Is GM GTZ (Good till Zero)? My Analysis
I proposed that it is but several on the FOOL have told me: "No Way". The only reason offered was the gov't will not let them go under.
I asked how the gov't could prevent it?
Just "no way" was about the only answer I could get.
Well here was my response: I say "way".
Here is the GTZ case (corrections please if I have something wrong)
Strictly financial, chart reading not required.
biz.yahoo.com
Long term debt is rising every quarter.
Long Term Debt $175,490,000,000 $164,879,000,000 $163,912,000,000 $154,166,000,000
Short Term And Current Long Term Debt $2,183,000,000
Net Income $1,292,000,000 $228,000,000 $255,000,000 ($368,000,000)
Cash Flows From Operating Activities $969,000,000 $7,257,000,000 $4,308,000,000 $125,000,000 -
Not even enough to service short term and current debt.
Cash Flows From Investing Activities ($8,174,000,000) ($6,950,000,000) ($15,345,000,000) ($2,142,000,000) - More money going down the rat hole every quarter to maintain operations - This looks like one huge rat hole.
Net Tangible Assets $6,928,000,000 $9,372,000,000 $9,701,000,000 $21,149,000,000 - Dropping like a rock
Auto boom has peaked.
Auto loans at 0% is losing them money even if the boom has not peaked and continues indefinately.
They are $20B in the hole on pension fund funding.
I ask any proponents of "the gov't will not let them go under" to explain what the gov't can do to prevent GM from going under.
Even if the Gov't was to ban imports (or tax the heck out of them), can GM sell cars at increased rates if they have to give them away now with zero% financing deals. Most likley not. Most likely this administration (as stupid as it is) is not stupid enough to start a trade war this extreme.
Who supplies to GM?
Are they GTZ as well.
Name some someone.
GT perhaps?
Long Term Debt $2,940,200,000 $2,883,900,000 $3,203,600,000 $3,202,000,000
Short Term And Current Long Term Debt $426,900,000 $407,400,000 $364,700,000 $210,000,000 (going up every quarter)
Net Income $28,900,000 ($63,200,000) ($174,000,000) $9,300,000
Cash Flows From Operating Activities $263,700,000 ($203,100,000) $837,900,000 $318,800,000 - not enough to fund current debt
Pension fund enormously underfunded
This entire sector stinks.
Is there a sector bet here that I am not aware of?
GM F GT all likely headed to or near Zero.
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