General Motors Co. (NYSE:GM)

The analysis of the reported debt data over the five-year period reveals several trends in the company's debt structure. The short-term debt and the current portion of long-term debt demonstrated some fluctuations. It decreased from 36,913 million US dollars at the end of 2020 to 33,720 million in 2021, followed by an increase in the subsequent years, reaching 39,432 million by the end of 2024. This indicates an initial reduction in near-term obligations, which then gradually increased and surpassed the 2020 level by the final year.

The long-term debt, excluding its current portion, showed a more consistent upward trajectory. It increased steadily from 72,981 million US dollars in 2020 to 90,300 million by the end of 2024. This suggests a strategic or necessary accumulation of long-term liabilities during the period, potentially to support investments or other capital needs.

When considering total debt, which sums both short-term and long-term components, a clear increasing trend is evident. Total debt slightly decreased from 109,894 million US dollars in 2020 to 109,379 million in 2021 but subsequently rose each year to reach 129,732 million in 2024. The overall growth in total debt over the period amounted to approximately 18%, reflecting an expansion in the company’s leverage.

Short-term debt and current portion

Initial decrease in 2021, followed by a steady increase surpassing the initial value by 2024.

Long-term debt, excluding current portion

Consistent and pronounced growth throughout the period, increasing by over 23% from 2020 to 2024.

Total debt (carrying amount)

Slight decline in 2021, then continuous increase reaching nearly 130 billion US dollars in 2024, representing overall growth in indebtedness.

These observations reflect the company’s changing debt composition with growing reliance on long-term debt and increasing total obligations, which may have implications for financial strategy, cost of capital, and risk profile going forward.

Automotive interest expense

The automotive interest expense shows a consistent decline over the five-year period. Starting at $1,098 million in 2020, it decreased to $950 million in 2021, then slightly rose to $987 million in 2022 before continuing its downward trend to $911 million in 2023 and reaching $846 million in 2024. Overall, this reflects an approximate 23% reduction from the initial level in 2020 to 2024.

Interest capitalized

Interest capitalized was not recorded during the first four years of the period and appears only in 2024, amounting to $215 million. This introduction of capitalized interest in 2024 represents a notable shift in accounting or financing practices relating to interest costs.

Interest costs incurred

The total interest costs incurred generally decreased from $1,098 million in 2020 to $911 million in 2023. However, in 2024, there is a marked increase to $1,061 million, which contrasts the downward trend observed in prior years. This spike aligns with the introduction of interest capitalized in 2024 and indicates the total interest burden may have risen when combining operating expenses and capitalized interest.

Overall trend and insights

The data illustrates a general decrease in automotive interest expense over the five years, suggesting improved interest cost management or reduced borrowing costs. The sudden appearance of capitalized interest in 2024 implies a change in financing strategy or capital expenditure accounting. Although interest expenses declined, total interest costs incurred saw a resurgence in 2024, driven by the inclusion of capitalized interest, which might reflect increased investment activities or shifts in debt structure. This highlights the importance of evaluating both interest expense and capitalized interest for a comprehensive understanding of interest-related financial obligations.

The financial data reveals the trend in the interest coverage ratios, both excluding and including capitalized interest, over the five-year period from December 31, 2020, to December 31, 2024.

Interest Coverage Ratio (without capitalized interest)

This ratio shows a significant improvement from 8.37 in 2020 to a peak of 14.39 in 2021, indicating a stronger ability to meet interest obligations from operating earnings. After 2021, the ratio declines gradually over the subsequent years to 12.75 in 2022, 12.42 in 2023, and further down to 11.07 by the end of 2024. Despite the downward trend after 2021, the ratio remains comfortably above the 2020 level, suggesting a relatively strong interest coverage position throughout the period.

Adjusted Interest Coverage Ratio (with capitalized interest)

The adjusted ratio follows the same initial trend as the unadjusted ratio, rising from 8.37 in 2020 to 14.39 in 2021 and then declining to 12.75 in 2022 and 12.42 in 2023. However, there is a more pronounced drop in 2024, when the ratio decreases to 8.83. This sharper decline compared to the unadjusted ratio implies that capitalized interest has a growing impact on coverage ability in the latest period, which may warrant attention regarding the capitalization practices or the level of interest expenses being deferred.

Overall, the data indicates a strong interest coverage capacity in the earlier years, peaking in 2021, followed by a moderate decline in subsequent years. The difference emerging in 2024 between the unadjusted and adjusted ratios highlights a possible increasing burden or change in accounting treatment of interest expenses, which could affect the company’s financial flexibility.