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General Motors Corporation - Final Exam Question




Question;GENERAL MOTORS CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEYears Ended December 31,-----------------------200320022001---------(dollars in millions except per share amounts)GENERAL MOTORS CORPORATION AND SUBSIDIARIESTotal net sales and revenues (Notes 1 and 24) $185,524 $177,324 $169,051------- ------- ------Cost of sales and other expenses (Note 5)152,071 146,793 138,847Selling, general, and administrative expenses 21,008 20,69019,433Interest expense (Note 16)9,464 7,5038,317------- ------- ------Total costs and expenses182,543 174,986 166,597------- ------- ------Income from continuing operations beforeincome taxes, equity incomeand minority interests2,981 2,3382,454Income tax expense (Note 11)7316441,094Equity income (loss) and minority interests612281(138)----- --------Income from continuing operations2,862 1,9751,222Loss from discontinued operations (Note 2)(219) (239)(621)Gain on sale of discontinued operations1,179----- --------Net income3,822 1,736601Dividends on preference stocks(46)(99)----- --------Earnings attributable to common stocks(Note 20)$3,822 $1,690$502===== ========Basic earnings (loss) per share attributable tocommon stocks$1-2/3 par valueContinuing operations$5.10 $3.53$2.21Discontinued operations$2.14 $(0.16) $(0.42)---------Earnings per share attributable to$1-2/3 par value$7.24 $3.37$1.79============Losses per share from discontinued operationsattributable to Class H$(0.22) $(0.21) $(0.55)============Earnings (loss) per share attributable tocommon stocks assuming dilution$1-2/3 par valueContinuing operations$5.03 $3.51$2.20Discontinued operations$2.11 $(0.16) $(0.43)---------Earnings per share attributable to $1-2/3par value$7.14 $3.35$1.77============Losses per share from discontinued operationsattributable to Class H$(0.22) $(0.21) $(0.55)============Reference should be made to the notes to consolidated financial statements.GENERAL MOTORS CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSASSETSDecember 31,-----------2003 2002(dollars in millions)Cash and cash equivalents (Note 1)Other marketable securities (Note 6)$32,554 $20,32022,215 16,825------ -----Total cash and marketable securities54,769 37,145Finance receivables - net (Note 8)173,137 134,643Loans held for sale19,609 15,720Accounts and notes receivable (less allowances) 20,532 16,337Inventories (less allowances) (Note 9)10,9609,737Assets of discontinued operations- 18,653Deferred income taxes (Note 11)27,190 39,767Net equipment on operating leases(less accumulated depreciation) (Note 10)34,383 31,026Equity in net assets of nonconsolidated affiliates6,0325,097Property - net (Note 12)38,211 35,956Intangible assets - net (Notes 1 and 13)4,760 10,796Other assets (Note 14)58,924 14,176------- ------Total assets$448,507 $369,053======= =======LIABILITIES AND STOCKHOLDERS' EQUITYAccounts payable (principally trade)$25,422 $21,138Notes and loans payable (Note 16)271,756 200,168Liabilities of discontinued operations7,956Postretirement benefits other than pensions (Note 17)36,292 38,152Pensions (Note 17)8,024 22,679Deferred income taxes (Notes 11 and 15)7,5086,523Accrued expenses and other liabilities (Note 15)73,930 65,344------- ------Total liabilities422,932 361,960Minority interests307279Stockholders' equity (Note 19)$1-2/3 par value common stock (outstanding,561,997,725 and 560,447,797 shares)937936Class H common stock (outstanding,958,284,272 shares in 2002)96Capital surplus (principally additional paid-in capital) 15,185 21,583Retained earnings12,752 10,031------ -----Subtotal28,874 32,646Accumulated foreign currency translation adjustments(1,815) (2,784)Net unrealized gains (losses) on derivatives51(205)Net unrealized gains on securities618372Minimum pension liability adjustment(2,460) (23,215)----- -----Accumulated other comprehensive loss(3,606) (25,832)----- -----Total stockholders' equity25,2686,814------- ------Total liabilities and stockholders' equity$448,507 $369,053======= =======Reference should be made to the notes to consolidated financial statements.Volkswagen and GM (questions 1-7)1. If you were to make a tender offer for Volkswagen, how would you decide much tooffer? What accounting differences between the U.S. and Germany should be takeninto account?2. If Volkswagen were to sell bonds on the U.S. market, do you think its interest ratewould be greater or lesser than GM? Why? Compute the following ratios for both companies in 2003. What are somepossible reasons for the differences in ratios?Which of the statements do you prefer? Why? Which of the statements is moretransparent?What differences should you look for when adjusting Volkswagens results to GAAPreporting standards? In other words, what are some of the major accountingdifferences between Germany and the U.S. that are relevant to this industry?If you were a bank, to whom would you rather lend money? Why?If you were an equity investor, in whom would you rather invest? Why?


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