Deceptive Earnings at General Motors Company (GM)

A less fuzzy option

Ford Motor Company (NYSE:F) is the other major American car company. In 2011 Ford recognized an $11 billion tax benefit, goosing its net income to over $20 billion. I can’t tell you how many articles I read which claimed that Ford was trading at a P/E ratio of 2 because of this. Excluding this benefit net income was about $8.7 billion before taxes.

In 2012 net income fell to $5.6 billion after taxes. Ford pays far more interest on debt than GM, having refused bailout money during the financial crisis. In 2012 Ford payed $3.8 billion in interest compared to GM’s $489 million. This huge debt load was the main reason why I preferred GM over Ford in the past, but after GM’s strange results I may have to change my mind on that one.

The article Deceptive Earnings at This Car Company originally appeared on and is written by Timothy Green.

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