Key words and Definitions
Short-term financial planning – planning cash inflows and cash outflows for periods of time that are typically less than one year.
Working capital – cash used for current operations that is equal to the firm’s current assets minus its current liabilities.
Cash position – the amount of cash a firm has on hand at a point in time.
Summary: Key Points in the Article.
GM lost $806 million in the second quarter of 2020. Revenue fell by 47% relative to the same quarter in 2019. However, overall US vehicle sales are down by 34% relative to the second quarter of 2019. GM attributed the sales decline to lower demand due to the Covid-19 virus and also lower dealer inventories related to the two-month production shutdown earlier in the year.
GM’s response has been to slash advertising spending and other discretionary spending. The automaker also “furloughed some employees and deferred compensation in an effort to weather the pandemic.” CEO Mary Barra stated that GM makes swift and strategic decisions designed to ensure the firm’s long-term success. GM stock fell by 3% after the earnings were released.
FULL ARTICLE LINK HERE
Thinking Critically Questions:
- How is this large loss affecting GM’s current operations?
- How will this loss affect long-term financial planning?
- How might the pandemic change internal policies on the firm’s cash position?
1. read article
2. answer questions ( must be at least 500 words)
3. cite anything in APA format
4. include keywords shown above
5. attach turnit in check !!!