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Real World Event Case Study: The Financial Collapse of General Motors
Finance & Accounting
Pages 4 (1004 words)
Real World Event Case Study: The Financial Collapse of General Motors Table of Contents Question 1 3 Question 2 4 Question 3 5 Question 5 5 Reference 8 Question 1 Please describe your event and how this ties into applied managerial finance? The event that is to be discussed is about the financial collapse of General Motors.
But with the fall of financial industry in 2007, things got worst across all the financial industries in America, including the automobile industry. GM declined in the late 20th century as it failed to adapt to the changing business environment and respond to an increasingly competition from abroad. Gm which has funded approximately $103billion towards employee related obligations proved to be disadvantage for the company. Not only legacy cost but also due to its poor business strategy. It relied on its old mode of thinking which resisted the offering, and manufacturing capacity. The business suffered decline where its market share fell from 45% to 22%. In addition the deteriorating strength of the economy and the loss of purchasing power of its consumers resulted in bankruptcy for GM (Estrada, 2011). In 2009, GM announced that the cash reserves amounted to $14billion after losing $30.9billion in 2008. Thus GM was filed bankrupt and its assets were sold off to the new government owned organization (The New York Times, 2010). It can be said that managerial finance was not applied by GM because if the financial manager would have made proper decisions with respect to cash flows and how much and the type of equity and debt to be used in order to finance the firm. ...
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