General Motors - Financial Ratio AnalysisI. Highlights of the History of General Motors In its early years, the automotive industry consisted of hundreds of companies, each producing a few models. William Durant, who purchased and reorganized the bankrupt Buick Motors in 1904, determined that if several automobile manufacturers merged, it would increase the group's protection. In 1908 he founded the General Motors Company in Flint, Michigan. Durant had purchased 17 companies (including Oldsmobile, Cadillac, and Pontiac) by 1910, the year a bankers' union forced him to resign. In a 1915 stock exchange, he regained control through Chevrolet, a company he had formed with race car driver Louis Chevrolet. GM created GM Acceptance Corporation (self-financing) and acquired a number of companies, including Fisher Body, Frigidaire (sold in 1979), and a small bearing company, Hyatt Roller Bearing. With the acquisition of Hyatt came Alfred Sloan, an administrative genius who would build GM into a corporate behemoth. Sloan, president from 1923 to 1937, implemented a decentralized management system, now emulated around the world. The automaker competed by offering models ranging from luxury to economy, colors beyond black, and annual styling changes. By 1927 it had become the industry leader. GM introduced a line of front-wheel-drive compacts in 1979. Under Roger Smith, CEO from 1981 to 1990, GM laid off thousands of workers as part of a massive company-wide restructuring and cost-cutting program. In 1984 GM founded NUMMI with Toyota as an experiment to see if Toyota's manufacturing techniques would work in the United States. The joint venture's first car was the Chevy Nova. GM purchased Ross Perot's Electronic Data Systems (1984) and HughesAircraft (1986). In 1989 the company purchased 50% of Saab Automobile. In 1990 GM launched Saturn, its first new brand since 1926, reflecting a new emphasis on quality company-wide. Two years later it made the largest stock offering in U.S. history, raising $2.2 billion. Culminating a period of boardroom coups (related to the company's slow effort to reduce costs) in the early 1990s, John Smith replaced Robert Stempel as CEO. NBC apologized in 1993 for irregularities in its complaint that GM pickups equipped with "side-saddle" gas tanks tended to explode in side impacts. However, the government has requested that… half of the paper… be improved. Shareholders' share capital increased significantly, indicating better management of the company's capital. EBIT has improved over the last two years mainly because the level of interest paid has decreased due to the reduction in liabilities. Profitability Gross profit margin increased from 1993 to 1994 because the cost of goods sold did not increase at the same level as the increase in sales. The operating profit margin ratio remained stable in 1995 compared to 1994, and the net profit margin also improved over the past two years. Return on total assets has risen as companies' profitability has increased, while return on equity has declined over the past two years. as shareholder equity has increased Overall, it is clear that the company's profitability has increased over the last 2 years, primarily due to decreasing liabilities, improved accounts receivable, and better corporate debt management. The company also demonstrates that profitability can be increased and improved further.