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Rosemary's Business Finance Blog

GM About to Exit Bankruptcy a New Company......Really?

Friday July 10, 2009

In order to emerge from bankruptcy quickly, GM has sold its most profitable brand, dealerships, and factories to the "new GM" which is 61% owned by the U.S. government, a union-owned health care trust owns 17.5%, Canada owns about 11.7%, and the old GM eventually will get 10%.

GM will keep four brands -- Chevrolet, Cadillac, GMC, and Buick. Out of these brands, the Corvette is the most profitable car currently made by GM. About 2000 GM dealerships will close gradually over the next two years and about 16 plants will close by 2012.

GM has a number of new cars in the pipeline including a couple of muscle cars like the Chevy Camaro, made more fuel efficient. They also are producing a new Buick, popular in China, and the last Pontiac that will be made, a new sports car. Add a couple of fairly fuel efficient SUV's to the mix, including a Cadillac. Do you see much that's different there? I don't.

Is this really a "new" GM? The new GM will have the same old problems. It will emerge from bankruptcy with less than 20% market share in the automotive market. A big problem will be consumer perception of the company. Will anyone want to buy the cars? Then there is the recession and tight money. People aren't buying cars in droves.

As if that weren't enough, there is still the union, high wages, and an underfunded pension plan.

I don't see much different between the old GM and the new GM. I wonder about the management structure. The Obama administration says it has no plans to participate in the operations of the company, but with a 61% share of the GM, it seems it will have to have representation on the Board of Directors.

I have to wonder if the new GM will last for a little while and then start to, once again, fail. Brands, like Corvette and Cadillac, may be sold off. What do you think about the new GM, its chances for survival, and how the government will handle its stake in the company?

Here's a Tutorial for you on Liquidity Analysis!

Thursday July 9, 2009

I've put together a beginning tutorial for you on analyzing your company's liquidity and cash position with financial ratios. It takes you through a step-by-step process using just two years of balance sheet information for a hypothetical company and shows you how to calculate the ratios and use trend analysis. Take a look!

Are you Struggling with Business Credit Card Debt?

Wednesday July 8, 2009

Yesterday, I blogged about using credit cards for a new business if you can't get financing anywhere else. There are some of you out there, however, that are having to close down your businesses and are struggling with paying off credit card debt that you used for your business.

I found a great article that I want to share with you about how to develop a plan to pay off your credit card debt if your business has failed. Check out this article about struggling with credit card debt if your business has failed to help you make a plan to pay it off.

Credit Cards as a Financing Option for Your New Business

Tuesday July 7, 2009

Small businesses are running out of financing options. If you have a new business, you are particularly squeezed in this tight credit market as your chances of landing a bank loan are slim. You may have to resort to using one or more credit cards to get money for your business.

If you have to use credit cards to get money for your new business, only do so after you've made a plan. Otherwise, you can get yourself into deep financial trouble. Maybe this article will help you!

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