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GM And Toyota General Motors Assessment

"Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt" (Investopedia, Balance sheet, 2013). Forbes makes the balance sheets of companies available on its website. GM's balance sheet is below:

View: Annual Data | Quarterly Data

All numbers in thousands

PERIOD ENDING

09/2012

06/2012

03/2012

12/2011

Balance Sheet - Assets

Cash and Equivalents

23,320,000

22,184,000

17,378,000

15,499,000

Restricted Cash

863,000

734,000

924,000

206,000

Marketable Securities

10,411,000

11,381,000

14,686,000

16,148,000

Accounts Receivable

13,015,000

11,117,000

12,485,000

9,949,000

Other Receivable

3,744,000

3,478,000

3,314,000

Receivables

16,759,000

14,595,000

15,799,000

9,949,000

Raw Materials

7,241,000

7,112,000

6,745,000

Work in Progress

6,486,000

Finished Goods

8,431,000

8,321,000

9,099,000

7,838,000

Inventories

15,672,000

15,433,000

15,844,000

14,324,000

Current Deferred Income Taxes

2,110,000

2,087,000

1,985,000

1,657,000

Other Current Assets

2,972,000

3,819,000

2,600,000

2,464,000

Total Current Assets

72,107,000

70,233,000

69,216,000

60,247,000

Land & Improvements

2,496,000

Building & Improvements

4,670,000

Machinery, Furniture & Equipment

17,324,000

Construction in Progress

3,068,000

Other Fixed Assets

26,578,000

25,026,000

24,275,000

Total Fixed Assets

26,578,000

25,026,000

24,275,000

27,558,000

Gross Fixed Assets (Plant, Prop. & Equip.)

26,578,000

25,026,000

24,275,000

27,558,000

Accumulated Depreciation & Depletion

4,601,000

Net Fixed Assets (Net PP&E)

26,578,000

25,026,000

24,275,000

22,957,000

Intangibles

8,904,000

9,192,000

9,687,000

10,013,000

Cost in Excess

28,408,000

28,405,000

28,433,000

29,019,000

Non-Current Deferred Income Taxes

2,778,000

3,151,000

3,411,000

2,900,000

Other Non-Current Assets

16,681,000

15,980,000

15,172,000

19,467,000

Total Non-Current Assets

83,349,000

81,754,000

80,978,000

84,356,000

Total Assets

155,456,000

151,987,000

150,194,000

144,603,000

Balance Sheet - Liabilities, Stockholders Equity

Accounts Payable

26,313,000

26,425,000

27,576,000

24,494,000

Short-Term Debt

6,278,000

5,092,000

5,350,000

1,682,000

Accrued Liabilities

25,032,000

25,134,000

23,651,000

22,756,000

Total Current Liabilities

57,623,000

56,651,000

56,577,000

48,932,000

Long-Term Debt

10,375,000

9,701,000

8,874,000

11,650,000

Deferred Income Taxes

12,757,000

12,735,000

12,754,000

12,336,000

Other Non-Current Liabilities

32,072,000

31,290,000

31,849,000

32,694,000

Minority Interest

970,000

910,000

884,000

871,000

Total Non-Current Liabilities

56,174,000

54,636,000

54,361,000

57,551,000

Total Liabilities

113,797,000

111,287,000

110,938,000

106,483,000

Preferred Stock Equity

10,391,000

10,391,000

10,391,000

10,391,000

Common Stock Equity

31,268,000

30,309,000

28,865,000

27,729,000

Common Par

16,000

16,000

16,000

16,000

Additional Paid in Capital

26,443,000

26,399,000

26,334,000

26,391,000

Retained Earnings

11,533,000

9,889,000

8,283,000

7,183,000

Other Equity Adjustments

(6,724,000)

(5,995,000)

(5,768,000)

(5,861,000)

Total Capitalization

52,034,000

50,401,000

48,130,000

49,770,000

Total Equity

41,659,000

40,700,000

39,256,000

38,120,000

Total Liabilities & Stock Equity

155,456,000

151,987,000

150,194,000

144,603,000

Cash Flow

12,342,000

12,592,000

13,270,000

15,129,000

Working Capital

14,484,000

13,582,000

12,639,000

11,315,000

Free Cash Flow

8,292,000

1,370,000

2,034,000

11,181,000

Invested Capital

52,034,000

50,401,000

48,130,000

49,770,000

* = Data not available

(Forbes, General Motors balance sheet, 2013).

Examining GM's balance sheet, several features stand out. First, GM has experienced a steady increase in assets over the last several reporting periods. Likewise, it has a significantly greater free cash flow than it had the previous two reporting periods. It has been able to continue to invest capital in the company. Finally, its equity has continued to grow over the last few reporting periods.

Toyota's balance sheet, also prepared by Forbes to aid in comparison across dimensions, is featured below:

View: Annual Data | Quarterly Data

All numbers in thousands

PERIOD ENDING

12/2012

09/2012

06/2012

03/2012

Balance Sheet - Assets

Cash and Equivalents

14,438,633

22,842,840

22,605,351

21,380,411

Marketable Securities

17,772,675

16,549,447

15,726,494

14,351,661

Accounts Receivable

18,236,608

21,813,251

22,190,099

24,300,710

Loans Receivable

54,954,449

53,746,465

51,686,652

50,001,786

Other Receivable

3,937,766

4,247,956

3,943,188

4,964,420

Receivables

77,128,825

79,807,673

77,819,939

79,266,917

Raw Materials

5,099,143

Work in Progress

2,685,898

Finished Goods

11,927,966

Other Inventories

18,885,108

20,141,323

20,376,024

Inventories

18,885,108

20,141,323

20,376,024

19,713,008

Prepaid Expenses

6,354,201

5,850,938

6,352,199

6,274,718

Current Deferred Income Taxes

7,929,450

8,552,943

8,863,616

8,733,057

Total Current Assets

142,508,895

153,745,167

151,743,627

149,719,776

Land & Improvements

14,818,434

15,913,187

15,529,540

15,107,369

Building & Improvements

43,617,269

46,918,239

45,561,549

44,485,229

Machinery, Furniture & Equipment

141,035,142

147,029,048

143,538,952

141,803,900

Construction in Progress

3,195,749

3,395,385

3,213,335

3,345,974

Total Fixed Assets

202,666,596

213,255,861

207,843,376

204,742,475

Gross Fixed Assets (Plant, Prop. & Equip.)

202,666,596

213,255,861

207,843,376

204,742,475

Accumulated Depreciation & Depletion

128,220,451

135,696,593

131,818,874

128,973,838

Net Fixed Assets (Net PP&E)

74,446,144

77,559,267

76,024,501

75,768,637

Other Non-Current Assets

157,031,347

155,593,791

148,592,004

146,963,922

Total Non-Current Assets

231,477,491

233,153,059

224,616,505

222,732,559

Total Assets

373,986,387

386,898,226

376,360,132

372,452,336

Balance Sheet - Liabilities, Stockholders Equity

Accounts Payable

26,771,923

31,545,411

32,858,378

34,894,902

Short-Term Debt

75,284,748

75,199,010

74,462,689

72,462,105

Accrued Liabilities

21,437,591

22,739,550

22,820,917

22,219,126

Other Current Liabilities

14,688,155

14,983,997

14,032,974

13,586,560

Total Current Liabilities

138,182,419

144,467,969

144,174,959

143,162,695

Long-Term Debt

74,706,516

75,511,452

72,505,940

73,422,164

Deferred Income Taxes

11,981,156

11,208,830

10,956,748

11,044,206

Other Non-Current Liabilities

11,696,756

10,912,107

10,514,776

10,349,996

Minority Interest

6,444,997

6,765,796

6,483,707

6,272,762

Total Non-Current Liabilities

104,829,427

104,398,187

100,461,173

101,089,130

Total Liabilities

243,011,846

248,866,156

244,636,132

244,251,825

Common Stock Equity

130,974,540

138,032,069

131,724,000

128,200,510

Common Par

4,824,715

Additional Paid in Capital

11,031,299

12,177,172

11,897,831

6,691,172

Retained Earnings

143,923,999

159,001,760

151,803,697

144,809,210

Treasury Stock

(13,205,272)

(14,597,570)

(14,233,500)

(13,800,109)

Other Equity Adjustments

(10,775,486)

(18,549,293)

(17,744,028)

(14,324,479)

Total Capitalization

205,681,057

213,543,521

204,229,941

201,622,674

Total Equity

130,974,540

138,032,069

131,724,000

128,200,510

Total Liabilities & Stock Equity

373,986,387

386,898,226

376,360,132

372,452,336

Cash Flow

21,578,061

22,142,188

20,043,145

16,421,277

Working Capital

4,326,476

9,277,197

7,568,667

6,557,081

Free Cash Flow

2,484,342

3,881,940

2,113,598

(2,872,981)

Invested Capital

205,681,057

213,543,521

204,229,941

201,622,674

* = Data not available

(Forbes, Toyota balance sheet, 2013).

Examining Toyota's balance sheet, several features stand out. First, Toyota appears to have experienced a steady decline in assets over the last several reporting periods. However, its free cash flow is much higher than it was in the initial reporting period. It has been able to continue to invest...

Finally, its equity has remained fairly consistent over the last several reporting periods.
Statement of Funds

A statement of funds is also referred to as a cash flow statement. A cash flow statement is "One of the quarterly financial reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter" (Investopedia, Cash flow statement, 2013). In many ways, a statement of funds does not provide significant information to a potential investor about a company's financial health. "Because public companies tend to use accrual accounting, the income statements they release each quarter may not necessarily reflect changes in their cash positions. For example, if a company lands a major contract, this contract would be recognized as revenue (and therefore income), but the company may not yet actually receive the cash from the contract until a later date" (Investopedia, Cash flow statement, 2013). Therefore, it is important to keep in mind the limitations of a statement of funds when using it to examine a company's financial health.

Forbes makes the cash flow statements of companies available on its website. GM's cash flow statement is below:

View: Annual Data | Quarterly Data

All numbers in thousands

PERIOD ENDING

9-Month

09/2012

6-Month

06/2012

3-Month

03/2012

12-Month

12/2011

Cash Flow From Operating Activities

Net Income (Loss)

5,105,000

9,287,000

Depreciation

7,344,000

Amortization

200,000

Deferred Income Taxes

(311,000)

Operating (Gains) Losses

(4,933,000)

(Increase) Decrease in Receivables

(1,572,000)

(Increase) Decrease in Inventories

(2,760,000)

(Increase) Decrease in Prepaid Expenses

(195,000)

(Increase) Decrease in Other Current Assets

(522,000)

(Increase) Decrease in Payables

2,095,000

(Increase) Decrease in Other Curr Liabs.

(943,000)

Other Non-Cash Items

4,719,000

6,441,000

2,499,000

476,000

Net Cash from Continuing Operations

9,824,000

6,441,000

2,499,000

8,166,000

Net Cash from Operating Activities

9,824,000

6,441,000

2,499,000

8,166,000

Sale of Long-Term Investments

3,349,000

2,040,000

1,016,000

5,613,000

Sale of Short-Term Investments

14,236,000

11,217,000

6,036,000

Purchase of Property, Plant, Equipment

(837,000)

(4,669,000)

(304,000)

(837,000)

Acquisitions

(16,000)

57,000

56,000

4,768,000

Purchase of Long-Term Investments

(4,941,000)

(2,874,000)

(1,369,000)

(543,000)

Purchase of Short-Term Investments

(8,685,000)

(6,925,000)

(4,742,000)

(15,633,000)

Other Investing Changes Net

(7,387,000)

329,000

(1,985,000)

(6,108,000)

Net Cash from Investing Activities

(4,281,000)

(825,000)

(1,292,000)

(12,740,000)

Issuance of Debt

7,930,000

5,278,000

2,394,000

9,034,000

Issuance of Capital Stock

3,000

3,000

11,000

Repayment of Debt

(5,267,000)

(4,077,000)

(2,057,000)

(8,468,000)

Repurchase of Capital Stock

(100,000)

Payment of Cash Dividends

(679,000)

(459,000)

(217,000)

(916,000)

Other Financing Charges, Net

(261,000)

(179,000)

(151,000)

81,000

Net Cash from Financing Activities

1,723,000

566,000

(28,000)

(358,000)

Effect of Exchange Rate Changes

(17,000)

(69,000)

128,000

(253,000)

Net Change in Cash & Cash Equivalents

7,249,000

6,113,000

1,307,000

(5,185,000)

Cash at Beginning of Period

16,071,000

16,071,000

16,071,000

21,256,000

Cash at End of Period

23,320,000

22,184,000

17,378,000

16,071,000

* = Data not available

(Forbes, General Motors cash flow, 2013).

Examining GM's cash flow, several features stand out. GM has experienced a positive net change in cash and cash equivalents since the 2011 reporting period.

Toyota's cash flow, also prepared by Forbes to aid in comparison across dimensions, is featured below:

View: Annual Data | Quarterly Data

All numbers in thousands

PERIOD ENDING

9-Month

12/2012

6-Month

09/2012

3-Month

06/2012

12-Month

03/2012

Cash Flow From Operating Activities

Net Income (Loss)

8,485,608

7,809,100

4,030,956

4,475,387

Depreciation

9,291,358

6,593,624

3,172,477

12,975,636

Deferred Income Taxes

536,236

550,205

71,700

77,708

Operating (Gains) Losses

(1,681,884)

(1,204,408)

(761,837)

(1,791,870)

(Increase) Decrease in Receivables

(7,114,211)

(Increase) Decrease in Inventories

(4,191,299)

(Increase) Decrease in Other Current Assets

(2,193,681)

(Increase) Decrease in Payables

9,190,874

(Increase) Decrease in Other Curr Liabs.

4,098,778

(Increase) Decrease in Other Working Capital

3,469,554

2,132,660

2,206,329

1,350,750

Other Non-Cash Items

207,711

51,298

87,128

771,055

Net Cash from Continuing Operations

20,308,585

15,932,480

8,806,755

17,649,128

Net Cash from Operating Activities

20,308,585

15,932,480

8,806,755

17,649,128

Sale of Property, Plant, Equipment

4,517,394

3,113,650

1,622,408

5,686,202

Sale of Long-Term Investments

23,137,815

55,994,254

27,351,059

34,714,441

Purchase of Property, Plant, Equipment

(15,614,450)

(10,829,408)

(5,502,481)

(18,616,951)

Purchase of Long-Term Investments

(30,099,929)

(19,903,303)

(10,443,363)

(38,565,903)

Other Investing Changes Net

(9,305,872)

(45,870,282)

(21,801,892)

(748,113)

Net Cash from Investing Activities

(27,365,041)

(17,495,089)

(8,774,269)

(17,530,323)

Issuance of Debt

28,433,466

18,440,372

7,540,193

29,100,273

Repayment of Debt

(24,014,787)

(14,701,131)

(4,926,945)

(34,845,033)

Repurchase of Capital Stock

(514,383)

(353,958)

(210,690)

(455,045)

Payment of Cash Dividends

(2,209,793)

(1,221,131)

(1,190,675)

(1,905,158)

Other Financing Charges, Net

3,786,997

Net Cash from Financing Activities

1,694,502

2,164,151

1,211,881

(4,317,965)

Effect of Exchange Rate Changes

271,490

(778,637)

(629,151)

(679,737)

Net Change in Cash & Cash Equivalents

(5,090,462)

(177,095)

615,214

(4,878,899)

Cash at Beginning of Period

19,529,096

21,583,547

21,045,243

25,283,540

Cash at End of Period

14,438,633

21,406,452

21,660,458

20,404,641

* = Data not available

(Forbes, Toyota cash flow, 2013).

Examining Toyota's cash flow, several features stand out. First, its cash has declined in the reporting time, but part of that may be due to a large payment of cash dividends. It also paid back a significant amount of debt during the last reporting period and invested a significant portion of its cash in long-term investments; both of these expenditures would help explain a drop in available cash.

Conclusion

Comparing and contrasting the two companies across several dimensions makes it easier to compare them, but it does not make it easier to determine which company is in a better financial position. GM suffered losses due to the economic downturn, while Toyota suffered major losses as a result of the economic downturn and the tsunami that hit Japan. Both companies have, as a result, struggled over the past few years. However, they appear to have placed their business focus in two distinct areas. Toyota has attempted to dominate the global automobile market, and has done so successfully, but does not compare favorably with GM in its productivity and profitability measures. In contrast, GM is taking a more cautious approach than it did prior to its bankruptcy and has not been willing to win market share at the risk of its profits (Higgins, 2012). Which strategy will prove the most profitable for the long-run is something that remains to be seen; however, both companies have positive financial outlooks at this time.

References

Chu, M. (2012, March 27). Is GM a good stock to buy right now? Retrieved February 12, 2013

from Insider Monkey website: http://www.insidermonkey.com/blog/is-gm-a-good-stock-to-buy-right-now-11565/

Forbes. (2013). General Motors Company (NYSE: GM): Balance sheet. Retrieved February

12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=gm&period=qtr

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12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=tm&period=qtr

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Higgins, T. (2012, July 26). Toyota extends global sales lead over General Motors, VW.

Retrieved February 12, 2013 from Bloomberg website: http://www.bloomberg.com/news/2012-07-25/toyota-extends-global-sales-lead-over-general-motors-vw.html

Johnson, S. (2009, September 3). Getting back to black drives Toyota CFO. Retrieved

February 12, 2013 from CFO.com website: http://www.cfo.com/article.cfm/14389887/1/c_2984340

Investopedia. (2013). Balance sheet. Retrieved February 12, 2013 from Investopedia website:

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Investopedia. (2013. Cash flow statement. Retrieved February 12, 2013 from Investopedia

website: http://www.investopedia.com/terms/c/cashflowstatement.asp#axzz2Kh4sBzIK

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http://www.macroaxis.com/invest/ratio/GM -- Working_Capital

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References

Chu, M. (2012, March 27). Is GM a good stock to buy right now? Retrieved February 12, 2013

from Insider Monkey website: http://www.insidermonkey.com/blog/is-gm-a-good-stock-to-buy-right-now-11565/

Forbes. (2013). General Motors Company (NYSE: GM): Balance sheet. Retrieved February

12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=gm&period=qtr
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Forbes. (2013). General Motors Company (NYSE: GM): Income statement. Retrieved February 12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/IncomeStatement.jsp?tkr=gm&period=qtr
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http://www.macroaxis.com/invest/ratio/GM -- Working_Capital
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General Motors Versus Toyota
Words: 627 Length: 2 Document Type: Term Paper

General Motors vs. Toyota General Motors, a European car company, and Toyota, a Japanese car company, are competing for worldwide supremacy in the manufacture of automobiles. However, as with any competition, are factors that make one superior from the other. And in the case of General Motors and Toyota, if I were an investor, I will choose to invest with Toyota. Following is a discussion on why it is more ideal

General Motors Company, Commonly Called As GM
Words: 3009 Length: 10 Document Type: Case Study

General Motors Company, commonly called as GM is one of the largest automobile manufacturers in the world. It is an American multinational corporation headquartered in Detroit, Michigan. It has business operations in more than 157 countries around the Globe. It was founded in 1908 as General Motors Corporation; and renamed as General Motors in 2009. The top brands of the company include Chevrolet, Isuzu, GMC, Jie Fang, Cadillac, Vauxhall, Baojun,

General Motors GM Is One
Words: 6236 Length: 25 Document Type: Thesis

" Conclusion Overall GM is currently confronting some of the most difficult obstacles that it has ever had to overcome. Government intervention is no guarantee that the company will be able to overcome these obstacles. Billions of dollars have been given to the company in an effort to save it from further demise. However, capital alone will not save the company, there must be a strategic effort of the management to properly

General Motors Company and Alternatives to Realize
Words: 916 Length: 3 Document Type: Case Study

General Motors Company and Alternatives to Realize Growth Value discipline According to management theorists Treacy and Wiersema, companies must always ask how they can provide value to their customers (Value Disciplines Model, 2011, Value-Based Management). Such value may be provided by operational excellence -- for example, a company that provides a high-quality product at a relatively low price, because of its ability to capitalize upon efficiency and brand marketing due to economies

General Motors: A Perfect Storm
Words: 693 Length: 2 Document Type: Term Paper

After years of unquestioned industry dominance, GM was not prepared to shift its approach to making cars to cope with the competitive edge possessed by Japanese automotive manufactures such as Toyota since the 1980s. "To be sure, GM has seen sales jump from time to time, but always because of costly incentives, like zero-interest financing after the Sept. 11 attacks, or the 'employee pricing' last summer. Ford and Chrysler have

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