General Motors Co. (NYSE:GM)

The examined financial metrics reveal notable shifts in profitability and financial leverage over the observed period. Return on Equity (ROE) demonstrates a generally declining trend, particularly pronounced in the latter half of the analyzed timeframe. This decline appears to be driven by a combination of factors affecting both Return on Assets (ROA) and Financial Leverage.

Return on Assets (ROA)

ROA exhibited relative stability between March 2022 and December 2022, fluctuating between 3.47% and 3.95%. A slight increase was observed through June 2024, peaking at 3.92%. However, a significant downward trend commenced in September 2024, with ROA decreasing to 0.96% by December 2025. This suggests a diminishing ability to generate earnings from the company’s asset base.

Financial Leverage

Financial Leverage remained relatively consistent between March 2022 and December 2022, ranging from 3.89 to 4.05. A moderate increase occurred in December 2022, reaching 4.25, and continued into the first half of 2024, peaking at 4.15. While leverage remained elevated, it did not fully offset the decline in ROA during the latter period. A further increase is observed in December 2025, reaching 4.60, indicating a greater reliance on debt financing as profitability decreased.

Return on Equity (ROE)

ROE began at 16.00% in March 2022 and generally decreased over the period. Initial fluctuations were observed, but a clear downward trajectory emerged from June 2023 onwards. The most substantial decline occurred between September 2024 and December 2025, with ROE falling from 3.83% to 0.96%. This decrease mirrors the combined effect of declining ROA and, to a lesser extent, fluctuations in Financial Leverage. The increasing leverage in the final periods did not prevent a substantial reduction in ROE.

The observed trends suggest a weakening of overall financial performance. While the company initially maintained stable profitability and leverage, a pronounced decline in asset efficiency, coupled with increasing reliance on debt, has resulted in a significant reduction in shareholder returns as measured by ROE. Further investigation into the factors driving the decline in ROA is warranted.

The analysis of the presented financial metrics reveals notable shifts in profitability, efficiency, and financial leverage over the observed period. Return on Equity (ROE) experienced fluctuations, driven by changes in its component ratios. A general trend of declining performance is evident in the latter half of the period, particularly concerning profitability.

Net Profit Margin

The Net Profit Margin demonstrated relative stability between March 2022 and December 2022, fluctuating between 6.90% and 8.47%. A slight upward trend was observed through June 2024, peaking at 6.80%. However, a significant decline commenced in September 2024, falling to 3.50% by December 2024 and continuing to decrease to 1.61% by December 2025. This indicates a substantial erosion of profitability in the most recent periods.

Asset Turnover

Asset Turnover exhibited a gradual increase from 0.47 in March 2022 to 0.58 between March 2023 and June 2024, suggesting improving efficiency in utilizing assets to generate sales. This trend plateaued, with values remaining around 0.58 to 0.61 through September 2024. A slight decrease is observed in the final two periods, falling to 0.59 and 0.60, respectively, but remains relatively stable overall.

Financial Leverage

Financial Leverage remained relatively consistent between March 2022 and September 2023, fluctuating between 3.78 and 4.25. A noticeable increase occurred in December 2024, reaching 4.44, and continued to rise to 4.60 by December 2025. This suggests an increasing reliance on debt financing, which amplifies both potential gains and losses.

Return on Equity (ROE)

ROE mirrored the trends of its components. It peaked at 16.00% in March 2022 and experienced fluctuations, generally decreasing to 9.53% by December 2024. The decline accelerated in the final periods, reaching 4.41% by December 2025. The decrease in ROE is primarily attributable to the significant drop in Net Profit Margin, despite a relatively stable Asset Turnover and increasing Financial Leverage. The increasing leverage did not offset the declining profitability.

In summary, while asset utilization remained reasonably consistent, the substantial decline in net profit margin significantly impacted overall Return on Equity. The increasing financial leverage, while potentially amplifying returns in more profitable periods, exacerbated the negative impact of declining profitability in the later quarters. The observed trends suggest a weakening financial performance in recent periods.

The five-component DuPont analysis reveals fluctuating performance over the observed period. Return on Equity (ROE) initially demonstrated strength, peaking in late 2022, before experiencing a significant decline through 2025. This shift is attributable to changes across the contributing factors of the ROE calculation.

Tax Burden

The tax burden generally remained high, fluctuating between 0.80 and 0.95. A notable decrease to 0.70 is observed in late 2024 and early 2025, potentially indicating tax benefits or changes in tax liabilities, but it recovers to 0.89 by the end of 2025. This fluctuation has a direct impact on net income and, consequently, ROE.

Interest Burden

The interest burden exhibited relative stability, consistently above 0.90 throughout the period. A slight decrease to 0.81 is seen in late 2025, suggesting a potential reduction in interest expense relative to earnings before interest and taxes (EBIT). However, the overall impact appears limited given the consistent high values.

EBIT Margin

The EBIT margin experienced a consistent downward trend. Starting at 10.59 in early 2022, it declined to 2.24 by the end of 2025. This represents a substantial erosion of profitability from core operations and is a primary driver of the ROE decline. The most significant drops occurred between late 2023 and early 2025.

Asset Turnover

Asset turnover showed a modest increase from 0.47 to 0.61 between early 2022 and late 2024, indicating improved efficiency in utilizing assets to generate sales. However, it slightly decreased to 0.59 in mid-2025 and stabilized at 0.60 by the end of 2025. While positive, this improvement was insufficient to offset the declining EBIT margin.

Financial Leverage

Financial leverage remained relatively stable, generally between 3.78 and 4.25. A slight increase to 4.60 is observed at the end of 2025, suggesting increased reliance on debt financing. While leverage can amplify returns, it also increases financial risk. The impact of this increase is likely muted by the overall decline in profitability.

The decline in ROE is primarily driven by the substantial decrease in the EBIT margin. While asset turnover showed some improvement and financial leverage remained consistent, these factors were not enough to counteract the impact of reduced operational profitability. The tax burden fluctuations also contributed to the ROE volatility, but to a lesser extent than the EBIT margin. The increase in financial leverage at the end of the period warrants further investigation.

The financial performance, as indicated by the provided metrics, demonstrates a shifting trend in profitability and efficiency over the observed period. Initially, a relatively stable Return on Assets (ROA) is observed, followed by a noticeable decline in recent quarters. This shift appears to be driven by changes in both Net Profit Margin and Asset Turnover.

Net Profit Margin

The Net Profit Margin exhibited a gradual decline from 8.47% in March 2022 to 1.61% in December 2025. The most significant decrease occurred between December 2023 and December 2025, falling from 3.50% to 1.61%. Prior to this, a more moderate decline was present, suggesting increasing cost pressures or pricing challenges impacting profitability. The period between March 2022 and June 2023 showed relative stability, fluctuating between 6.35% and 7.37% before the more pronounced downturn.

Asset Turnover

Asset Turnover showed a generally increasing trend from 0.47 in March 2022 to 0.61 in March 2024, indicating improved efficiency in utilizing assets to generate sales. However, this trend plateaued and subsequently experienced a slight decline, reaching 0.60 in December 2025. While the increase initially contributed positively to ROA, the stabilization and minor decrease in recent periods have not been sufficient to offset the declining Net Profit Margin.

Return on Assets (ROA)

ROA initially remained relatively stable, fluctuating around 3.5% to 4.0% between March 2022 and December 2022. A clear downward trend emerges from March 2023 onwards, culminating in a ROA of 0.96% in December 2025. This decline directly correlates with the decreasing Net Profit Margin, with the stabilizing Asset Turnover offering limited counterbalancing effect. The most substantial decrease in ROA occurred between December 2023 and December 2025, mirroring the sharp decline in Net Profit Margin.

The disaggregation of ROA into its component parts reveals that the recent decline in overall profitability is primarily attributable to a significant reduction in Net Profit Margin. While Asset Turnover demonstrated initial improvement, its recent stabilization and slight decrease have not been enough to mitigate the impact of lower margins. Continued monitoring of these trends is warranted to understand the underlying drivers of the declining profitability and to assess the effectiveness of any implemented corrective measures.

The financial performance, as indicated by the four-component DuPont analysis, reveals several notable trends over the observed period. Return on Assets (ROA) experienced a general decline from early 2022 through the end of 2025, although fluctuations occurred within that timeframe. This overall decrease in ROA appears to be driven by a combination of factors related to profitability and, to a lesser extent, asset utilization. The tax and interest burdens also exhibited changes, contributing to the observed ROA trajectory.

Return on Assets (ROA)

ROA began at 3.95% in March 2022 and generally decreased to 0.96% by December 2025. A period of relative stability was observed between March 2022 and September 2022, ranging from 3.47% to 3.71%. A more pronounced decline began in March 2023, accelerating through December 2025. The most significant drop occurred between September 2024 and December 2025, indicating a substantial reduction in the company’s ability to generate profit from its assets.

EBIT Margin

The EBIT Margin demonstrated a consistent downward trend throughout the period. Starting at 10.59% in March 2022, it decreased to 2.24% by December 2025. The decline was relatively gradual through June 2023, remaining above 8%. However, a steeper decrease was observed from September 2023 onwards, suggesting increasing pressure on profitability. This decreasing margin is a primary driver of the declining ROA.

Asset Turnover

Asset Turnover showed a modest increase from 0.47 in March 2022 to a peak of 0.61 in both March and September 2024, before stabilizing around 0.59-0.60. While there was some improvement in asset utilization, it was not substantial enough to offset the negative impact of the declining EBIT Margin on ROA. The relatively stable asset turnover suggests that the decrease in ROA is primarily attributable to profitability rather than efficiency in asset use.

Tax Burden

The Tax Burden fluctuated throughout the period, beginning at 0.86 and decreasing to 0.65 in September 2025, before increasing to 0.89 in December 2025. The decrease in tax burden in late 2024 and early 2025 partially offset the decline in ROA, but did not fully compensate for the lower profitability. The initial values suggest a relatively consistent effective tax rate, with a noticeable reduction towards the end of the observation period.

Interest Burden

The Interest Burden remained remarkably stable throughout the entire period, consistently above 0.90. A slight decrease to 0.81 was observed in December 2025, but the overall impact on ROA was minimal due to its consistent high level. This indicates a consistent level of interest expense relative to EBIT, and does not appear to be a significant contributor to the observed ROA decline.

In summary, the declining ROA is largely attributable to the significant decrease in the EBIT Margin. While asset turnover showed some improvement, it was insufficient to counteract the impact of lower profitability. Fluctuations in the tax burden provided some offsetting effects, but the consistent interest burden did not contribute significantly to the overall trend.

The period under review demonstrates fluctuating performance across key profitability metrics. A general trend of declining margins is apparent, particularly when comparing the earlier quarters to the later ones. The analysis focuses on the interplay between tax burden, interest burden, EBIT margin, and net profit margin to understand the drivers of these changes.

Tax Burden

The tax burden generally remained high, fluctuating between 0.84 and 0.95 for most of the observed period. A significant decrease to 0.70 is noted in December 2024, followed by further reductions to 0.68 and 0.65 in the subsequent quarters. This suggests a potential impact from changes in tax regulations or improved tax planning strategies towards the end of the period.

Interest Burden

The interest burden exhibited relative stability, consistently above 0.90 throughout most of the period. A noticeable decline is observed in the final quarters, decreasing from 0.91 in December 2024 to 0.86 in September 2025 and finally to 0.81 in December 2025. This reduction could be attributed to debt repayment, refinancing at lower rates, or a decrease in overall debt levels.

EBIT Margin

The EBIT margin experienced a consistent downward trend. Starting at 10.59 in March 2022, it progressively decreased to 2.24 by December 2025. This decline indicates increasing operational costs or decreasing revenue generation relative to sales. The most substantial drops occurred between September 2023 and March 2024, and again between March 2024 and December 2025.

Net Profit Margin

The net profit margin mirrored the trend observed in the EBIT margin, exhibiting a steady decline from 8.47 in March 2022 to 1.61 in December 2025. This decrease is consistent with the diminishing EBIT margin and the fluctuations in tax and interest burdens. The largest decrease in net profit margin occurred between December 2023 and March 2024, and again between September 2024 and December 2025. The reduction in tax burden in the later quarters partially offset the impact of the declining EBIT margin, but was insufficient to prevent an overall decrease in net profitability.

The combined effect of these factors suggests increasing pressure on overall profitability. While reductions in tax and interest burdens provided some mitigation, the primary driver of the declining net profit margin appears to be the consistent erosion of the EBIT margin. Further investigation into the underlying causes of the EBIT margin decline is warranted.