General Motors Co. (NYSE:GM)

Return on Assets (ROA)

The Return on Assets demonstrated an overall declining trend over the observed periods. Starting at 3.84% in the first quarter of 2021, it rose to a peak of 5.27% in the second quarter of 2021, then experienced fluctuation around the mid-3% to 4% range through 2022 and early 2023. Notably, from 2024 onwards, the ROA began a marked decline, dropping sharply from 3.87% in the first quarter of 2024 to just above 1% by the third quarter of 2025. This suggests worsening efficiency in asset utilization over time, particularly in the most recent periods.

Financial Leverage

Financial leverage showed a decreasing trend in the early periods, falling from 4.93 in March 2021 to around 3.82 by the first quarter of 2023. However, this trend reversed with a steady increase starting from late 2023, peaking at 4.44 in the first quarter of 2025, before slightly decreasing but remaining above 4.3. This pattern indicates a reduction in reliance on debt financing initially, followed by an increased use of leverage in the later periods, potentially reflecting strategic shifts in capital structure or responses to market conditions.

Return on Equity (ROE)

Return on Equity exhibited substantial volatility throughout the timeline. ROE was robust during 2021, reaching as high as 24.67% in the second quarter. However, it declined steeply to the mid-teens through 2022 and early 2023, with modest fluctuations but no return to earlier highs. From early 2024, the ROE showed a considerable downward trajectory, falling from around 16% to below 5% by late 2025. This sharp decrease parallels the decline in ROA and suggests that shareholder returns have diminished significantly, highlighting potential challenges in profitability and effective equity use.

Overall Analysis

The financial metrics collectively indicate a period of declining profitability and efficiency. Despite an initial period of relatively strong asset returns and equity profitability, the latter years reveal weakening performance. Increasing financial leverage during these periods may signal greater risk-taking or an attempt to counteract deteriorating profitability through borrowed capital. The reduced returns on assets and equity underscore potential operational or market challenges, suggesting that the company faces profitability pressure and possibly increasing financial risk.

Net Profit Margin

The net profit margin demonstrates a general declining trend over the reported periods. Initially, it peaked at 10.12% in June 2021, followed by a gradual decrease to 6.42% by December 2023. A brief stabilization and slight improvement occurred through mid-2024, reaching 6.8% in June 2024. However, from the third quarter of 2024 onward, the margin declined sharply, reaching a low of 1.79% by September 2025. This downward trajectory indicates widening pressure on profitability, particularly in the most recent quarters.

Asset Turnover

The asset turnover ratio has generally improved over time, rising from 0.46 in March 2021 to a stabilized level around 0.58 between late 2023 and mid-2024. It peaked further at 0.61 in early 2025 before slightly moderating to 0.59 by September 2025. This upward trend suggests increased efficiency in utilizing assets to generate sales, with the ratio showing resilience even as profit margins tightened.

Financial Leverage

Financial leverage exhibited a noticeable decline from 4.93 in March 2021 to approximately 3.82 in March 2023, indicating a reduction in reliance on debt relative to equity during this timeframe. Subsequently, leverage rose again, peaking near 4.44 by early 2025 before a minor decrease to 4.34 by September 2025. This pattern reflects initial deleveraging followed by a moderate re-leveraging phase, suggesting a strategic adjustment in capital structure over the years.

Return on Equity (ROE)

ROE experienced significant volatility, starting at 18.94% in March 2021 and reaching a high of 24.67% in Q2 2021. Thereafter, it progressively declined to around 15.75% by December 2023, followed by a slight increase to approximately 16.14% mid-2024. Thereafter, ROE decreased sharply again, dropping to 4.59% by September 2025. The decline in ROE corresponds with the reduced net profit margin despite improved asset turnover, reflecting the impact of fluctuating profitability and financial leverage on shareholder returns.

The financial data reveals discernible trends in profitability, operational efficiency, and leverage over the examined periods. Several key financial ratios demonstrate shifts that may impact overall financial performance and strategy.

Tax Burden

The tax burden ratio showed moderate fluctuations, beginning around 0.78 in early 2021 and peaking at 0.95 by late 2023, suggesting an increasing proportion of earnings retained after taxes during that latter period. However, this ratio subsequently declined sharply to 0.65 by the third quarter of 2025, indicating a higher effective tax rate in the most recent observations.

Interest Burden

The interest burden remained relatively stable, fluctuating narrowly around the low 0.90s across all quarters. This stability suggests consistent interest expense management relative to Earnings Before Interest and Taxes (EBIT), with a minor decline towards 0.86 in late 2025 indicating a slight increase in interest expense impact on earnings.

EBIT Margin

A gradual downward trend is apparent in the EBIT margin percentage, which started at nearly 13% in mid-2021, decreasing steadily to around 3.2% by the third quarter of 2025. This decline reflects diminishing operating profitability over time, potentially signaling rising operating costs or competitive pressures impacting earnings before interest and taxes.

Asset Turnover

Asset turnover demonstrated a modest improvement over the periods analyzed, increasing from under 0.50 early in 2021 to approximately 0.59 by late 2025. This suggests improved efficiency in using assets to generate revenue, which partially offsets the decline in profit margins by delivering higher sales volume per asset unit.

Financial Leverage

Financial leverage decreased from about 4.93 in early 2021 to around 3.78 in late 2023, indicating a reduction in the company's reliance on debt financing. Nonetheless, leverage ratios rose again to above 4.3 by 2025, implying a renewed increase in debt usage to support equity funding, potentially raising financial risk.

Return on Equity (ROE)

ROE showed considerable volatility and a clear downward trajectory, starting from almost 25% in mid-2021 and declining to under 5% by late 2025. This sharp reduction reflects the combined effects of lower profit margins, fluctuating leverage, and changes in asset turnover, leading to diminished returns for shareholders.

Overall, the data points to decreasing profitability margins and return on equity despite improved asset utilization efficiency. The decline in EBIT margin coupled with fluctuating leverage and a rising tax burden towards the end of the timeline may inform considerations on cost management, capital structure optimization, and tax strategy. These trends emphasize the need for strategic actions to enhance operational effectiveness and sustain shareholder value.

The analysis of the quarterly financial indicators reveals distinct trends and shifts across the reported periods. The three key ratios examined—Net Profit Margin, Asset Turnover, and Return on Assets (ROA)—offer insights into profitability, efficiency, and overall asset utilization over time.

Net Profit Margin

The Net Profit Margin exhibited a relatively high performance in early 2021, peaking in the second quarter at 10.12%. However, from late 2021 onwards, there was a gradual decline through 2022 and into early 2023, stabilizing around the mid-6% range. Notably, by late 2024 and continuing into 2025, the margin decreased sharply, reaching as low as 1.79% in the first quarter of 2025. This downward trend indicates increasing pressure on profitability, possibly driven by rising costs or decreasing pricing power.

Asset Turnover

Asset Turnover ratios showed a generally positive trajectory over the periods under review. Starting from 0.46 in early 2021, the ratio increased marginally but steadily, climbing to about 0.61 by 2025. This incremental improvement suggests enhanced efficiency in generating revenue from the company's assets. The stable upward trend contrasts with the declining profitability, indicating that while asset utilization has improved, it has not translated into increased net profits.

Return on Assets (ROA)

ROA followed a pattern somewhat aligned with Net Profit Margin. Initially, it improved from 3.84% in the first quarter of 2021 to a high of 5.27% in the second quarter of 2021, then showed fluctuation but generally declined over time. From mid-2024 onward, the ROA fell sharply, mirroring the drop in net margins, ending at a low of 1.06% in early 2025. This reduction reflects diminished returns generated by the assets and points to decreased overall profitability despite improved asset turnover.

In summary, despite gains in asset efficiency, indicated by the steady increase in the Asset Turnover ratio, the company's profitability markers—Net Profit Margin and ROA—have experienced a noteworthy decline, especially entering the latter part of the reported timeline. These trends may warrant a further review of cost management, pricing strategies, and asset capital allocation to address the divergence between operational efficiency and profitability outcomes.

Tax Burden

The tax burden ratio showed relative stability around 0.78 to 0.79 during 2021, before increasing notably in the first half of 2022 to peak near 0.89. It then experienced fluctuations, with a pronounced peak of 0.95 in late 2023 followed by a consistent decline through 2024 and into 2025, reaching 0.65 by the third quarter of 2025. This trend indicates increasing tax efficiency initially, followed by a reduction in tax burden in the most recent periods.

Interest Burden

The interest burden ratio remained fairly stable across the entire period, oscillating slightly between 0.90 and 0.94. It started around 0.91 in early 2021, maintained levels close to 0.92-0.93 for most quarters, with a minimal downward trend observed towards mid-2025, ending at approximately 0.86. This suggests steady control over interest expenses relative to EBIT.

EBIT Margin

The EBIT margin exhibited a clear declining trend over the timeframe. Initial quarters of 2021 showed strong performance above 11%, peaking at 13.91% in mid-2021. However, starting in 2022, the margin gradually decreased, falling below 10%, then continuing its decline through 2023 and 2024. By early 2025, the EBIT margin had diminished markedly to just above 3%, indicating reduced operational profitability from core activities.

Asset Turnover

Asset turnover ratio displayed an improving trend overall. From a low of 0.46 in early 2021, it increased steadily throughout the years, rising above 0.55 in late 2022 and sustaining levels close to 0.58 through much of 2023 and 2024. It further climbed to approximately 0.61 in early 2025 before slightly dropping to 0.59 by the third quarter. This reflects enhanced efficiency in utilizing assets to generate revenue over time.

Return on Assets (ROA)

ROA followed a pattern similar to the EBIT margin. Initially rising from 3.84% to a peak of 5.27% in mid-2021, it then decreased gradually to around 3.5-3.9% during 2022 and 2023. A sharper decline was observed in 2024 and early 2025, with ROA dropping to around 1% by the third quarter of 2025. This downward movement signals diminishing overall profitability relative to total assets.

Tax Burden

The tax burden ratio demonstrated a general upward trend from early 2021 through the end of 2023, reaching a peak around the fourth quarter of 2023 at 0.95. Following that peak, the tax burden ratio reversed course, declining steadily through the first three quarters of 2025 to a low of 0.65. This fluctuation suggests a period of increasing effective tax rates before a notable easing in the tax impact on earnings more recently.

Interest Burden

The interest burden ratio remained relatively stable throughout the period analyzed, consistently hovering around the low 0.90s. Minor fluctuations were observed, with the ratio slightly declining from 0.94 in mid-2021 to 0.86 by the third quarter of 2025. This indicates a modest increase in interest expenses relative to earnings over time, although the changes are not pronounced.

EBIT Margin

EBIT margin experienced a gradual and consistent decline over the time span. Starting from nearly 12% in early 2021, it declined steadily to about 3.2% by the third quarter of 2025. The most notable decreases occurred after 2023, with the margin contracting sharply in 2024 and 2025. This trend reflects deteriorating operational profitability, which could be due to rising costs, diminishing revenues, or a combination of both.

Net Profit Margin

Net profit margin followed a pattern similar to EBIT margin, though starting at a slightly lower base. It decreased from above 8% in early 2021 to under 2% by the third quarter of 2025. This gradual erosion in net profitability is consistent with pressures observed in operating margins and is likely compounded by the variations in tax and interest burdens. The decline in net margin particularly accelerated after 2023, highlighting increasing challenges in converting sales to net income.