Until very recently, GM was not being publicly traded; after its bailout by the U.S. government, the company was required to pay down its debt and essentially purchase itself back from the taxpayers before issuing stock. This stock has now been issued, and the debt was very recently paid off, giving the company a current debt/equity ratio of .36 (GM 2011). This means that the company is primarily being financed through the ownership funds of the company rather than through borrowing, which likely means fewer short-term gains but longer financial stability. Honda, on the other hand, has a debt/equity ratio of .71, meaning that a greater percentage of the company's operations are being financed through borrowed funds rather than through ownership funds (Honda 2011). While this might lead to more short-term advantages, it is a less desirable position to be in during volatile economic and industry times. Finally, there is one more important measure of the fiscal health and policies of these...
Though there are many other metrics that could be applied to the situation, this one is especially telling in terms of recent events. Honda's current dividend yield is holding steady at just above one percent, while GM has no reportable dividend yield at all -- the re-issued stock has not been in existence long enough. While Honda can be counted on to give one percent of invested money back to its shareholders each year, there is no guarantee that GM will be in a position to pay any dividends for some time.
Acura was launched in the mid 1980s, and it was the first Japanese produced luxury car, however it lacked many of the features that customers were looking for in high end vehicles and Acura went through almost five years of net losses before Honda finally figured out their design and distribution methods. Honda depends too much on their ingenuity and ability to adjust once a product enters the market,
GM v Honda In FY 2010, General Motors earned revenue of $135 billion and earned profit of $6.17 billion on this. The 2010 FY figures are distorted because of the impact of the government bailout, but in prior years GM was losing over $30 billion per year, despite recording higher sales ($177 billion in 2007 and $147 billion in 2008). Sales hit their nadir in 2009 with just $104 billion, so
General Motors and Honda Financial Analysis This text seeks to compare the finances of General Motors (GM) to those of Honda Motors (HMC) in an attempt to determine why the latter has been more successful than the former. In so doing, the paper will amongst other things utilize a number of financial management concepts and measures of performance including but not limited to financial ratios and managerial capabilities. Although the biggest headache
Ford Motor Company Business Analysis Ford Motor Company Ford Motor Company is 4th on Fortune 500 List and 4th on Global 500 List and is the 2nd largest auto manufacturer in the world. Ford Motor Company has the advantage of Ford Motor Credit however, due to Firestone tire recalls the prices are the lowest prices in years with cash reserves sunk to $4.1 billion and $13 billion on acquisitions with $3.5 billion
Corporate Strategies of Japanese Automaker in Europe: Case of Honda Success in the auto industry depends in part upon the ability of automakers to build a superior product that functions efficiently and economically. Traditionally Japanese automakers have been associated with this success and efficiency in the world of auto manufacturing. Honda, one well-known competitor, is particularly well-known for its drive to set itself apart from other automakers in corporate strategy
However sales have dropped due in part to the financial crisis. Ford and GM therefore must be aware that consumers may be demand electric cars but may be unwilling to pay large sums of money for them. Below is an explanation why. Brief overview of the Financial Crisis and its implications on Ford and GM To begin, in order to understand many of the initiatives both Ford and GM took in
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