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Gm - Old Financial

In: Business and Management

Submitted By qyang2014
Words 569
Pages 3
Old Financial Information
G.M. filed for Chapter 11 on 2009 and the filing reported$82.29 billion in assets and $172.81 billion in debt. It can be easily saw that the old G.M.’s debt is twice of its assets. Data observed from 2009 General Motors Bankruptcy Filing.
December 12, 2008, G.M. stated that it was nearly out of cash, and may not survive past 2009. One of the major reasons lead GM to bankruptcy is its large amount of debt. Too much debt payments not only directly made G.M. fell bankrupt but also narrowed the working in capital which decreased the production volume and then the IBIT; finally caused G.M. didn’t have enough money to pay off the debt. The problem of large amount of debt can be seen as the butterfly effect. Any problem on any part of the chain such as borrowing debt, producing product, sales profit and debt payoff will cause a chain reaction that will make the whole building fell. And when the financial crisis happen in the end 2008 and the sales of auto market fell, the chain reaction happened and the capital chain broke.
The financial status of G.M. can be seen from the stock market. As Micki Maynard stated (Maynard, 2009), in 2007, G.M.’s shares still sold for $40, and the company was honored by Morgan Stanley as the top performer among auto companies in 2006. Even in the middle of 2008 G.M. was still in relatively good shape, when its shares sold for about $18. But the slump that hit the car market last summer, and which accelerated in the fall, played havoc with the company’s value. But at the end of May, 2009 the price of G.M. shares had fallen under $1.00 and the symbol of the bankrupted G.M. became MTLQQ which trade in the OTC.
The bankruptcy can be seen as a strategy of G.M. to clean up the debt. Of GM’s creditors, Starcom MediaVest Group, the automaker’s largest trade creditor, is owed $121.5 million, according to the bankruptcy…...

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