Acc 561: Gm Corporation Analysis

GM Corporation Analysis

Michelle Thompson, Shanica Todd-Higgins, Katrina Self, Robert Newton

ACC 561

July 13, 2015

David Duren, DBA

GM Corporation Analysis

Corporations use financial sheets and information in many facets for business.  Depending on the information provided, businesses have capabilities to determine directions to take a company, make internal changes accordingly, and determine how the company compares in the market to competitors.  Externally, the financial information provides details to individuals and entities desiring to invest or loan money to the company (Kimmel, Weygandt, & Keiso, 2011).  The following information reviews the financial statements for the GM Corporation.  The document discusses the comparative and ratio analysis of GM as it pertains to liquidity and profitability.

Comparative Analysis

According to Kimmel, Weygandt, and Keiso (2011), comparative analysis provides information to the company through the use of horizontal, vertical, and ratio analysis.  When comparing information across the years, the company leadership determines if the company is heading in the right direction financially (Kimmel, Weygandt, and Keiso, 2011).  When using a vertical or horizontal analysis one compares the financial statement for General Motors from a period to period basis. In this case, the document compares the 2011 (base year) to the 2014 (current year) financial sheets for GM in order to determine growth and income for the company.  The financial statement for General motors on NASDAQ includes the years of 2014, 2013, 2012 and 2011. In the year of 2014 the net income was $3,949,000 while 2011 the net income was $9,190,000 (NASDAQ, 2015). You can see that the net income decreased from the year of 2011 to 2014 by $8,795,100.  If we take the current year amount which is $3,949,000 and subtract from the base year which is $9,190,000 and divide by the base year net income, one will find the deficit of approximately 57 percent difference.  This reflection is large, but not uncommon.  GM reflects an increase in expenses and payouts affecting the net income (NASDAQ, 2015).  This payout affected the net income of the company.   According to Kimmel, Weygandt, and Keiso (2011), one would calculate the current year sales by using the equation Current Results in  relation to base period = Current Year Amount divided by Base Year Amount.

Financial statement provided for General Motors according to NASDAQ (2015), the current year amount for net income is $3,949,000 which will be divided by the base year amount of 2011 consisting of $9,190,000. The current results would be a percentage of 43% in sales.  For 2014 General Motors $155,929,000 and in the year of 2011 we had a total revenue of $150,276,000 (NASDAQ, 2015). The current year amount of $155,929,000 and subtract this from the base year amount of $150,276,000.  This would give a total of $5,653,000 and divide this amount by the base year of $150,276,000 and have a total revenue increase of 3.8%. This shows that General Motors sales increased over the 4 year income statement and had a decrease in the net income over the 4 year income statement.  Again, this drop in net income results larger expenses over the course of time.

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