Write 7 pages with APA style on Company Financial Ratio Analysis. While evaluating the annual financial situation of General Motors, it is crucial to maintain the disclosure of the income statement, balance sheet, and other relevant accounting frameworks. Analysis and interpretation of financial statements help to evaluate the financial position and performance of an enterprise. “GM generated record third-quarter automotive revenue of $43.1 billion. The company also achieved a record global third-quarter sales of 2.39 million cars and trucks, up to four percent compared to the third quarter 2006, driven by exceptionally strong demand in emerging markets and improved performance in developed markets. GM also set many third-quarter sales records around the globe, including a 22 percent increase in GMLAAM, a 16 percent increase in the GMAP region, and a 15 percent gain in GME” (GM Reports third-quarter financial results, 2007). .
Ratio analysis is one of the important tools used to develop and interpret the financial statements of a business entity. Ratios measure the efficiency of the operation of a business unit. Moreover, it also helps to analyze the financial strength or weakness of a business entity. The economic growth of the company is steady and stable. Like all other areas, the company is highly concentrating in the area of accounting and finance also. Similarly, a well-defined plan is maintained by the company for protecting its quantum of stock:
1. Maintain control over the entire amount of raw material obtained from the suppliers.
2. Utilize these quanta of raw materials for the production of goods with appropriate control and without making any wastage.
3. After making the delivery of finished goods, the company tries to restore the balance of material/inventory for further process.
General Motors, a leading automobile manufacturer, is following a systematic procedure for evaluating the financial performance of the entity. The major ratios are being calculated by GM for the analysis and interpretation of financial measurement are current ratio, quick ratio, asset turn over ratio, inventory turn over ratio, etc.