Analysis of Financial

Information
Video Presentation- GM Company
ACCT2105-Ha Thanh N
Student: Ho Le Anh Dinh-S3817796
 Profitability
2 significant ratios:
❖ Return on Assets %: How much profit is being generated for every dollar of assets controlled by the
organization (Hargrave & James 2020)

❖ Return on Equity %: Provides a measure of the profit being generated for each dollar of equity the
owners have in the organization (Hargrave & Mansa 2020)

Downward trend => negative sign

2017 => incur a loss
an instability in the profit
 Profitability
1 financial information:
Revenue USD Mil: is the income generated from normal business operations and includes discounts and
deductions for returned merchandise (Kenton 2019)

Decreased since 2017

 Recommendations:
1. Re-consider about its strategy
2. See improvement or not
 Market performance
1 significant ratio:
Price earnings ratio: Provides an indication of how many times earnings the market is prepared to pay
𝑴𝒂𝒓𝒌𝒆𝒕 𝒑𝒓𝒊𝒄𝒆 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆
for a share (Hayes & Scott 2020) =
𝒆𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆

An upward trend => misunderstanding (overestimated)

should make use of this element
 Market performance
2 financial information:
❖ Days sales outstanding (DSO): is a measure of the average number of days that it takes a company
to collect payment after a sale has been made (Grant & Johnson 2020)

Upward trend for DSO => cash flow problems

❖ Earnings per share (EPS): is the portion of a company's profit that is allocated to each outstanding
share of its common stock (Chen & Kindness 2020)

Downward trend for EPS => investors paid less for the firm
 Capital structure
2 significant ratios:
❖ Debt to assets ratio: is a measure of the extent to which an organization’s assets have been funded by
lenders/creditors. The ratio is used to determine the financial risk of a business (Bragg 2018)
𝑻𝒐𝒕𝒂𝒍 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
=
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕𝒔
 Capital structure
❖ Debt to equity ratio: provides an indication of how much liabilities there are per dollar of equity. It
reflects the ability of shareholder equity to cover all outstanding debts in the event of a business
𝑻𝒐𝒕𝒂𝒍 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
downturn (Hayes & Mansa 2020) =
𝑻𝒐𝒕𝒂𝒍 𝒐𝒘𝒏𝒆𝒓 𝒆𝒒𝒖𝒊𝒕𝒚

Upward trend for these ratios => the riskier of the firm
However, improvement since 2017 => positive sign for investors
 Capital structure
1 financial information:
Long-term debt (in %) : refers to a company's loans and other liabilities that will not become due within
one year of the balance sheet date (Averkamp 2020)

Upward trend in long-term debt => might try to hide real debt, especially 2017
However, improve since 2017=> positive sign for investors
 Perspective as a supplier
2 significant ratios:
❖ Current ratio: is a liquidity ratio that measures a company's ability to pay short-term obligations or
those due within one year (Kenton & Mansa 2020)

❖ Quick ratio: is a measure of how well a company can meet its short-term financial liabilities
(InvesingAnswers 2019)
 Perspective as a supplier
1 financial information:
Short-term debt: also called current liabilities, is a firm's financial obligations that are expected to be
paid off within a year (Ganti 2020)

FCAU is lowest and decrease by times

GM & F increased by times
To sum up, opt for FCAU company
 References
• Averkamp, H n.d, 'What is long-term debt?', AccountingCoach, viewed 20 May 2020,
<https://www.accountingcoach.com/blog/what-is-long-term-debt>.
• Bragg, S 2018, 'Debt to assets ratio', AccountingTools, viewed 20 May 2020,
<https://www.accountingtools.com/articles/2017/5/5/debt-to-assets-ratio>.
• Chen, J & Kindness, D 2020, 'Earnings Per Share – EPS Definition', Investopedia, viewed 20 May 2020,
<https://www.investopedia.com/terms/e/eps.asp>.
• Grant, M & Johnson, J 2020, 'Days Sales Outstanding – DSO Definition', Investopedia, viewed 20 May 2020,
<https://www.investopedia.com/terms/d/dso.asp>.
• Hargrave, M & James, M 2020, 'Return on Assets ROA', Investopedia, viewed 20 May 2020,
<https://www.investopedia.com/terms/r/returnonassets.asp>.
• Hargrave, M & Mansa, J 2020, 'Return on Equity ROE', Investopedia, viewed 20 May 2020,
<https://www.investopedia.com/terms/r/returnonequity.asp>.
• Hayes, A & Mansa, J 2020, 'Debt-To-Equity Ratio D/E', Investopedia, viewed 20 May 2020,
<https://www.investopedia.com/terms/d/debtequityratio.asp>.
• Hayes, A & Scott, G 2020, 'Price-to-Earnings Ratio P/E Ratio', Investopedia, viewed 20 May 2020,
<https://www.investopedia.com/terms/p/price-earningsratio.asp>.
• InvestingAnswers 2019, 'Quick Ratio', InvestingAnswers, viewed 20 May 2020,
<https://investinganswers.com/dictionary/q/quick-ratio>.
• Kenton, W & Mansa, J 2020, 'Current Ratio', Investopedia, viewed 20 May 2020,
<https://www.investopedia.com/terms/c/currentratio.asp>.
• Kenton, W 2019, 'Revenue', Investopedia, viewed 20 May 2020, <https://www.investopedia.com/terms/r/revenue.asp>.