General Motors is and has been one of the world’s largest automakers for over 100 years. GM goes back as far as 1908. GM’s headquarters is in Detroit; however, GM has over 209,000 employees in every core region of the world, and conducts business in over 120 countries. GM and all its associates produce both cars and trucks in 31 countries. “GM also sell and service many of these vehicles through the following brands: Baojun, Buick, Cadillac, Chevrolet, FAW, GMC, Daewoo, Holden, Isuzu, Jiefang, Opel, Vauxhall, and Wuling (NA, 2011).
” GM’s leading market nationally is China. After China is the United States, Brazil, the United Kingdom, Germany, Canada, and Russia. “GM’s On Star subsidiary is the industry leader in vehicle safety, security and information services (NA, 2011). ” It is because of good ethics compliance, financial filings, and GM’s care and concern to the public that keeps the company striving for perfection. Business ethics and compliance issues are of concern within any company. It can make or break an organization if strong ethics are not understood.
GM is taking a deeper look into the code of ethics issue because survival is at stake. “In 2004, with the revisions to the Sentencing Guidelines for Organizations, GM recognized the need for a more centralized compliance function. ” “There has always been an emphasis on compliance, but it was decentralized,” (Singer, 2008, para. 5). In 2005, the GM’s Board of Audit Committee created the Global Compliance department to consider ethical behavior from all angles. Samina R.
Schey was hired to this position, and she has four full-time people in her office and holds two weekly meetings to identify recurring problems She also works closely with an investigative team that include two lawyers, a legal assistant, a security officer, and an audit officer. GM is one of the world’s largest corporations and considered to be of the highest standards. Schey’s main concerns are to improve programs on quality, health, safety, and integrity. Procedures In-place to Ensure Ethical Behavior Because of ethical practice concerns, “Schey has undertaken a re-branding of the program.
She has been focused on revising GM’s code of conduct book, developing a more comprehensive training, and conducting risk assessments” (Singer, 2008, para. 10). GM first started with smaller booklets of Code of Conducts. There were too many booklets so a 120-page Code of Conduct book is created. Schey knew that such a long book would lose interest for the reader and was not a useful tool for teaching. The 120-page book was condensed to a mere 19-page booklet with the help of a consulting firm called The Ethical Leadership Group.
The design of the final 19-page booklet is written in a universal manner to be a teaching tool anywhere: this project took over a year to compile. GM is still revising this document because of phone calls from people asking for clarification. Although consolidating made it more simplified, this smaller version includes hyperlinks to take the reader to more in-debt information as needed. Because GM is a multi-national company to more than 35 different countries, it creates many obstacles, concerns, and harassment within each country that requires different approaches.
Some examples would be of how a woman dresses: it is offensive to speak of this issue in the Middle East but Latin Americans believe that it is an insult if a person does not comment on how a woman is dressed. Integrity is another matter: in some places, integrity is a cultural norm whereas other places view it as an ethical issue. GM prides itself on not tolerating any sexual harassment of any kind. Sexual harassment is not a violation of the law in some countries, Schey said it is the breaking of the law in the United States and will not be tolerated at GM.
The corporate responsibility starts with the values of integrity, individual Respect, and responsibility. They measure all of their activities against these values that were endorsed in 1999. One of the GM Board of Directors is Reverend Leon Sullivan, he has been on this board since the beginning of 1970 (General Motors, n. d. ). Their code of ethics training begins with two main modules. 1. “Winning with integrity” is on basic code and is mandatory for all salaried employee 2.
“Leading with Integrity” is a new module that teaches leadership skills for managers and supervisors; it helps with issues like how to handle employees who report misconduct and how to support a non-retaliatory workplace. “The key to any ethics and compliance program is training and communication, Schey observes. If you don’t have that, ‘all the other stuff falls apart’. ” (Singer, 2008, para. 28). Another action is to educate employees on GM’s top risks: “•Accounting and financial controls •FCPA/Anti-Corruption •Export Compliance •Information Security
•Political/Economic Risk (Singer, 2008, para. 34)” Schey concludes that GM has “such a passion for integrity—from senior managers on down. ” In emerging markets, employees often have little notion what senior managers even mean by integrity; this is when a centralized ethics and compliance office can make a difference (Singer, 2008, para. 42). The SEC or Securities Exchange Commission was founded in 1933. The SEC’s main operation is to protect investors, sustain fair, orderly, and efficient markets, and to assist in capital formation.
Violations of the SEC may include: “misrepresentation or omission of important information about securities, manipulating the market prices of securities, stealing customers’ funds or securities, violating broker-dealers’ responsibility to treat customers fairly, insider trading (violating a trust relationship by trading on material, non-public information about a security), or selling unregistered securities (NA, 2011). ” The GM Company has been through some rough patches over the past few years; however, as of 2009, GM has become a new company. GM’s vision is to design, build, and sell the world’s best vehicles.
GM’s goals are to build its market share, revenue, earnings and cash flow, boost customer satisfaction, and continue to lead the market by finding new technology to save energy, and find new ways to create new and better cars for the public (NA, 2011). As of last year, the GM Company keeps in accordance with the SEC by filing a 10-Q, 10-K, and 8-K forms every year. GM’s reports are filed in concordance to the GAAP or Generally Acceptable Accounting Principles (NA, 2011). Liquidity Ratios: Current Ratio: (CA) 53,053,000 / (CL) 47,157,000 =. 11 2010 (CA) 59,247,000 / (CL) 52,435,000 = 1.
13 2009 Quick/Acid Ratio: (CA – Inv) 53,053,000 – 12,125,000 / (CL) 47,157,000 = . 87 2010 (CA – Inv) 59,247,000 – 10,107,000 / (CL) 52,435,000 = . 74 2009 Cash Ratio: (Cash) 22,301,000 / (CL) 47,157,000 = . 47 2010 (Cash) 36,596,000 / (CL) 52,435,000 = . 70 2009 Debt Ratios: Debt Ratio: (LTD) 9,142,000 / (TA) 138,898,000 =. 07 2010 (LTD) 5,562,000 / (TA) 136,295,000 = . 04 2009 Debt to Equity Ratio: (TD) 102,718,000 / (TA) 138,898,000 = . 74 201 (TD) 108,048,000 / (TA) 136,295,000 = . 79 2009 Interest Coverage Ratio: (EBIT) 6,639,000 / (IC) 1,098,000 = 6.
05 2010 (EBIT) 109,804,000 / (IC) 6,122,000 = 17. 94 2009 Profitability Ratios: Return on Equity Ratio: (Net Income) 6,172,000 / (Shareholders Equity) 36,180,000 = . 17 2010 (Net Income) 104,821,000 / (Shareholders Equity) 21,249,000 = 4. 93 2009 Return on Assets Ratio: (Net Income) 6,172,000 / (TA) 138,898,000 = . 04 2010 (Net Income) 104,821,000 / (TA) 136,295,000 = . 77 2009 Liquidity ratios provide information on the firm’s ability to meet its short-term financial obligations. The current ratio is a ratio of current assets to current liabilities, the higher the number the
better in this particular ratio. In addition, a number under one would mean that a company would not be able to pay of its debt if it came due. A quick ratio is a more conservative number because it deducts inventory from the equation. A higher quick ratio means a better position for GM, which had very similar current ratios in 2009 and 2010. The cash ratio compares the dollar amount of highly liquid assets for every dollar of short-term liabilities. GM was not a very “liquid” company in 2009-10 due to the fact that the company had to restructure itself as well as a weak economy at the time.
Debt ratios provide information on what proportion of debt a company has compared to its assets. “A debt ratio of greater than 1 indicates that a company has more debt than assets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt” (www. investopedia. com, 2010). In regards to General Motors, they have the ability to pay its debts; they were also in better position in 2009 compared to 2010. The debt to equity ratio determines how much equity and debt a company uses to finance its assets. A high debt to equity ratio means that a company has been using debt to finance their growth.
In 2009 and 2010, GM financed nearly seventy-five percent of their company using debt. The interest coverage ratio determines how easily a company can pay interest on outstanding debt. For interest coverage ratios, the lower the number the harder it is for a company to make interest payments. In 2009, GM was more able to pay off interest on their debts. “Profitability ratios are used to assess a business’s ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time” (www. investopedia. com, 2010). A high number would indicate that a company is doing well.
A return on equity ratio shows the amount of net income returned as a percentage of shareholder’s equity. Return on equity is expressed by a percentage and in regards to GM. GM was doing better in 2010 compared to 2009. A return on assets ratio tells how profitable a company is relative to its total assets. There was a huge swing in the figures for GM comparing 2009 and 2010. This had to do with the fact that GM had a net income of nearly 100,000,000 more in 2009. The financial analysis on General Motors exposed some very interesting information on the financial health of the company. It appears that GM had a
far superior year in 2009 compared to 2010. However, GM did receive up to 30 billion in government bailout money when the US had the financial collapse a few years ago. They also closed down eleven plants and cut 50,000 jobs between 2005 and 2008. These close downs and cuts have saved GM roughly 12 billion in operating costs. These factors may have contributed to the GM’s success in 2009. Overall, General Motors have been around for over a century, whether they have a poor or profitable fiscal year, they will not be going anywhere anytime soon. For over 100 years, GM has been serving the American public and all over the world.
GM has expanded, has had ups and downs, but continues to make every effort to serve the best they know how. GM strives year by year by improving ethic values and compliance, and following the SEC regulations by following the appropriate financial forms. All these things GM does to achieve perfection. References General Motors (n. d. ) Community Retrieved from http://www. gm. com/corporate/responsibility/community /community_message. jsp Singer, A. W. (2008) As Gm Struggles, Its Ethics and Compliance Office Motors on Ethikos, September/October Retrieved from http://www. ethikospublication. com/html/generalmotors.
html No Author (2011) U. S. Securities and Exchange Commission Retrieved on 4/8/11 from http://www. sec. gov/about/whatwedo. shtml No Author (2011) Retrieved on 4/8/11 from http://media. gm. com/content/dam/Media / gmcom /investor / 2010/Q2-10Q-SEC-Filing. pdf No Author (2011) Balance Sheet Retrieved from http://finance. yahoo. com/q/bs? s=GM+Balance+Sheet&annual No Author (2010) Financial Ratios Retrieved from http://www. netmba. com/finance/financial/ratios/ No Author (2011) Debt Ratios Retrieved from http://www. investopedia. com/ terms/d/debtratio. asphttp:/ / www. foxnews. com/story/0,2933,509052,00. html