / [(221,690+194,338)/2] = 4.5% 2017: $330 / [(212,482+221,690)/2] = 0.2% Return on Stockholders’ Equity 2016: $9,269 / [(43,836+38,871)/2] = 22.1% 2017: $330 / [(35,001+43,836)/2] = 0.8% The reason why there is a different between ROA and ROE percentage year over year is due to the facts that they were not able to generate the same amount of income as they did in 2016. Due to a cost of a discontinued operation. In the past three years, GM has declined it’s ability to generate profit. There is a large drop in profitability, return on assets, and return on equity. This decline in profit is due to GM’s 2017 income dropping significantly. Earnings Per Share 2016: $9,268 / 1,570= 5.9% 15 2017: $-3​,​882/ 1,492= -2.6% Current earnings per share had a significant drop since the previous year. This change was a result in GM taking a net loss for the current year. GM does not have any dilutive securities which would affect earnings per share. Cash Dividends per Share 2016: $2,368/ ($1,570+ 1,640)/2 = 1.47 2017:$2,233/ ($1,570+ 1,492)/2=1.45 Dividend Payout Ratio 2016: $2,337/ 9,268 = 25.21% 2017: $2,233/ -3,882 = -57.52% Price/ Earning Ratio 2016: $34.84/ 6 = 5.8 2017: $40.99/ -2.6= -15.76 GM’s price/earning ratio significantly changed within the past 2 years. In both years, GM’s price/earning ratio was not near the average range. In 2017, Gm recorded a net loss which largely affected this ratio. This is concerning for the company’s growth because there are a lot of changes occuring in the auto industry and GM needs to stay competitive with others. Current Ratio 16 2016: $76,203/ $85,181 = 89.46% 2017: $68,744 / $76,890 = 89.40% Over the past 2 years, GM has held more liabilities than assets which can negatively affect their ability to meet their requirements. NOWC 2016: $76,203 - $85,181 = -$8978 2017: $68,744 - $76,890 = $8146 Quick Ratio 2016: $12,960 + 11,841 + 9,638/ 85,181= 40.43% 2017: $15,512 + 8,313 +8,164/ 76,890 = 41.60% Based on the previous 2 ratios, GM has maintained a similar position regarding their liquidity. There have not been any significant changes that would alter the company’s liquidity. Analysis of solvency 1. Debt to Total Assets 2016: $177,615/$221,690= 89.46% 2017: $176,282/$212,482= 89.41% Corporate debt has fallen slightly over the past year because existing debt is much lower than last year, and total assets have fallen compared with last year, but the 17 overall impact is modest. Potential lenders would prefer the debt to total assets ratio to be smaller. The lower the debt, the lower the debt to total assets ratio. 2. Times Interest Earned Ratio 2016: ($563+$2739+$9268)/$563= 22.33 times 2017: ($575+$11,533+(-$3,882))/$575= 14.31 times Time Interest Earned on the Cash Basis 2016: (-$33,592+$17,328)/ (-$33,592) =0.20 times 2017: (-$20,727+$16,607) / (-$20,727) =0.48 times Industry or competitor comparisons Primary Competitor Comparison Name of Competitor: Ford Corporation Competitor Income Statement Common-Size Data Gross Profit/Sales 6.88% 16.2% Income from continuing Operations/Sales 0.23% 5.2% 33% 45% Balance Sheet Common-Size Data Current Assets/Total Assets 18 Current Liabilities/Total Assets 36% 36% Liabilities/Total Assets 83% 86% Equity/Total Assets 17% 13% Profit Margin 0.2% 5.2% Return on Assets 0.2% 3.3% Return on Equity 0.8% 25.4% 57.5% -33.9% Current Ratio 0.89:1 1.23:1 Quick Ratio 0.42:1 0.71:1 83% 86% 14 times 8 times 17 times 10 times Profitability Ratios Dividend Payout Ratio Liquidity Ratios Solvency Ratios Debt/Total Assets Times Interest Earned Operational Ratios Receivable Turnover 19 Inventory Turnover 10 times 4 times 1. One primary difference between GM and its competitors is the amount of assets to liabilities they carry. GM seems to operate with a greater amount of long-term liabilities compared to its competitors, which can be an indication of the amount GM rely on its finance segment. This is visible in GM only carrying 33% current assets, whereas the competitor operates with 45 %. Having a current ratio under 1 indicates that it has more liabilities than assets and would have a harder time paying off its obligations when the time should arrive. In addition the quick ratio also shows that competitors posses more assets with greater liquidity than GM and is in a better position to take of short-term liabilities should they need to. 2. Based on the ratios given, GM compares unfavorably against its competitor. When looking at income statement ratios the competitor generates a greater amount of gross profit per sale, in addition they also attribute more income from continuing operations than GM. Another reason for their unfavorability is lack of liquidity as seen in both current and quick ratios. While GM does attribute more of its business to their financial segment than its competitor,total equity is only 4% greater than its competitor, they still do not meet satisfactory levels with their liquidity ratios where you would like to be above 1, the current ratio sits at 0.89 and the quick ratio at 0.42, both under 1. Making Decisions Based on the Annual Report 1. GM has been inconsistent in the recent years. In the last 3 years, GM has seen increases and decreases in their revenue. They have been able to maintain a solid customer base, however they are not making large strides to acquire new customers and this is negatively affecting their revenue. 20 2. Product innovation,competition and the state of the economy are the main factors that largely affect GM’s revenue. In the most recent years, electric vehicles have become high in demand. All companies in the auto industry are constantly looking to put out the newest features, such as self- driving cars. This is a huge impact to GM as they have to continue to meet customer expectations and find ways to exceed them to lure customers to buy their cars over another company. If GM is unable to stay up-to-pace with competitors they will lose customers and see a huge drop in their revenue. The state of the economy also plays a huge role in the growth or decline in revenue for GM. When the economy is growing, people are more willing to spend their money on a new car. However, this has the opposite effect when the economy is struggling. When people feel unsure of the economic situation, they may put off buying a new car until they feel more financially secure. GM’s inventory is a luxury item, not a necessity. 3. We predict that revenue will increase thanks to expansion in the Asia market with the new factory that could ramp up their production. Also in 2018 GM might be releasing an all new automotive vehicle that will utilize full control of AI which could potentially bring them a lot of profit. 4.Over the past few years, GM’s income performance has been inconsistent as well. For the most recent year GM had a net loss which was the first loss reported in the last 3 years. 5. We predict that Net income will bounce back up to a positive number, since in 2018 they will get a significant amount of tax cuts due to the government plan. Also they no longer have to suffer the loss from discontinued operation income lost since they have already realize it in 2017. 21 6. General Motor Asset growth rate is stable increase, they do their merger and acquisition one every fiscal year to help keep up with their competitor. Other than that their asset will stay stable for next year since it doesn’t seem like there will be an extreme growth in market shares that will require them to increase their inventory. 7. Their total assets will increase next year since they have extra cash on hand as well as potentially a new stream of products (automated vehicles) require them get purchase new materials and factory. 8. With the new credit line and a decrease net income in fiscal year 2017, it is possible that GM will need more financing, in the future since they might need more cash to invest in materials and R and D. 9. A. They are a value company that has been in existence for a really long time, this mean that their business model worked despite the fact that they had a negative income last fiscal year. B. They are able to keep up with their competitor in innovation field thanks to their constant merger and acquisition model that allowed them to stay competitive for this long (acquire Cruise technology for autonomous vehicles). C. Their business is diversify to over sea. One of the main revenue stream geographically come from Asia, China. They are currently holding 17% of market share in Asia which allow them to diversify their revenue stream so that they are not too rely on one segment. 10. A. They are currently restructuring their business model so that they could open a new factory over. This could be costly for them and could potentially hurt their income in the future. 22 B. They had a discontinued operation that have given them a negative income. This could hurt them because of the potential investor that they have lost due to negative earning and bad pres. C. Their market is really saturated and there are a lot of competitor in this market. 11.I’m pessimistic about the future of the corporation due to the fact that they had a bad income last fiscal year and their they are entering a new autonomous space vehicle trying to compete against establish brand such as Tesla. 12. I would not invest in the capital stock or bond of GM due to me being a risk averse investor and I see no value in investing in a value company with small growth. And personally to me this sector is not attracted enough are as exciting as the tech sector. So I don’t see myself investing in this in the near future. RATIO ANALYSIS General Motor 2017 $ Million Percent 2016 $ Million Percent 3 Years Ago $ Million Income Statement Revenue Cost of Goods Sold Interest Expense Tax Expense Income from Cont Operations Net Income 145,588 114,869 575 11,533 330 -3,882 100.0% 78.9% 0.4% 7.9% 0.2% -2.7% 149,184 120,499 563 2,739 9,269 9,268 100.0% 80.8% 0.4% 1.8% 6.2% 6.2% 135,725 112,995 423 -1,219 9,590 Balance Sheet Cash Short Term Investments Accounts Receivable Inventory Current Assets Long Term Investments Net Fixed Assets Other Assets Total Assets Current Liabilities Total Liabilities Total Stockholders' Equity 15,512 8,313 8,164 10,663 68,744 42,882 36,253 4,929 212,482 76,890 176,282 35,001 7.3% 3.9% 3.8% 5.0% 32.4% 20.2% 17.1% 2.3% 100.0% 36.2% 83.0% 16.5% 12,574 11,841 8,700 11,040 76,203 34,342 32,603 3,849 221,690 85,181 177,615 43,836 5.7% 5.3% 3.9% 5.0% 34.4% 15.5% 14.7% 1.7% 100.0% 38.4% 80.1% 19.8% 15,238 8,163 8,337 13,764 69,408 Cash Flow Cash Flow from Operations Dividends Paid Interest Paid 17,328 -2,233 -33,592 16,607 -2,368 -20,727 11,769 -2,242 -13,469 40.99 0.23 1,492 34.84 6.12 1,570 34.01 6.09 1,640 Share Information Market Price at Year End Earnings Per Share - Basic Shares Outstanding 194,338 71,217 154,015 39,871 4 Years Ago $ Million 5 Years Ago $ Million 155,929 155,427 1,530 5,131 18,611 RATIO ANALYSIS Growth Ratios Sales Growth Income Growth Asset Growth Activity Ratios Receivable Turnover Inventory Turnover Fixed Asset Turnover Profitability Ratios Profit Margin Return on Assets Return on Equity Dividend Payout Ratio Price Earnings Ratio Liquidity Ratios Current Ratio Quick Ratio Solvency Ratios Debt to Total Assets Times Interest Earned (Accrual) Times Interest Earned (Cash) © 2008 William R. Pasewark -2.4% -141.9% -4.2% 9.9% -3.3% 14.1% 17.3 10.6 4.0 17.5 9.7 4.6 0.2% 0.2% 0.8% 57.5% 178.2 6.2% 4.5% 22.1% -25.6% 5.7 0.89 0.42 0.89 0.39 0.83 21.63 0.48 0.80 22.33 0.20 PRIMARY COMPETITOR ANALYSIS General Motor $ Million Ford Motor $ Million Income Statement Revenue Cost of Goods Sold Interest Expense Tax Expense Income from Cont Op Net Income 145,588 114,869 575 11,533 330 -3,882 156,776 131,332 1,133 219 8,148 7,628 Prior Year Revenue Prior Year Income from Continuing Operations 149,184 9,269 151,800 6,796 Balance Sheet Cash Short Term Investments Accounts Receivable Inventory Current Assets Long Term Investments Net Fixed Assets Other Assets Total Assets Current Liabilities Total Liabilities Total Stockholders' Equity 15,512 8,313 8,164 10,663 68,744 42,882 36,253 4,929 212,482 76,890 176,282 35,001 18,492 28,235 20,435 10,277 115,902 28,235 35,327 8,104 257,808 94,600 222,792 34,918 Prior Year Accounts Receivable Prior Year Inventory Prior Year Assets Prior Year Liabilities Prior Year Stockholders' Equity 8,700 11,040 221,690 177,615 43,836 8,898 46,266 237,951 208,668 29,170 Cash Flow Cash Flow from Operations Dividends Paid Interest Paid 17,328 -2,233 -33,592 18,096 -2,584 40,770 RATIO ANALYSIS Income Statement Common-Size Data Gross Profit/Sales Income from Continuing Operations/Sales Balance Sheet Common-Size Data Current Assets/Total Assets Current Liabilities/Total Assets Liabilities/Total Assets Equity/Total Assets Profitabilty Ratios Profit Margin Return on Assets Return on Equity Dividend Payout Ratio Liquidity Ratios Current Ratio Quick Ratio Solvency Ratios Debt/Total Assets Times Interest Earned (Accrual) Operational Ratios Receivable Turnover Inventory Turnover © 2008 William R. Pasewark 21.1% 0.2% 16.2% 5.2% 32.4% 36.2% 83.0% 16.5% 45.0% 36.7% 86.4% 13.5% 0.2% 0.2% 0.8% 57.5% 5.2% 3.3% 25.4% -33.9% 0.89 0.42 1.23 0.71 0.83 21.63 0.86 8.38 17.3 10.6 10.7 4.6 TREND ANALYSIS Revenue Income - Continuing Operations Cash Flow from Operations Total Assets 5 Years Ago 4 Years Ago 3 Years Ago $155,427 $5,131 $155,929 $1,530 $135,725 $9,590 $11,769 $194,338 Prior Year $149,184 $9,269 $16,607 $221,690 Current Year $145,588 $330 $17,328 $212,482 REVENUE TREND $200,000 $150,000 $100,000 $50,000 $0 5 Years Ago 4 Years Ago 3 Years AgoPrior Year Current Year NET INCOME TREND $10,000 $8,000 $6,000 $4,000 $2,000 $0 5 Years Ago 4 Years Ago 3 Years Ago Prior Year Current Year INCOME TO CASH FLOW COMPARISON $20,000 Income Continuing Operations $15,000 $10,000 Cash Flow from Operations $5,000 $0 3 Years Ago Prior Year Current Year ASSET CHANGES $250,000 $200,000 $150,000 $100,000 Total Assets $50,000 $0 3 Years Ago © 2008 William R. Pasewark Prior Year Current Year QUARTERLY DATA 1st Q 37,266 33,016 2,608 1,953 Current Year Revenue Last Year Revenue Current Year Income Last Year Income 2nd Q 36,984 37,383 1,660 2,866 3rd Q 33,623 38,889 2,981 2,773 4th Q 37,715 39,896 5,151 1,835 Annual 145,588 149,184 3,864 9,427 CURRENT YEAR QUARTERLY STOCK PRICES 1st Q $38.55 $33.79 High Price Low Price 2nd Q $35.40 $31.92 3rd Q $40.69 $34.45 QUARTERLY REVENUE 50,000 40,000 30,000 39,896 37,715 38,889 33,623 37,383 36,984 37,266 33,016 Current Year Revenue 20,000 10,000 Last Year Revenue 0 1st Q 2nd Q 3rd Q 4th Q QUARTERLY INCOME 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Current Year Income 1st Q 2nd Q 3rd Q Last Year Income 4th Q QUARTERLY STOCK HIGHS AND LOWS $50.00 $40.00 $30.00 High Price $20.00 Low Price $10.00 $0.00 1st Q © 2008 William R. Pasewark 2nd Q 3rd Q 4th Q 4th Q $46.76 $40.70 ANALYSIS OF INVENTORY General Motor Total Assets Inventory Revenue Cost of Goods Sold Gross Profit Ford Motor Current Year 212,482 10,663 145,588 114,869 30,719 Prior Year 221,690 11,040 149,184 120,499 28,685 3 Years Ago 194,338 13,764 135,725 112,995 22,730 Current Year 257,808 10,277 156,776 131,332 25,444 Prior Year 237,951 46,266 151,800 126,183 25,617 5.0% 78.9% 5.0% 80.8% 7.1% 83.3% 4.0% 83.8% 19.4% 83.1% 10.6 34.5 9.7 37.6 4.6 78.6 2.8 2.3 0.9 IMPACT OF INVENTORY Inventory to Total Assets Cost of Goods Sold Percentage INVENTORY TURNOVER RATES Inventory Turnover Days in Inventory INVENTORY YIELD Inventory Yield © 2008 William R. Pasewark ANALYSIS OF DEBT Quick Assets Current Assets Current Liabilities Accounts Payable Purchases Total Assets Total Liabilities Total Stockholders' Equity Income from Continuing Operations Interest Expense Tax Expense Cash Flow from Operations Interest Paid General Motor Ford Motor Current Year Prior Year 3 Years Ago 31,989 33,115 31,738 68,744 76,203 69,408 76,890 85,181 71,217 Current Year Prior Year 67,162 115,902 94,600 114,492 212,482 176,282 35,001 330 575 11,533 17,328 -33,592 117,775 221,690 177,615 43,836 9,269 563 2,739 16,607 -20,727 194,338 154,015 39,871 9,590 423 -1,219 11,769 -13,469 95,343 257,808 222,792 34,918 8,148 219 219 18,096 40,770 237,951 208,668 29,170 6,796 LIQUIDITY RATIOS (ANALYSIS OF CURRENT DEBT) Current (Working Capital) Ratio Quick (Acid-Test) Ratio Days Payable Outstanding 0.9 0.4 0 0.9 0.4 0 1.0 0.4 1.2 0.7 0 0.83 5.04 0.80 4.05 0.79 3.86 0.86 6.38 21.6 0.5 22.3 0.2 20.8 39.2 1.4 #DIV/0! #DIV/0! SOLVENCY RATIOS (ANALYSIS OF LONG-TERM DEBT) Debt to Total Assets Debt to Equity DEBT SERVICABILITY Times Interest Earned (Accrual Basis) Times Interest Earned (Cash Basis) © 2008 William R. Pasewark 0.88 7.15 STOCKHOLDER ANALYSIS General Motor Total Assets Total Stockholders' Equity Income from Continuing Operations Dividends Paid Market Price at Year End Basic Earnings per Share Shares Outstanding Dividends per Share Ford Motor Current Year 212,482 35,001 330 -2,233 40.99 0.23 1,492 -1.50 Prior Year 221,690 43,836 9,269 -2,368 34.84 6.12 1,570 -1.51 3 Years Ago 194,338 39,871 9,590 -2,242 34.01 6.09 1,640 -1.37 Current Year 257,808 34,918 8,148 -2,584 12.49 1.91 3975.00 -0.65 Prior Year 237,951 29,170 6,796 -3,376 12.13 1.16 3973.00 -0.85 -676.7% -3.7% -25.5% -4.3% -23.4% -4.0% -31.7% -5.2% -49.7% -7.0% 0.2% 0.8% 13.4% 178.2 4.5% 22.1% -2.0% 5.7 5.6 3.3% 25.4% -2.4% 0.0 0.0 DIVIDEND RATIOS Dividend Payout Ratio Dividend Yield EARNINGS AND RETURN RATIOS Return on Assets Return on Equity Total Stockholder Return Price Earnings Ratio © 2008 William R. Pasewark ANALYSIS OF FIXED ASSETS General Motor Total Assets Gross Fixed Assets Accumulated Depreciation Net Fixed Assets Depreciable Assets Gross Capital Leases Revenue Depreciation Expense Operating Lease Expense Ford Motor Current Year 212,482 Prior Year 221,690 3 Years Ago 194,338 Current Year 257,808 Prior Year 237,951 36,253 32,603 0 35,327 0 145,588 149,184 135,725 156,776 151,800 17.1% 0.0% 0.0% 0.0% 14.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 13.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.2 0.7 9.2 0.7 IMPACT OF FIXED ASSETS Tangibility Ratio Depreciation as a Percent of Revenue Operating Lease Utilization Capital Lease Utilization FIXED ASSET ACTIVITY RATIOS Fixed Asset Turnover Total Asset Turnover 8.9 0.6 FIXED ASSET USAGE RATIOS Percent Depreciated Average Fixed Asset Life © 2008 William R. Pasewark #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! ANALYSIS OF ACCOUNTS RECEIVABLE General Motor Accounts Receivable Allowance for Bad Debt Total Assets Revenue Bad Debt Expense Ford Motor Current Year 8,164 Prior Year 8,700 3 Years Ago 8,337 Current Year 20,435 Prior Year 8,898 212,482 145,588 221,690 149,184 194,338 135,725 257,808 156,776 237,951 151,800 0.0% 0.0% 3.8% 0.0% 0.0% 3.9% 0.0% 0.0% 4.3% 0.0% 0.0% 7.9% 0.0% 0.0% 3.7% IMPACT OF ACCOUNTS RECEIVABLE Bad Debt Expense Percentage Allowance Percentage Accounts Receivable to Total Assets RECIEVABLE COLLECTION RATES Receivable Turnover Days of Receivable © 2008 William R. Pasewark #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! ANALYSIS OF RETIREMENT PLANS General Motor Total Assets Revenue Defined Contribution Pension Expense Defined Benefit Pension Expense Defined Benefit Pension Cash Contribution Other Post Retirement Expense Other Post Retirement Cash Contribution Fair Market Value of Pension Assets Fair Market Value of Other Post-Retirement Assets Accumulated Benefit Obligation (ABO) for Pensions Projected Benefit Obligation (PBO) for Pension Projected Benefit Obligation for Other Post-Retirement Ford Motor Current Year 212,482 145,588 Prior Year 221,690 149,184 3 Years Ago 194,338 135,725 Current Year 257,808 156,776 Prior Year 237,951 151,800 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% IMPACT OF RETIREMENT PLANS ON EARNINGS Defined Contribution Pension Expense to Revenue Defined Benefit Pension Expense to Revenue Total Pension Expense to Revenue Other Post Retirement Expense to Revenue Retirement Expense to Revenue IMPACT OF RETIREMENT PLANS ON FINANCIAL CONDITION Pension ABO to Total Assets Pension PBO to Total Assets Retirement PBO to Total Assets 0.0% 0.0% 0.0% RETIREMENT FUNDING RATIOS FMV of Pension Assets to Pension ABO FMV of Pension Assets to Pension PBO FMV of Retirement Benefit Assets to Retirement PBO Pension Contribution Ratio Retirement Contribution Ratio © 2008 William R. Pasewark #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! ANALYSIS OF COMPENSATION PLANS General Motor Revenue Shares Outstanding Market Price at Year End Stock Option Plan Stock Option Plan Expense Shares Obtained by Options Exercised this Year Shares Obtainable from: Options Granted this Year Exercisable Options Outstanding Options Average Exercise Price of Exercisable Options Average Exercise Price of Outstanding Options Stock Award Plan Stock Award Plan Expense Shares Obtained by Awards Vested this Year Shares Obtainable from: Awards Issued (Granted) this Year Outstanding (Non-vested) Awards Stock Purchase Plan Stock Purchase Plan Expense Current Year 145,588 1,492 40.99 Prior Year 149,184 1,570 34.84 Ford Motor 3 Years Ago 135,725 1,640 34.01 Current Year 156,776 #REF! 12.49 Prior Year 151,800 #REF! 12.13 POTENTIAL DILUTION RATIOS As a Percentage of Shares Outstanding OPTIONS - Granted this Year OPTIONS - Exercisable OPTIONS - Oustanding AWARDS - Net Issued AWARDS - Outstanding OPTIONS AND AWARDS - Outstanding 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% #REF! #REF! #REF! #REF! #REF! #REF! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% ACTUAL DILUTION RATIOS As a Percentage of Shares Outstanding OPTIONS - Net Exercised AWARDS - Net Vested ALL PLANS - Share Increase this Year IMPACT ON EARNINGS RATIOS OPTIONS - Expense to Revenue AWARDS - Expense to Revenue PURCHASE - Expense to Revenue ALL PLANS - Expense to Revenue BENEFIT TO PLAN PARTICIPANTS RATIOS As a Percent of Year End Stock Price OPTIONS - Price of Exercisable OPTIONS - Price of Outstanding © 2008 William R. Pasewark ANALYSIS OF OPERATING LEASES General Motor Average Borrowing Rate: Year 1 2 3 4 5 7 8 9 10 11 Current Year Next Year Current Year + 2 Current Year + 3 Current Year + 4 Current Year + 5 Current Year + 6 Current Year + 7 Current Year + 8 Current Year + 9 Total minimum lease pmts Total Liabilities Total Stockholders' Equity Income from Continuing Operations Total Assets Operating Lease Payment PV Factor #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 176,282 35,001 330 212,482 Adjusted for Capitalized Operating Leases Total Liabilites #DIV/0! Total Assets #DIV/0! RATIOS PRIOR TO CAPITALIZING OPERATING LEASES Debt to Equity Return on Assets 5 0 RATIOS ADJUSTED FOR CAPITALIZED OPERATING LEASES Debt to Equity Return on Assets © 2008 William R. Pasewark #DIV/0! #DIV/0! Percentag e Increase PV of Payment 0 0 0 0 0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Average increase #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Consolidated Statements Of Cash Flows - USD ($) $ in Millions Cash flows from operating activities Income from continuing operations Depreciation, amortization and impairment charges Foreign currency remeasurement and transaction losses Undistributed earnings of nonconsolidated affiliates, net Pension contributions and OPEB payments Pension and OPEB (income) expense, net Provision (benefit) for deferred taxes Change in other operating assets and liabilities (Note 25) Other operating activities Net cash provided by operating activities – continuing operations Net cash used in operating activities – discontinued operations Net cash provided by operating activities Cash flows from investing activities Expenditures for property Available-for-sale marketable securities, acquisitions Trading marketable securities, acquisitions Available-for-sale marketable securities, liquidations Trading marketable securities, liquidations Acquisition of companies/investments, net of cash acquired Purchases of finance receivables, net Principal collections and recoveries on finance receivables Purchases of leased vehicles, net Proceeds from termination of leased vehicles Other investing activities Net cash used in investing activities – continuing operations Net cash used in investing activities – discontinued operations (Note 3) Net cash used in investing activities Cash flows from financing activities Net decrease in short-term debt Proceeds from issuance of debt (original maturities greater than three months) Payments on debt (original maturities greater than three months) Payments to purchase common stock Proceeds from issuance of GM Financial preferred stock Dividends paid Other financing activities Net cash provided by financing activities – continuing operations Net cash provided by financing activities – discontinued operations Net cash provided by financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period Significant Non-cash Investing and Financing Activity Non-cash proceeds on sale of discontinued operations (Note 3) 12 Months Ended Dec. 31, 2017 $ 330 12,261 52 (132) (1,636) (934) 10,880 (3,015) (468) 17,338 (10) 17,328 (8,453) (5,503) 0 9,007 0 (41) (19,325) 12,578 (19,180) 6,667 178 (24,072) (3,500) (27,572) (140) 52,187 (33,592) (4,492) 985 (2,233) (305) 12,410 174 12,584 348 2,688 15,160 17,848 808 Continuing Operations [Member] Cash flows from financing activities Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period Significant Non-cash Investing and Financing Activity Non-cash property additions Non-cash business acquisition – continuing operations (Note 10) Discontinued Operations [Member] Cash flows from financing activities Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period Significant Non-cash Investing and Financing Activity Non-cash property additions 14,487 17,848 3,996 0 673 0 $0 12 Months Ended Dec. 31, 2016 Dec. 31, 2015 $ 9,269 9,819 229 (15) (3,454) (769) 2,228 580 (894) 16,993 (386) 16,607 $ 9,590 7,487 806 (145) (1,587) 83 (2,046) (1,208) (370) 12,610 (841) 11,769 (8,384) (15,182) (262) 10,871 872 (804) (14,378) 9,899 (19,495) 2,554 162 (34,147) (1,496) (35,643) (6,813) (8,113) (1,250) 8,463 1,758 (927) (13,888) 8,548 (15,096) 1,095 15 (26,208) (1,502) (27,710) (282) 42,036 (20,727) (2,500) 0 (2,368) (163) 15,996 1,081 17,077 (213) (2,172) 17,332 15,160 (61) 31,547 (13,469) (3,520) 0 (2,242) (159) 12,096 1,512 13,608 (1,524) (3,857) 21,189 17,332 0 0 16,588 14,487 16,588 3,897 290 3,970 0 744 673 744 $ 868 $ 706 Consolidated Income Statements - USD ($) shares in Millions, $ in Millions Net sales and revenue Automotive GM Financial Total net sales and revenue Costs and expenses Automotive cost of sales GM Financial interest, operating and other expenses Automotive selling, general and administrative expense Total costs and expenses Operating income Automotive interest expense Interest income and other non-operating income, net Gain on extinguishment of debt Equity income (Note 8) Income before income taxes Income tax expense (benefit) (Note 18) Income from continuing operations Income (loss) from discontinued operations, net of tax (Note 3) Net income (loss) Net loss attributable to noncontrolling interests Net income (loss) attributable to stockholders Net income (loss) attributable to common stockholders Earnings per share (Note 21) Basic earnings per common share – continuing operations (in dollars per share) Basic earnings (loss) per common share – discontinued operations (in dollars per share) Basic earnings (loss) per common share (in dollars per share) Weighted-average common shares outstanding – basic (in shares) Diluted earnings per common share – continuing operations (in dollars per share) Diluted earnings (loss) per common share – discontinued operations (in dollars per share) Diluted earnings (loss) per common share (in dollars per share) Weighted-average common shares outstanding – diluted (in shares) 12 Months Ended Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2015 $ 133,449 12,139 145,588 $ 140,205 8,979 149,184 $ 129,864 5,861 135,725 114,869 11,128 9,575 135,572 10,016 575 290 0 2,132 11,863 11,533 330 (4,212) (3,882) 18 (3,864) $ (3,880) 120,499 8,369 10,354 139,222 9,962 563 327 0 2,282 12,008 2,739 9,269 (1) 9,268 159 9,427 $ 9,427 112,995 5,304 11,888 130,187 5,538 423 614 449 2,193 8,371 (1,219) 9,590 25 9,615 72 9,687 $ 9,687 $ 0.23 (2.88) $ (2.65) 1,465 $ 0.22 (2.82) $ (2.60) 1,492 $ 6.12 0 $ 6.12 1,540 $6 0 $6 1,570 $ 6.09 0.02 $ 6.11 1,586 $ 5.89 0.02 $ 5.91 1,640 Consolidated Balance Sheets - USD ($) $ in Millions Current Assets Cash and cash equivalents Marketable securities (Note 4) Accounts and notes receivable (net of allowance of $278 and $212) Inventories (Note 6) Equipment on operating leases, net (Note 7) Other current assets (Note 4; Note 12 at VIEs) Current assets held for sale (Note 3) Total current assets Non-current Assets Equity in net assets of nonconsolidated affiliates (Note 8) Property, net (Note 9) Goodwill and intangible assets, net (Note 11) Equipment on operating leases, net (Note 7; Note 12 at VIEs) Deferred income taxes (Note 18) Other assets (Note 4; Note 12 at VIEs) Non-current assets held for sale (Note 3) Total non-current assets Total Assets Current Liabilities Accounts payable (principally trade) Accrued liabilities (Note 13) Current liabilities held for sale (Note 3) Total current liabilities Non-current Liabilities Postretirement benefits other than pensions (Note 16) Pensions (Note 16) Other liabilities (Note 13) Non-current liabilities held for sale (Note 3) Total non-current liabilities Total Liabilities Commitments and contingencies (Note 17) Equity (Note 20) Common stock, $0.01 par value Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders’ equity Noncontrolling interests Total Equity Total Liabilities and Equity GM Financial [Member] Current Assets GM Financial receivables, net (Note 5; Note 12 at VIEs) Non-current Assets Dec. 31, 2017 Dec. 31, 2016 $ 15,512 8,313 8,164 10,663 1,106 4,465 0 68,744 $ 12,574 11,841 8,700 11,040 1,110 3,633 11,178 76,203 9,073 36,253 5,849 42,882 23,544 4,929 0 143,738 212,482 8,996 32,603 6,149 34,342 33,172 3,849 9,375 145,487 221,690 23,929 25,996 0 76,890 23,333 25,893 12,158 85,181 5,998 13,746 12,394 0 99,392 176,282 5,803 15,264 12,415 7,626 92,434 177,615 14 25,371 17,627 (8,011) 35,001 1,199 36,200 212,482 15 26,983 26,168 (9,330) 43,836 239 44,075 221,690 20,521 16,127 GM Financial receivables, net (Note 5; Note 12 at VIEs) Current Liabilities Short-term debt and current portion of long-term debt (Note 14) Non-current Liabilities Long-term debt (Note 14) Automotive [Member] Current Liabilities Short-term debt and current portion of long-term debt (Note 14) Non-current Liabilities Long-term debt (Note 14) 21,208 17,001 24,450 22,737 56,267 41,826 2,515 1,060 $ 10,987 $ 9,500 Dec. 31, 2015 $ 15,238 8,163 8,337 13,764 2,783 3,072 69,408 9,201 31,229 5,947 36,860 3,021 0 124,930 194,338 24,062 27,593 71,217 5,685 20,911 12,653 82,798 154,015 15 27,607 20,285 (8,036) 39,871 452 40,323 194,338 18,051 18,500 18,745 35,601 817 $ 7,948
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