GM stock,ratios, investors...?

okay I am stuck! I suck at this stuff, and I have to do this question, and I am so lost! because the website the teacher gave me really doesn't help, since i dont know anything, which is this. http://www.gm.com/company/investor_infor...
anyways I can't figure it out! It has been hours now!

the following four ratios for General Motors Corporation:
Current ratio
Debt ratio
Return on equity (ROE)
Return on investment (ROI)

in relation to profitability, liquidity, and
financial leverage. If you are assigned to the lender cluster, state whether you would
choose to accept or reject a loan of several million dollars to this company. If you are
assigned to the investor cluster, state whether you would purchase this company鈥檚 stock.
Note: Total debt on the General Motors Financials is the line labeled Total Liabilities plus
the line labeled Minority Interests.

That link only provides 2006 year end financials. Tell your professor we should be using 12/31/2007 audited financials since he is asking further analysis about purchasing this stock. All of these numbers are in thousands.

YEAR END Information for 12/31/2007
Current Ratio: 60,403.00/70,338.00 = .858 (rounded)
Debt Ratio (total assets): 44,339/148,883= .2978 =29.8%
Debt Ratio (Equity)- (Can not divided by a negative equity)
ROE- (Non-Applicable because its negative equity)
ROI- -44.5% (negative)


1) Question: Would I loan any money to GM? Answer: Right Now, I would absolutely would NOT offer a single loan to GM and here are my reasons why:

They have serious problems with Liquidity! The company can not produce positive net income (3yrs of NET LOSS), operating income and has negative FREE Cash flow. Operating cash flow is positive but only reason why is because of Depreciation (NON-Cash) and deferred Taxes! Current ratio is below 1. Huge RED FLAG- The company's earnings are negative but operating cash flow is positive. The company is borrowing more debt to stay afloat with their creditors. I could go on and on how terrible their financials are. This company is highly leveraged (too much debt). Their Z-score will be negative and Moody's rating has to below investment grade! I wouldn't be surprised if they are not JUNK BONDS.

2) Question would I purchase this stock? Answer: This depends on time period (maybe in the next 50yrs).. Currently with their financial situation SELL SELL SELL!! Do NOT buy this stock! I could tell you about EPS, P/E and other financial ratios/numbers but its not going to matter at this point. Who cares if the stock price looks attractive. Its only going to go DOWN, DOWN, and DOWN.

Bottom line, the company is highly leveraged, cash flow problems, and negative earnings ($38B Net loss).. In my opinion, the company looks like they might have to file Bankruptcy in the next 12months. Beware of this company and tell your professor who cares about ROI or ROE because their Shareholders are least of their worries. Watch out, their creditors will be coming soon to take everything!!!!

If I was GM Directors or Officers. I would be purchasing as much D&O insurance they can borrow (no pun intended).

I apologize but the Debt ratio should not be in percentage (%). The debt ratio should be .29 relative to 1. NOTE: I only added the long and short term notes payable to get .29. Report It

That link just gave me an error message.
Do you want to know how to get those ratios? The formulas for those ratios? Or do you just want to know the bottom part?

If it helps, you can google those formulas. Just type (e.g)"define: current ratio" to get formulas.
Use sec.gov for financial statements to get the numbers you need for those ratios.
You have to have those ratios and percentages to answer the bottom part. (You probably knew that.)