General Motors Co. (NYSE:GM)

Net operating profit after taxes (NOPAT)

The net operating profit after taxes showed a significant increase from 7,866 million US dollars in 2020 to a peak of 13,885 million US dollars in 2021. Subsequently, it declined to 10,217 million in 2022, followed by a moderate recovery in 2023 to 11,524 million, before decreasing again to 10,525 million in 2024. This suggests volatility in the company's operating profitability over the five-year period, with 2021 as a standout year.

Cost of capital

The cost of capital exhibited a gradual decline over the period, starting at 8.74% in 2020 and decreasing steadily to 7.63% in 2023, before slightly rising to 7.84% in 2024. The general downward trend in cost of capital implies an improving financing environment or enhanced creditworthiness, although the slight uptick in the final year may warrant attention.

Invested capital

Invested capital demonstrated a consistent upward trend throughout the period, rising from 152,793 million US dollars in 2020 to 194,168 million US dollars in 2024. This steady increase highlights ongoing investments and asset growth, which may support future operations and profitability but also increases capital deployment.

Economic profit

Economic profit remained negative during the entire period, indicating that the company did not generate returns above its cost of capital. The economic loss was largest in 2020 at -5,485 million, improved significantly in 2021 to -605 million, but deteriorated again in 2022 and 2024, with losses of -3,662 million and -4,707 million respectively. The fluctuations and generally negative economic profit imply challenges in value creation despite the positive NOPAT figures.

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 significant volatility over the five-year period. Starting with a substantial negative value of -5485 million US dollars in 2020, there is a marked improvement in 2021, where the loss narrows to -605 million US dollars. However, this positive shift is not sustained, as economic profit deteriorates again in 2022 to -3662 million US dollars and remains negative through 2023 and 2024 at -2386 and -4707 million US dollars, respectively. This indicates ongoing challenges in generating returns above the cost of capital.

Invested Capital

Invested capital shows a consistent upward trend throughout the timeframe. Beginning at 152,793 million US dollars in 2020, it increases steadily each year to reach 194,168 million US dollars by the end of 2024. This reflects ongoing investments in assets or operations, suggesting an expansion or increased capitalization despite the persistent negative economic profits.

Economic Spread Ratio

The economic spread ratio remains negative over all periods, indicating the company's return on invested capital is below its cost of capital each year. While the ratio improves substantially from -3.59% in 2020 to -0.36% in 2021, this improvement is temporary. It then declines again to -2.13% in 2022, improves slightly to -1.31% in 2023, but worsens to -2.42% in 2024. The persistent negative values denote a continued inability to generate value over and above capital costs.

The financial data over the five-year period demonstrates notable fluctuations in economic profit alongside steady growth in automotive net sales and revenue.

Economic Profit

The company experienced negative economic profit throughout all the years analyzed. In 2020, economic profit was significantly negative at -5,485 million US dollars but improved dramatically by 2021 to -605 million US dollars. However, this was followed by a sharp decline in 2022, with economic profit falling back to -3,662 million US dollars. The trend shows partial recovery in 2023, with economic profit at -2,386 million US dollars, before deteriorating again considerably in 2024 to -4,707 million US dollars. This volatility suggests challenges in converting revenue growth into positive economic returns.

Adjusted Automotive Net Sales and Revenue

Adjusted automotive net sales and revenue displayed a consistent upward trajectory over the period. Starting at 108,324 million US dollars in 2020, revenue increased steadily each year, reaching 173,096 million US dollars by 2024. This represents substantial growth of approximately 60% over the five years, indicating effective volume expansion, improved pricing strategies, or a combination of both in the automotive segment.

Economic Profit Margin

The economic profit margin remained negative during the entire period, implying ongoing challenges in profitability relative to revenue. The margin improved significantly from -5.06% in 2020 to nearly break even at -0.53% in 2021. However, margins worsened again in the subsequent years, declining to -2.53% in 2022, slightly improving to -1.5% in 2023, and then deteriorating to -2.72% in 2024. The fluctuations indicate inconsistent cost control, price pressure, or other operational inefficiencies amidst growing sales.

In summary, while the company demonstrated robust growth in adjusted automotive net sales and revenue, this top-line increase did not translate into sustained improvements in economic profit or profit margins. The persistent negative economic profit and volatile margins suggest that despite scaling up revenue, operational or structural issues continue to affect overall economic value generation negatively.