GM Financial Analysis and Planning of the Collapse

GM Financial Analysis and Planning of the Collapse Essay example
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GM financial analysis and planning of the collapse General Motors was one of the biggest companies in Automobiles Industry. It was most innovative car maker and it led to the development of new companies in the automotive industry. Even though, it was the biggest player in the industry, it was exceeded by Toyota in 2008…

Introduction

The debt kept rising and the conditions worsened for GM in 2008. (Henderson, 2008) The earnings per share in 2005 were $ (5.93) which lead to the fall in the value of the shares. (General Motors Financial report, 2005). In 2007, the earnings per share further decreased to $ (76.16). However, in 2008, there was a slight improvement. The earnings per share were $ (53.47). (General Motors Annual Report 2010) In 2007, GM made the biggest loss in automobile industry. It made a loss of $ 38.7 billion. GM had to sell Allison Transmission for 5.6 billion dollars to Onex Corporation and Carlyle Group. Then, the gas prices increased in 2008 and GM had to close its sports utility vehicle and pick up factories. 8350 people became unemployed. By the end of 2008, it had to ask the government for protection. It had to ask Congress for $18 billion to pay its debts and to remain afloat. The Congress gave him $13.4 billion. However, the loss made was huge. It made an annual loss of $30.9 billion and its debt was accumulating. In 2009, it declared that it needs $ 30 billion to survive. On the other hand, its unit in Sweden filed for bankruptcy. This was another blow to General Motors. It presented a survival plan and a restructuring plan to US Government in which it mentioned that they close all their units except Saturn by 2011. ...
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