The Industry Averages and Financial Ratios Essay
The Industry Averages and Financial Ratios
In today’s market business really look at what the others in their competitive market are doing to compare how they are doing as a business or corporation. They do this by evaluating the industry averages and the financial ratios. When corporations and financial advisors look at the industry average and the ratios it helps them identify the industry strengths, weaknesses and the overall health of the financial standings of the organization. The automotive and transportation industry with a focus on General Motors (SIC:37110000) is what our group as chosen to examine for our comparison. General Motors was started in 1908 by William Durant by the combination of over 17 independent companies in to one general company, thus eliminating his competitors of the industry. This increased the overall average of the industry and increased the company’s financial health. That was then, now General Motors in number 3 in the market as it shows in Bloomberg Business week graph.
The purpose of comparing the rate of General Motors and the Industry is to rate their performance in solvency, profitability and efficiency. General Motors ratio improved in profitability from 2011 to 2012 and 2012 to 2013 the assets and liabilities ratio was 1.31 that means in profit earned relatively to sales and total assets. In the Industry that means GM did pretty well in assets and sales compared to the Industry. In solvency the ratio was 13.19, it has more than 202,000 employees supporting the companies’ production and distribution. In efficiency it total a ratio of 9.00 in 2012 to 9.70 in 2013 which they did better in quality, receivables and efficiency of assets control compared to the industry.
General Motors has a reasonable balance on overall performance. It has a higher payables compared to the industry but lower receivables 16.9 to 6.9 , that indicates that there’s a higher cash coming in and less cash going out. In 2011 GM Company achieved staggering turnover of 150.3 billion US. Dollar and net income of 7.6 billion compared to the industry. Below our group as compared the ratios with the industry as a whole and the company General Motors to see where and how the company is doing within the industry.
Bloomberg Businessweek. General Motors Co (GM:New York) (Dec.22, 2014). Retrieved from http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=GM Dan & Bradstreet Key Business Ratios. (2014). 3711 Motor Vehicle and Car Bodies. Retrieved from Dan & Bradstreet Key Business Ratios, FIN370 website. General Motors Co. (2014). Market Watch. Retrieved from http://www.marketwatch.com/investing/stock/gm/financials/balance-sheet Magloff, David. “General Motors Co.” Growth, Profitability, and Financial Ratios for (GM) from Morningstar.com. N.p., n.d. Web. 22 Dec. 2014