General Motors Co. (NYSE:GM)

The analysis of the financial ratios over the reported quarters reveals notable trends and fluctuations in profitability and leverage metrics.

Return on Assets (ROA)

The ROA data begins from the quarter ending March 31, 2021, showing an initial upward movement from 2.73% to a peak of 5.27% in September 2021. Subsequently, the ROA experienced a gradual decline with some fluctuations, maintaining levels mostly between 3.5% and 4.0% throughout 2022 and 2023. Into 2024, the ROA showed a slight increase peaking near 3.9% by September and December, followed by a marked decline to approximately 2.15% and 2.06% in the last two reported quarters. This trend suggests moderate asset profitability that peaked in mid-2021 before stabilizing and dropping during 2024.

Financial Leverage

The Financial Leverage ratio demonstrates a consistent downward trend from a high of 6.15 at the start of the dataset in early 2020, declining steadily to a trough near 3.78 by late 2023. A reversal occurs commencing in late 2023, where leverage increases again, reaching approximately 4.44 by March 2025. This indicates a strategic deleveraging from 2020 through 2023, followed by an increased use of debt or other liabilities relative to equity in the subsequent quarters.

Return on Equity (ROE)

ROE exhibits a pattern similar to ROA, starting at 14.27% in early 2021, then rising sharply to its highest point of 24.67% in the third quarter of 2021. After this peak, ROE declines notably, stabilizing around the 13.5% to 16% range through 2022 and 2023. In 2024, ROE briefly rises again to above 16% but then falls sharply in the final two quarters to levels near 9%. The high initial ROE in 2021 reflects strong equity profitability, which then moderates and diminishes toward the end of the period examined.

Overall, the data demonstrates strong profitability in 2021, as evidenced by peaks in both ROA and ROE, accompanied by gradually declining financial leverage. However, the recent quarters into 2024 show a reversal in leverage coupled with declining profitability ratios. This pattern may reflect changing operational or capital structure strategies impacting asset efficiency and equity returns.

Net Profit Margin

The net profit margin exhibits a generally positive trend from early 2021 through late 2024, starting at 5.91% and reaching a peak of 6.8% in mid-2024. This indicates an improvement in profitability over this period. However, a noticeable decline occurs in the final two quarters, with margins dropping to 3.5% and 3.37%, suggesting pressures on profitability towards the end of the observed timeline.

Asset Turnover

Asset turnover shows a gradual increase over the examined period, beginning at 0.46 in the first quarter of 2021 and rising consistently to 0.61 by early 2025. This trend reflects a steady enhancement in the efficiency with which the company utilizes its assets to generate revenue. The progression from 0.46 to 0.61 indicates incremental operational improvements.

Financial Leverage

Financial leverage declines significantly from a high of 6.15 in March 2020 to around 3.78 by the end of 2023, indicating a de-risking approach and reduced reliance on debt. However, from late 2023 onwards, leverage ratios begin to rise again, reaching approximately 4.44 in early 2025. This suggests a recent increase in borrowing or use of financial leverage.

Return on Equity (ROE)

Return on Equity demonstrates considerable variability but remains strong throughout most of the period. From 14.27% in early 2021, it spikes to a peak of nearly 24.67% in late 2021, followed by a general decline and stabilization between roughly 13% and 16% through 2023 and 2024. In the final two quarters, ROE declines sharply to approximately 9.5% and then 9.0%, mirroring the decrease in net profit margins. This suggests reduced overall profitability and return to shareholders at the end of the period.

Overall Insights

Across the observed timeframe, profitability metrics initially improve, with increasing net profit margins and ROE, accompanied by improved asset utilization as indicated by rising asset turnover ratios. Concurrently, financial leverage decreases substantially, indicating a potential strategy to lower financial risk. However, towards the latter part of the period, leverage increases slightly, and profitability metrics decline, possibly signaling emerging challenges or shifts in operational or financial strategy. The data reveal a company that enhanced operational efficiency and reduced leverage over several years, but faced headwinds impacting profitability near the end of the observed timeline.

The analysis of the quarterly financial ratios reveals several notable trends and patterns over the observed periods.

Tax Burden

The tax burden ratio shows moderate fluctuation, maintaining a general range between 0.7 and 0.95. Initially, values remain stable around 0.78 before progressively increasing to peak near 0.95 in late 2023. Following this peak, a downward correction occurs, returning to 0.7 by early 2025, suggesting changes in effective tax rates or tax-related expenses impacting net income differently across quarters.

Interest Burden

This ratio stays relatively steady throughout the periods, primarily oscillating narrowly between 0.88 and 0.94. Stability in the interest burden implies consistent interest expenses relative to operating profits, with no significant spikes or declines, indicating manageable debt service costs over time.

EBIT Margin

The EBIT margin experiences an initial upward trend from 8.56% to a peak of 13.91% in late 2020, reflecting improving operational efficiency or better pricing power during this phase. However, from 2021 onward, the margin exhibits a declining trajectory, falling gradually to about 5.29% by early 2025. This decline could indicate rising costs, decreasing sales prices, or increasing competitive pressure affecting operating profitability.

Asset Turnover

Asset turnover maintains a positive upward trend throughout most periods, starting at approximately 0.46 and increasing steadily to 0.61 by early 2025. This improvement signals enhanced efficiency in generating revenue from assets, suggesting better utilization of resources over time.

Financial Leverage

Financial leverage shows a consistent downward trajectory from 6.15 in early 2020 to a trough near 3.78 by late 2023, indicating a reduction in reliance on debt financing or balance sheet deleveraging efforts. Nevertheless, slight increases occur after 2023, with leverage rising to about 4.44 by early 2025, possibly reflecting renewed borrowing or changes in capital structure strategy.

Return on Equity (ROE)

The ROE demonstrates significant variation throughout the timeframe. It climbs steeply from approximately 14.27% to a peak of 24.67% in late 2020, highlighting periods of robust profitability and effective equity use. Subsequent quarters show a decline and stabilization in the mid-teens, followed by a notable drop to around 9% by early 2025. This pattern could reflect shifting profitability dynamics due to changing margins, leverage, or asset efficiency.

Overall, the data suggests initial improvements in operational profitability and efficiency, followed by pressures reducing margins and returns despite better asset utilization and a reduced leverage profile. The recent decrease in ROE alongside a lower EBIT margin and slight rise in leverage warrants attention to maintain sustainable profitability.

Net Profit Margin

The net profit margin exhibits a rising trend from March 2021 to approximately mid-2023, starting at 5.91% and peaking around 6.9% to 7.37%. Subsequently, there is a gradual decline through 2023 and into early 2024, followed by a sharper decrease projected towards the end of the periods, reaching approximately 3.37% by March 2025. This suggests a general improvement in profitability in the initial periods, with subsequent pressure on margins likely due to increased costs or competitive factors.

Asset Turnover

The asset turnover ratio shows consistent improvement over the entire period analyzed. It begins near 0.46 in early 2021 and generally trends upward to 0.61 by March 2025. The trajectory indicates enhanced efficiency in using assets to generate revenue, with incremental increases seen almost every reported quarter.

Return on Assets (ROA)

The return on assets follows a pattern similar to the net profit margin, rising from 2.73% in early 2021 to peak around 3.92% in late 2023. After this peak, it experiences a modest decline heading into 2025, with projections ending near 2.06%. The initial growth phase points to improving overall profitability relative to asset base, while the later decline could signal challenges in sustaining profitability levels or increased asset base without proportional income growth.

Tax Burden

The tax burden ratio shows a generally stable pattern with values mostly around 0.78 to 0.95 from the first recorded quarter in March 31, 2021 through March 31, 2025. There was a noticeable increase reaching a peak at 0.95 in the fourth quarter of 2022, followed by a gradual decline toward 0.7 by March 31, 2025. This indicates fluctuations in effective tax rates impacting net income gradually over the analyzed periods.

Interest Burden

The interest burden ratio remains relatively consistent and high, fluctuating slightly within a narrow range between 0.88 and 0.94 throughout the period. This stability suggests that the company’s earnings before interest and taxes are moderately affected by interest expenses, with no pronounced trend of improvement or deterioration.

EBIT Margin

The EBIT margin exhibits an initial upward trend starting at 8.56% in March 31, 2021, ascending to a peak of approximately 13.91% in September 30, 2021. Post this peak, a gradual downward trajectory becomes evident, with the margin declining steadily to 5.29% by the quarter ending March 31, 2025. This pattern reflects an erosion of operational profitability over the recent quarters following an earlier period of margin expansion.

Asset Turnover

Asset turnover shows an improving trend over time, starting at 0.46 in March 31, 2021 and increasing gradually to reach 0.61 by March 31, 2025. This rise indicates enhanced efficiency in utilizing assets to generate revenue, implying better asset management or increased sales relative to asset base.

Return on Assets (ROA)

ROA demonstrates a fluctuating but overall declining pattern, beginning at 2.73% in March 31, 2021 and reaching a peak of 5.27% in September 30, 2021. After this peak, ROA declines to about 2.06% by March 31, 2025. The trend suggests that despite improved asset turnover, overall profitability relative to assets has weakened significantly toward the end of the analyzed period, potentially due to declining margins or other operational factors impacting net income.

Tax Burden

The tax burden ratio shows a generally stable pattern from March 2021 through March 2025, fluctuating around the 0.78 to 0.83 range until the end of 2023. Notably, there is an increase starting in the last quarter of 2023, peaking at 0.95, followed by a gradual decline to 0.7 by the first quarter of 2025. This suggests variability in the effective tax rate impacting net income differently over the more recent periods.

Interest Burden

The interest burden ratio displays minimal variation throughout the entire period from March 2021 to March 2025, remaining consistently around the 0.91 to 0.94 range. This implies that the company's interest expense relative to earnings before interest and taxes has been relatively stable, indicating a steady debt servicing cost without significant spikes.

EBIT Margin

The EBIT margin reveals a positive trend from March through September 2021, peaking at approximately 13.91%. After this peak, a declining trend emerges, with the margin decreasing gradually to about 7.95% by September 2024 and further dropping to 5.29% by March 2025. This decline points to a reduction in operating profitability over time, possibly due to rising costs or decreasing operating revenues.

Net Profit Margin

The net profit margin also follows a similar trend to the EBIT margin, initially improving from 5.91% in March 2021 to a peak above 10% by September 2021. Subsequently, the margin decreases steadily to approximately 6.62% by September 2024 and sharply declines to around 3.37% by the first quarter of 2025. This indicates that after a period of improved profitability, net profits have been compressed, potentially due to increasing expenses, tax effects, or non-operating charges.