General Motors' financial ratios show improving profitability from 2017 to 2018. The company's quick ratio, debt ratio, times interest earned ratio, and return on equity all improved. However, inventory turnover declined, suggesting higher inventory costs or volumes. Overall, better management of accounts receivable, debt, and equity contributed to increased profitability, though inventory management could be further optimized.
General Motors' financial ratios show improving profitability from 2017 to 2018. The company's quick ratio, debt ratio, times interest earned ratio, and return on equity all improved. However, inventory turnover declined, suggesting higher inventory costs or volumes. Overall, better management of accounts receivable, debt, and equity contributed to increased profitability, though inventory management could be further optimized.
General Motors' financial ratios show improving profitability from 2017 to 2018. The company's quick ratio, debt ratio, times interest earned ratio, and return on equity all improved. However, inventory turnover declined, suggesting higher inventory costs or volumes. Overall, better management of accounts receivable, debt, and equity contributed to increased profitability, though inventory management could be further optimized.
General Motors' financial ratios show improving profitability from 2017 to 2018. The company's quick ratio, debt ratio, times interest earned ratio, and return on equity all improved. However, inventory turnover declined, suggesting higher inventory costs or volumes. Overall, better management of accounts receivable, debt, and equity contributed to increased profitability, though inventory management could be further optimized.
Investment 0.32 6.97 Average (Long-term Debts + Equity) (ROI)
Operating asset = Net Sales
0.83 0.84 turnover Average operating assets
Return on = Operating income
Operating 0.18 0.21 Average operating assets Assets
Dupont Return = Operating Margin x Operating asset turnover 4.93 2.53 on Assets
Sales to fixed = Net Sales
1.22 - assets Average Net fixed assets 2. Comment a) Overall It is clear that the profitability of the company has been increasing for the last 2 years, mainly due to the decrease in Income tax expense (Note 17), improvement in accounts receivable and better management of the company debt.. The company also demonstrates that the profitability can be improved even further by having better inventory management and productivity maximization on their fixed assets.
b) Short-term debt-paying ratios
Short-term debt-paying ratios
1 0.8 0.6 0.4 0.2 0 2017 2018 -0.2 Current ratio Quick ratio Cash ratio Net working capital ratio
General Motors overall Short-term debt-paying ablity in 2018 was improved
when compared to 2017. The Quick Ratio saw a significant grown from 0.83 in 2017 to 0.92 in 2018. The difference here is mainly because of the higher amount in inventories that may indicate an increase in inventory prices or volume. c) Long-term debt-paying ratios
Short-term debt-paying ratios
8 6 4 2 0 2017 2018 Debt ratio D/E ratio Debt to tangible net worth ratio Net working capital ratio
The Debt Ratio decreased slightly for the last two years going from 0.83 to 0.81 mainly due to the quite high growth rate of total assets compared to the figure of total liability, indicated that the level of creditor financing was improved. The stockholders equity increased dramatically from $36420 millions in 2017 to $42777 millions in 2018 indicated the better management of the companies equity.
2017 2018 Day’s sales in receivables 71.91 82.90 Inventory turnover in days - 38.85
The inventory liquidity declined for the last two years, while the cost of goods sold increased during the same period. This trend indicated that the inventory cost or volume was increased. The accounts receivable turnover was improved when compared to 2017, where it decreased from 5.07 to 4.4 times. The inventory turnover increased sharply from 11.94 in 2017 to 13.55 in 2018 and the day’s sales in receivables also grown about 11 days. Which may indicated a good managerial efficiency. The Total Asset Turnover improved slightly for the last two years because of the better management of current assets.
-4 Net profit margin Gross profit margin Opeating margin
Return ratio 20 18 16 14 12 10 8 6 4 2 0 2017 2018 ROA ROE ROI
The Gross Profit Margin and the Operating profit margin decreased sharply from 2017 to 2018 as the cost of goods sold did not increase at the same level that the sales increased. Wheares, The Net Profit Margin ratio was improved significantly from -2.66 to 5.38 in last 2 years mainly due to the decrease in Income tax expense (Note 17). There was a upward trend in return ratio included ROA, ROE and ROI. Especially ROE from 0.91 in 2017 to 18.87 in 2018. 3. Appendix a) General Motors Income Statement b) General Motors Balance Sheet
