"Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt" (Investopedia, Balance sheet, 2013).
Forbes makes the balance sheets of companies available on its website. GM's balance sheet is below:
View: Annual Data | Quarterly Data
All numbers in thousands
PERIOD ENDING
09/2012
06/2012
03/2012
12/2011
Balance Sheet - Assets
Cash and Equivalents
23,320,000
22,184,000
17,378,000
15,499,000
Restricted Cash
863,000
734,000
924,000
206,000
Marketable Securities
10,411,000
11,381,000
14,686,000
16,148,000
Accounts Receivable
13,015,000
11,117,000
12,485,000
9,949,000
Other Receivable
3,744,000
3,478,000
3,314,000
Receivables
16,759,000
14,595,000
15,799,000
9,949,000
Raw Materials
7,241,000
7,112,000
6,745,000
Work in Progress
6,486,000
Finished Goods
8,431,000
8,321,000
9,099,000
7,838,000
Inventories
15,672,000
15,433,000
15,844,000
14,324,000
Current Deferred Income Taxes
2,110,000
2,087,000
1,985,000
1,657,000
Other Current Assets
2,972,000
3,819,000
2,600,000
2,464,000
Total Current Assets
72,107,000
70,233,000
69,216,000
60,247,000
Land & Improvements
2,496,000
Building & Improvements
4,670,000
Machinery, Furniture & Equipment
17,324,000
Construction in Progress
3,068,000
Other Fixed Assets
26,578,000
25,026,000
24,275,000
Total Fixed Assets
26,578,000
25,026,000
24,275,000
27,558,000
Gross Fixed Assets (Plant, Prop. & Equip.)
26,578,000
25,026,000
24,275,000
27,558,000
Accumulated Depreciation & Depletion
4,601,000
Net Fixed Assets (Net PP&E)
26,578,000
25,026,000
24,275,000
22,957,000
Intangibles
8,904,000
9,192,000
9,687,000
10,013,000
Cost in Excess
28,408,000
28,405,000
28,433,000
29,019,000
Non-Current Deferred Income Taxes
2,778,000
3,151,000
3,411,000
2,900,000
Other Non-Current Assets
16,681,000
15,980,000
15,172,000
19,467,000
Total Non-Current Assets
83,349,000
81,754,000
80,978,000
84,356,000
Total Assets
155,456,000
151,987,000
150,194,000
144,603,000
Balance Sheet - Liabilities, Stockholders Equity
Accounts Payable
26,313,000
26,425,000
27,576,000
24,494,000
Short-Term Debt
6,278,000
5,092,000
5,350,000
1,682,000
Accrued Liabilities
25,032,000
25,134,000
23,651,000
22,756,000
Total Current Liabilities
57,623,000
56,651,000
56,577,000
48,932,000
Long-Term Debt
10,375,000
9,701,000
8,874,000
11,650,000
Deferred Income Taxes
12,757,000
12,735,000
12,754,000
12,336,000
Other Non-Current Liabilities
32,072,000
31,290,000
31,849,000
32,694,000
Minority Interest
970,000
910,000
884,000
871,000
Total Non-Current Liabilities
56,174,000
54,636,000
54,361,000
57,551,000
Total Liabilities
113,797,000
111,287,000
110,938,000
106,483,000
Preferred Stock Equity
10,391,000
10,391,000
10,391,000
10,391,000
Common Stock Equity
31,268,000
30,309,000
28,865,000
27,729,000
Common Par
16,000
16,000
16,000
16,000
Additional Paid in Capital
26,443,000
26,399,000
26,334,000
26,391,000
Retained Earnings
11,533,000
9,889,000
8,283,000
7,183,000
Other Equity Adjustments
(6,724,000)
(5,995,000)
(5,768,000)
(5,861,000)
Total Capitalization
52,034,000
50,401,000
48,130,000
49,770,000
Total Equity
41,659,000
40,700,000
39,256,000
38,120,000
Total Liabilities & Stock Equity
155,456,000
151,987,000
150,194,000
144,603,000
Cash Flow
12,342,000
12,592,000
13,270,000
15,129,000
Working Capital
14,484,000
13,582,000
12,639,000
11,315,000
Free Cash Flow
8,292,000
1,370,000
2,034,000
11,181,000
Invested Capital
52,034,000
50,401,000
48,130,000
49,770,000
* = Data not available
(Forbes, General Motors balance sheet, 2013).
Examining GM's balance sheet, several features stand out. First, GM has experienced a steady increase in assets over the last several reporting periods. Likewise, it has a significantly greater free cash flow than it had the previous two reporting periods. It has been able to continue to invest capital in the company. Finally, its equity has continued to grow over the last few reporting periods.
Toyota's balance sheet, also prepared by Forbes to aid in comparison across dimensions, is featured below:
View: Annual Data | Quarterly Data
All numbers in thousands
PERIOD ENDING
12/2012
09/2012
06/2012
03/2012
Balance Sheet - Assets
Cash and Equivalents
14,438,633
22,842,840
22,605,351
21,380,411
Marketable Securities
17,772,675
16,549,447
15,726,494
14,351,661
Accounts Receivable
18,236,608
21,813,251
22,190,099
24,300,710
Loans Receivable
54,954,449
53,746,465
51,686,652
50,001,786
Other Receivable
3,937,766
4,247,956
3,943,188
4,964,420
Receivables
77,128,825
79,807,673
77,819,939
79,266,917
Raw Materials
5,099,143
Work in Progress
2,685,898
Finished Goods
11,927,966
Other Inventories
18,885,108
20,141,323
20,376,024
Inventories
18,885,108
20,141,323
20,376,024
19,713,008
Prepaid Expenses
6,354,201
5,850,938
6,352,199
6,274,718
Current Deferred Income Taxes
7,929,450
8,552,943
8,863,616
8,733,057
Total Current Assets
142,508,895
153,745,167
151,743,627
149,719,776
Land & Improvements
14,818,434
15,913,187
15,529,540
15,107,369
Building & Improvements
43,617,269
46,918,239
45,561,549
44,485,229
Machinery, Furniture & Equipment
141,035,142
147,029,048
143,538,952
141,803,900
Construction in Progress
3,195,749
3,395,385
3,213,335
3,345,974
Total Fixed Assets
202,666,596
213,255,861
207,843,376
204,742,475
Gross Fixed Assets (Plant, Prop. & Equip.)
202,666,596
213,255,861
207,843,376
204,742,475
Accumulated Depreciation & Depletion
128,220,451
135,696,593
131,818,874
128,973,838
Net Fixed Assets (Net PP&E)
74,446,144
77,559,267
76,024,501
75,768,637
Other Non-Current Assets
157,031,347
155,593,791
148,592,004
146,963,922
Total Non-Current Assets
231,477,491
233,153,059
224,616,505
222,732,559
Total Assets
373,986,387
386,898,226
376,360,132
372,452,336
Balance Sheet - Liabilities, Stockholders Equity
Accounts Payable
26,771,923
31,545,411
32,858,378
34,894,902
Short-Term Debt
75,284,748
75,199,010
74,462,689
72,462,105
Accrued Liabilities
21,437,591
22,739,550
22,820,917
22,219,126
Other Current Liabilities
14,688,155
14,983,997
14,032,974
13,586,560
Total Current Liabilities
138,182,419
144,467,969
144,174,959
143,162,695
Long-Term Debt
74,706,516
75,511,452
72,505,940
73,422,164
Deferred Income Taxes
11,981,156
11,208,830
10,956,748
11,044,206
Other Non-Current Liabilities
11,696,756
10,912,107
10,514,776
10,349,996
Minority Interest
6,444,997
6,765,796
6,483,707
6,272,762
Total Non-Current Liabilities
104,829,427
104,398,187
100,461,173
101,089,130
Total Liabilities
243,011,846
248,866,156
244,636,132
244,251,825
Common Stock Equity
130,974,540
138,032,069
131,724,000
128,200,510
Common Par
4,824,715
Additional Paid in Capital
11,031,299
12,177,172
11,897,831
6,691,172
Retained Earnings
143,923,999
159,001,760
151,803,697
144,809,210
Treasury Stock
(13,205,272)
(14,597,570)
(14,233,500)
(13,800,109)
Other Equity Adjustments
(10,775,486)
(18,549,293)
(17,744,028)
(14,324,479)
Total Capitalization
205,681,057
213,543,521
204,229,941
201,622,674
Total Equity
130,974,540
138,032,069
131,724,000
128,200,510
Total Liabilities & Stock Equity
373,986,387
386,898,226
376,360,132
372,452,336
Cash Flow
21,578,061
22,142,188
20,043,145
16,421,277
Working Capital
4,326,476
9,277,197
7,568,667
6,557,081
Free Cash Flow
2,484,342
3,881,940
2,113,598
(2,872,981)
Invested Capital
205,681,057
213,543,521
204,229,941
201,622,674
* = Data not available
(Forbes, Toyota balance sheet, 2013).
Examining Toyota's balance sheet, several features stand out. First, Toyota appears to have experienced a steady decline in assets over the last several reporting periods. However, its free cash flow is much higher than it was in the initial reporting period. It has been able to continue to invest...
Finally, its equity has remained fairly consistent over the last several reporting periods.
Statement of Funds
A statement of funds is also referred to as a cash flow statement. A cash flow statement is "One of the quarterly financial reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter" (Investopedia, Cash flow statement, 2013). In many ways, a statement of funds does not provide significant information to a potential investor about a company's financial health. "Because public companies tend to use accrual accounting, the income statements they release each quarter may not necessarily reflect changes in their cash positions. For example, if a company lands a major contract, this contract would be recognized as revenue (and therefore income), but the company may not yet actually receive the cash from the contract until a later date" (Investopedia, Cash flow statement, 2013). Therefore, it is important to keep in mind the limitations of a statement of funds when using it to examine a company's financial health.
Forbes makes the cash flow statements of companies available on its website. GM's cash flow statement is below:
View: Annual Data | Quarterly Data
All numbers in thousands
PERIOD ENDING
9-Month
09/2012
6-Month
06/2012
3-Month
03/2012
12-Month
12/2011
Cash Flow From Operating Activities
Net Income (Loss)
5,105,000
9,287,000
Depreciation
7,344,000
Amortization
200,000
Deferred Income Taxes
(311,000)
Operating (Gains) Losses
(4,933,000)
(Increase) Decrease in Receivables
(1,572,000)
(Increase) Decrease in Inventories
(2,760,000)
(Increase) Decrease in Prepaid Expenses
(195,000)
(Increase) Decrease in Other Current Assets
(522,000)
(Increase) Decrease in Payables
2,095,000
(Increase) Decrease in Other Curr Liabs.
(943,000)
Other Non-Cash Items
4,719,000
6,441,000
2,499,000
476,000
Net Cash from Continuing Operations
9,824,000
6,441,000
2,499,000
8,166,000
Net Cash from Operating Activities
9,824,000
6,441,000
2,499,000
8,166,000
Sale of Long-Term Investments
3,349,000
2,040,000
1,016,000
5,613,000
Sale of Short-Term Investments
14,236,000
11,217,000
6,036,000
Purchase of Property, Plant, Equipment
(837,000)
(4,669,000)
(304,000)
(837,000)
Acquisitions
(16,000)
57,000
56,000
4,768,000
Purchase of Long-Term Investments
(4,941,000)
(2,874,000)
(1,369,000)
(543,000)
Purchase of Short-Term Investments
(8,685,000)
(6,925,000)
(4,742,000)
(15,633,000)
Other Investing Changes Net
(7,387,000)
329,000
(1,985,000)
(6,108,000)
Net Cash from Investing Activities
(4,281,000)
(825,000)
(1,292,000)
(12,740,000)
Issuance of Debt
7,930,000
5,278,000
2,394,000
9,034,000
Issuance of Capital Stock
3,000
3,000
11,000
Repayment of Debt
(5,267,000)
(4,077,000)
(2,057,000)
(8,468,000)
Repurchase of Capital Stock
(100,000)
Payment of Cash Dividends
(679,000)
(459,000)
(217,000)
(916,000)
Other Financing Charges, Net
(261,000)
(179,000)
(151,000)
81,000
Net Cash from Financing Activities
1,723,000
566,000
(28,000)
(358,000)
Effect of Exchange Rate Changes
(17,000)
(69,000)
128,000
(253,000)
Net Change in Cash & Cash Equivalents
7,249,000
6,113,000
1,307,000
(5,185,000)
Cash at Beginning of Period
16,071,000
16,071,000
16,071,000
21,256,000
Cash at End of Period
23,320,000
22,184,000
17,378,000
16,071,000
* = Data not available
(Forbes, General Motors cash flow, 2013).
Examining GM's cash flow, several features stand out. GM has experienced a positive net change in cash and cash equivalents since the 2011 reporting period.
Toyota's cash flow, also prepared by Forbes to aid in comparison across dimensions, is featured below:
View: Annual Data | Quarterly Data
All numbers in thousands
PERIOD ENDING
9-Month
12/2012
6-Month
09/2012
3-Month
06/2012
12-Month
03/2012
Cash Flow From Operating Activities
Net Income (Loss)
8,485,608
7,809,100
4,030,956
4,475,387
Depreciation
9,291,358
6,593,624
3,172,477
12,975,636
Deferred Income Taxes
536,236
550,205
71,700
77,708
Operating (Gains) Losses
(1,681,884)
(1,204,408)
(761,837)
(1,791,870)
(Increase) Decrease in Receivables
(7,114,211)
(Increase) Decrease in Inventories
(4,191,299)
(Increase) Decrease in Other Current Assets
(2,193,681)
(Increase) Decrease in Payables
9,190,874
(Increase) Decrease in Other Curr Liabs.
4,098,778
(Increase) Decrease in Other Working Capital
3,469,554
2,132,660
2,206,329
1,350,750
Other Non-Cash Items
207,711
51,298
87,128
771,055
Net Cash from Continuing Operations
20,308,585
15,932,480
8,806,755
17,649,128
Net Cash from Operating Activities
20,308,585
15,932,480
8,806,755
17,649,128
Sale of Property, Plant, Equipment
4,517,394
3,113,650
1,622,408
5,686,202
Sale of Long-Term Investments
23,137,815
55,994,254
27,351,059
34,714,441
Purchase of Property, Plant, Equipment
(15,614,450)
(10,829,408)
(5,502,481)
(18,616,951)
Purchase of Long-Term Investments
(30,099,929)
(19,903,303)
(10,443,363)
(38,565,903)
Other Investing Changes Net
(9,305,872)
(45,870,282)
(21,801,892)
(748,113)
Net Cash from Investing Activities
(27,365,041)
(17,495,089)
(8,774,269)
(17,530,323)
Issuance of Debt
28,433,466
18,440,372
7,540,193
29,100,273
Repayment of Debt
(24,014,787)
(14,701,131)
(4,926,945)
(34,845,033)
Repurchase of Capital Stock
(514,383)
(353,958)
(210,690)
(455,045)
Payment of Cash Dividends
(2,209,793)
(1,221,131)
(1,190,675)
(1,905,158)
Other Financing Charges, Net
3,786,997
Net Cash from Financing Activities
1,694,502
2,164,151
1,211,881
(4,317,965)
Effect of Exchange Rate Changes
271,490
(778,637)
(629,151)
(679,737)
Net Change in Cash & Cash Equivalents
(5,090,462)
(177,095)
615,214
(4,878,899)
Cash at Beginning of Period
19,529,096
21,583,547
21,045,243
25,283,540
Cash at End of Period
14,438,633
21,406,452
21,660,458
20,404,641
* = Data not available
(Forbes, Toyota cash flow, 2013).
Examining Toyota's cash flow, several features stand out. First, its cash has declined in the reporting time, but part of that may be due to a large payment of cash dividends. It also paid back a significant amount of debt during the last reporting period and invested a significant portion of its cash in long-term investments; both of these expenditures would help explain a drop in available cash.
Conclusion
Comparing and contrasting the two companies across several dimensions makes it easier to compare them, but it does not make it easier to determine which company is in a better financial position. GM suffered losses due to the economic downturn, while Toyota suffered major losses as a result of the economic downturn and the tsunami that hit Japan. Both companies have, as a result, struggled over the past few years. However, they appear to have placed their business focus in two distinct areas. Toyota has attempted to dominate the global automobile market, and has done so successfully, but does not compare favorably with GM in its productivity and profitability measures. In contrast, GM is taking a more cautious approach than it did prior to its bankruptcy and has not been willing to win market share at the risk of its profits (Higgins, 2012). Which strategy will prove the most profitable for the long-run is something that remains to be seen; however, both companies have positive financial outlooks at this time.
References
Chu, M. (2012, March 27). Is GM a good stock to buy right now? Retrieved February 12, 2013
from Insider Monkey website: http://www.insidermonkey.com/blog/is-gm-a-good-stock-to-buy-right-now-11565/
Forbes. (2013). General Motors Company (NYSE: GM): Balance sheet. Retrieved February
12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=gm&period=qtr
12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/CashFlows.jsp?tkr=GM&period=qtr
Forbes. (2013). General Motors Company (NYSE: GM): Income statement. Retrieved February 12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/IncomeStatement.jsp?tkr=gm&period=qtr
12, 2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=tm&period=qtr
2013 from Forbes website: http://finapps.forbes.com/finapps/jsp/finance/compinfo/IncomeStatement.jsp?tkr=tm&period=qtr
Retrieved February 12, 2013 from Bloomberg website: http://www.bloomberg.com/news/2012-07-25/toyota-extends-global-sales-lead-over-general-motors-vw.html
February 12, 2013 from CFO.com website: http://www.cfo.com/article.cfm/14389887/1/c_2984340
http://www.investopedia.com/terms/b/balancesheet.asp#axzz2Kh4sBzIK
website: http://www.investopedia.com/terms/c/cashflowstatement.asp#axzz2Kh4sBzIK
website: http://www.investopedia.com/terms/i/incomestatement.asp#axzz2Kh4sBzIK
website: http://www.investopedia.com/terms/w/workingcapital.asp#axzz2Kh4sBzIK
http://www.macroaxis.com/invest/ratio/GM -- Working_Capital
website: http://www.macroaxis.com/invest/ratio/TM -- Working_Capital
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