Originally Posted by Phanuthier
Oh, and by the numbers, here is how the business performed. Looking strictly from a corporate health POV (not just form an investor POV), looking at their operating margins, the key number in showing the profitability (or the bottomless pit of a business), we see the figures as follows (quarterly, annual 2007, annual TTM; negative numbers in red, positive numbers in green):
Ford: -0.96%, -3.07%, -8.75%
GM: -2.33%, -2.42%, -10.21%
Chrysler: N/A
vs
Toyota: 2.84%, 8.64%, 6.21%
Honda: 5.27%, 7.94%, 6.91%
Mazda: 3.96%, 4.60%, -
Nissan: 3.3%, 6.56%, -
Volkswagon: 5.13%, 5.65%, 5.99%
Evidently, by the numbers - and the one of the most important ones to look at - GM and Ford are not a good business (the same can be interpreted by Chrysler) - bail them out in 2003, they struggle, bail them out in 2008, they'll struggle again, they'll need another bailout in 2012, 2016, 2020, 2024, 2028, 2032, 2036, 2040, 2044, 2048, 2052 and well... remember when the iron curtain fell in Russia, and what we found were a bunch of lazy workers in an inefficient system? Hello US automakers.
Lets look more into Ford as a business (not a stock, but as a business):
Profitability Ratios:
Operating Margin TTIM: -8.75%
5 year Operating Margin: -2.48%
Net Profit Margin TTM: -6.92%
5 year Net Profit Margin: -1.01%
Management Effectiveness:
Return on Assets TTM: -4.3%
5 year Return on Assets: -0.59%
Return on Investment TTM: -6.47%
5 year Return on Investment: -0.83%
GM? Even worse.
Operating Margin TTM: -10.21%
5 year Operating Margin: -2.48%
Net Profit Margin TTM: -14.01%
5 year Net Profit Margin: -5.51%
Return on Assets TTM: -17.85%
5 year Return on Assets: -2.86%
Return on Investment TTM: -39.35%
5 year Return on Investment: -4.17%
Whats the sector average you ask?
OM TTM: 2.91%
5Y OM: 8.07%
NPM TTM: 1.59%
5Y NPM: 5.11%
RoA TTM: 2.17%
5Y RoA: 4.51%
ROI TTM: 3.47%
5Y ROI: 6.78%
Now, tell me again why this bailout will work? Looking at the income statements, there is nothing about these businesses that shows it can survive once its billion dollar allowence is up, and they need their allowence again in 4 years.
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