General Motors Co. (NYSE:GM)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes increased significantly from 7,866 million US dollars in 2020 to a peak of 13,885 million US dollars in 2021. However, in the following years, NOPAT experienced a decline to 10,217 million in 2022, followed by a moderate recovery to 11,524 million in 2023, before decreasing again to 10,525 million in 2024. Overall, NOPAT shows a fluctuating pattern with a high point in 2021 followed by declines and some volatility through 2024.

Cost of Capital

The cost of capital demonstrated a gradual downward trend over the observed period, starting at 8.9% in 2020 and reducing to 7.95% by 2024. This indicates a declining expense related to financing or required return, with a slight dip in the middle years, reaching a low of 7.74% in 2023 before marginally increasing again in 2024.

Invested Capital

Invested capital has steadily increased each year, rising from 152,793 million US dollars in 2020 to 194,168 million in 2024. This consistent upward trend suggests ongoing investment or expansion in the company's assets or operations throughout the period.

Economic Profit

Economic profit remains negative throughout the entire period, indicating that the company is not generating returns above its cost of capital. The economic loss was largest in 2020, at -5,730 million US dollars, and showed improvement in 2021 to -872 million. However, it worsened again in 2022 to -3,887 million, followed by some recovery in 2023 at -2,579 million, before declining to -4,920 million in 2024. The negative economic profit, combined with fluctuating values, points to persistent challenges in achieving value creation beyond capital costs despite variations in operating profit and invested capital.

The financial performance over the periods shows varying trends in profitability metrics. Net income attributable to stockholders demonstrated a notable increase from 2020 to 2021, rising from 6,427 million US dollars to 10,019 million US dollars. This peak was followed by a slight decline in 2022 to 9,934 million US dollars, then a minor recovery in 2023 to 10,127 million US dollars. However, in 2024, net income decreased significantly to 6,008 million US dollars, indicating a potentially adverse development or external factors affecting profitability in the most recent period.

Net operating profit after taxes (NOPAT) showed an overall upward trend from 2020 to 2021, increasing from 7,866 million US dollars to 13,885 million US dollars, which represents a substantial improvement. NOPAT then declined to 10,217 million US dollars in 2022, suggesting some operational challenges or increased expenses. Following this, there was a recovery to 11,524 million US dollars in 2023, although it did not return to the peak level observed in 2021. In 2024, NOPAT decreased again to 10,525 million US dollars, showing some volatility but maintaining a higher level than the initial 2020 figure.

Profitability Trends:

Both net income and NOPAT peaked in 2021, followed by fluctuations in subsequent years, with net income showing a more pronounced decline by 2024.

Operational Efficiency:

NOPAT figures suggest the company improved operating profitability significantly in 2021, experienced some operational setbacks in 2022, partial recovery in 2023, and slight decline in 2024.

Recent Performance:

The substantial drop in net income in 2024 compared to prior years warrants attention, as it may signal deteriorating profitability or increased costs not fully reflected in operating profit.

Income Tax Expense

The income tax expense shows a fluctuating trend over the observed period. It increased significantly from 1,774 million USD in 2020 to 2,771 million USD in 2021. This was followed by a decrease to 1,889 million USD in 2022, then a sharp decline to 563 million USD in 2023. However, in 2024, the expense rose again to 2,556 million USD. This pattern indicates considerable variability in tax liabilities, potentially influenced by changes in taxable income, tax policies, or one-time tax adjustments.

Cash Operating Taxes

Cash operating taxes displayed some volatility but less pronounced than income tax expense. Starting at 1,039 million USD in 2020, the amount decreased to 735 million USD in 2021. It then surged to 1,585 million USD in 2022 and remained at a similar level of 1,573 million USD in 2023. In 2024, cash operating taxes declined to 1,174 million USD. The general trend suggests variable cash outflows for taxes, with a peak in 2022 and 2023, possibly reflecting changes in operating earnings, deferred tax adjustments, or cash tax payment timing.

Comparative Insights

Throughout the timeline, income tax expense and cash operating taxes do not consistently move in tandem, indicating differences between accounting tax expense recognition and actual cash paid taxes. Notably, the income tax expense experienced more pronounced fluctuations, especially the sharp drop in 2023, which was not as evident in cash operating taxes. This disparity might imply significant deferred tax impacts or adjustments in non-cash tax provisions during these years.

The financial data reveals several notable trends in the company's capital structure and financing over the five-year period from 2020 to 2024.

Total Reported Debt & Leases

This metric shows a steady increase each year, rising from $111,072 million in 2020 to $130,947 million in 2024. The upward trajectory suggests a growing reliance on debt and lease obligations for financing or expansion purposes. The increment from 2023 to 2024 is approximately $8 billion, marking a consistent pattern of debt accumulation.

Stockholders’ Equity

Equity levels increased significantly from 2020 to 2022, growing from $45,030 million to a peak of $67,792 million. However, after this peak, equity declined over the next two years, reaching $63,072 million by 2024. This decline may indicate factors such as dividend payouts, share repurchases, or changes in retained earnings impacting the overall equity base.

Invested Capital

Invested capital rose steadily year over year, increasing from $152,793 million in 2020 to $194,168 million in 2024. This continuous increase mirrors the company's expanding asset base or operational investments. The growth in invested capital, despite the fluctuations in equity, suggests that the company is leveraging both debt and equity to finance its growth initiatives.

Overall, the data exhibits a pattern of increasing financial leverage accompanied by growth in invested capital. The rise in total reported debt alongside a fluctuating but generally strong equity position indicates a balanced approach toward financing growth, though the recent decrease in equity may warrant further examination to understand its drivers and implications on financial stability.

Economic Profit

The economic profit exhibits considerable volatility throughout the periods analyzed. Starting from a substantial negative value of -5,730 million US dollars in 2020, the loss significantly reduces to -872 million in 2021, indicating an improvement. However, this positive trend reverses in 2022 with a sharp increase in losses to -3,887 million, followed by a partial recovery in 2023 where the economic loss decreases to -2,579 million. In 2024, the economic profit deteriorates again to -4,920 million, suggesting ongoing challenges in generating value beyond the cost of capital.

Invested Capital

The invested capital shows a steady upward trend across all periods, increasing from 152,793 million US dollars in 2020 to 194,168 million in 2024. This represents a cumulative growth of approximately 27%, reflecting continuous investments or asset accumulation over the five-year span. The steady rise in invested capital suggests company expansion or reinvestment strategies despite fluctuations in economic profit.

Economic Spread Ratio

The economic spread ratio, indicating the difference between return on invested capital and cost of capital, remains negative throughout the timeline, signaling consistent value destruction. Although the ratio improves markedly from -3.75% in 2020 to -0.52% in 2021, it worsens again in subsequent years, rising to -2.26% in 2022, then improving slightly to -1.41% in 2023 before declining once more to -2.53% in 2024. This pattern aligns with the fluctuations observed in economic profit, emphasizing challenges in achieving returns that exceed capital costs.

Overall Analysis

Overall, the data reveals that despite an increase in invested capital, the company consistently experiences negative economic profit and economic spread ratio values. This indicates difficulties in generating sufficient returns to cover the cost of capital, resulting in persistent economic losses. The improvement observed in 2021 serves as a notable but temporary relief, with subsequent years showing increased volatility and renewed declines. The trends suggest a need for strategic reassessment to improve profitability and capital efficiency.

The financial data over the five-year period shows a fluctuating yet challenging performance in economic profitability alongside a steady increase in revenue from automotive sales.

Adjusted Automotive Net Sales and Revenue

The adjusted automotive net sales and revenue exhibited a consistent upward trend each year, growing from $108,324 million in 2020 to $173,096 million in 2024. This represents a substantial increase, indicating successful expansion in sales volume or pricing power in the automotive segment.

Economic Profit

Despite rising revenues, economic profit remained negative throughout the period. Although there was an improvement from a loss of $5,730 million in 2020 to a loss of $872 million in 2021, the trend reversed afterward, with economic losses deepening to $3,887 million in 2022, slightly recovering to $2,579 million in 2023, and then worsening again to a $4,920 million loss in 2024. This volatility suggests struggles in managing costs or achieving adequate returns above the cost of capital.

Economic Profit Margin

The economic profit margin mirrored the fluctuations in absolute economic profit but remained negative in all years. It improved notably from -5.29% in 2020 to -0.77% in 2021, indicating an initial betterment in profitability relative to sales. However, subsequent years saw a decline in margin to -2.69% in 2022, partial recovery to -1.62% in 2023, and then a regression to -2.84% in 2024. This pattern highlights ongoing challenges in converting increased revenues into positive economic profit margins.

In summary, the data reflects a sustained increase in automotive revenues, which contrasts with persistent and fluctuating economic losses. The underlying profitability issues suggest that despite growth in sales, the company faces difficulties in controlling costs or generating sufficient returns relative to the capital employed.