Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: AC Flyer who wrote (21379)	7/17/2002 1:55:08 PM
From: reaper	Read Replies (2) of 74559

<<instead of pulling the "investing 101" crap>> OK, then let's see how you do with Investing 201. (i) GM "earned" $1.5 billion in the quarter, yet their cash and their debt are basically unchanged. Where did the money go? (ii) GM generated $3.5 billion of cash from ops from their automotive division in the quarter (according to their press release). How much of this cash came from not paying their bills, and how much came from the actual operations of the company (i'll give you a hint: look in payables and accrueds)? (iii) how much of the real cash that GM generated (i.e. beyond not paying their bills) was spent on capital expenditures in the quarter? (iv) GM has $35.5 billion of lease assets on its balance sheet. what are management's assumptions regarding residual values on those leases? are your assumptions the same or different from management's? (v) GM has $106.8 billion of finance receivable assets on its balance sheet. what are management's assumptions regarding future charge-offs? are your assumptions the same or different? (vi) GM has $20.7 billion of book equity. how much downward adjustment to the assumptions referenced in (iv) and (v) above would be necessary for GM to become insolvent? (vii) what are GMs credit ratings, both at GM corporate and at GMAC? in which direction are these ratings heading? where are GM bonds trading, and what is their general trend? what does the direction of bond prices signal about equity prices? (viii) and finally.... do you always buy stock in companies where you so grossly mis-understand the financial statements, or is it just your patriotic duty to "buy American"? Cheers

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