Intrinsic value of General Motors - GM

Previous Close

$39.40

  Intrinsic Value

$38.39

stock screener

  Rating & Target

hold

-3%

Previous close

$39.40

 
Intrinsic value

$38.39

 
Up/down potential

-3%

 
Rating

hold

We calculate the intrinsic value of GM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 57.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  148,500
  151,915
  155,819
  160,203
  165,060
  170,389
  176,191
  182,473
  189,240
  196,503
  204,272
  212,563
  221,390
  230,771
  240,726
  251,275
  262,442
  274,251
  286,729
  299,903
  313,805
  328,465
  343,918
  360,199
  377,347
  395,402
  414,405
  434,403
  455,441
  477,569
Variable operating expenses, $m
  138,539
  141,712
  145,338
  149,410
  153,922
  158,873
  164,264
  170,099
  176,386
  183,132
  189,765
  197,467
  205,667
  214,382
  223,630
  233,430
  243,804
  254,775
  266,366
  278,605
  291,519
  305,138
  319,494
  334,619
  350,549
  367,321
  384,975
  403,553
  423,097
  443,654
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  138,539
  141,712
  145,338
  149,410
  153,922
  158,873
  164,264
  170,099
  176,386
  183,132
  189,765
  197,467
  205,667
  214,382
  223,630
  233,430
  243,804
  254,775
  266,366
  278,605
  291,519
  305,138
  319,494
  334,619
  350,549
  367,321
  384,975
  403,553
  423,097
  443,654
Operating income, $m
  9,961
  10,204
  10,481
  10,792
  11,137
  11,516
  11,928
  12,374
  12,854
  13,370
  14,507
  15,096
  15,723
  16,389
  17,096
  17,845
  18,638
  19,477
  20,363
  21,298
  22,286
  23,327
  24,424
  25,580
  26,798
  28,080
  29,430
  30,850
  32,344
  33,916
EBITDA, $m
  18,728
  19,159
  19,652
  20,204
  20,817
  21,489
  22,221
  23,013
  23,866
  24,782
  25,762
  26,808
  27,921
  29,104
  30,360
  31,690
  33,099
  34,588
  36,162
  37,823
  39,576
  41,425
  43,374
  45,427
  47,590
  49,867
  52,264
  54,786
  57,439
  60,230
Interest expense (income), $m
  2,323
  5,088
  5,279
  5,504
  5,761
  6,049
  6,369
  6,720
  7,102
  7,515
  7,961
  8,439
  8,950
  9,496
  10,077
  10,694
  11,350
  12,044
  12,779
  13,556
  14,378
  15,245
  16,160
  17,125
  18,142
  19,214
  20,343
  21,531
  22,782
  24,098
  25,483
Earnings before tax, $m
  4,873
  4,925
  4,977
  5,032
  5,088
  5,147
  5,208
  5,272
  5,339
  5,410
  6,068
  6,146
  6,227
  6,312
  6,401
  6,495
  6,594
  6,698
  6,806
  6,921
  7,041
  7,167
  7,299
  7,438
  7,584
  7,738
  7,899
  8,068
  8,246
  8,433
Tax expense, $m
  1,316
  1,330
  1,344
  1,359
  1,374
  1,390
  1,406
  1,424
  1,442
  1,461
  1,638
  1,659
  1,681
  1,704
  1,728
  1,754
  1,780
  1,808
  1,838
  1,869
  1,901
  1,935
  1,971
  2,008
  2,048
  2,089
  2,133
  2,178
  2,226
  2,277
Net income, $m
  3,558
  3,595
  3,633
  3,673
  3,714
  3,757
  3,802
  3,849
  3,898
  3,949
  4,430
  4,486
  4,546
  4,608
  4,673
  4,742
  4,814
  4,889
  4,969
  5,052
  5,140
  5,232
  5,328
  5,430
  5,537
  5,649
  5,766
  5,890
  6,020
  6,156

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  216,788
  221,774
  227,474
  233,873
  240,963
  248,742
  257,214
  266,384
  276,263
  286,865
  298,208
  310,311
  323,197
  336,892
  351,425
  366,825
  383,127
  400,367
  418,582
  437,815
  458,109
  479,511
  502,070
  525,838
  550,872
  577,229
  604,972
  634,165
  664,877
  697,182
Adjusted assets (=assets-cash), $m
  216,788
  221,774
  227,474
  233,873
  240,963
  248,742
  257,214
  266,384
  276,263
  286,865
  298,208
  310,311
  323,197
  336,892
  351,425
  366,825
  383,127
  400,367
  418,582
  437,815
  458,109
  479,511
  502,070
  525,838
  550,872
  577,229
  604,972
  634,165
  664,877
  697,182
Revenue / Adjusted assets
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
  0.685
Average production assets, $m
  81,823
  83,705
  85,857
  88,272
  90,948
  93,884
  97,081
  100,543
  104,271
  108,273
  112,554
  117,122
  121,986
  127,155
  132,640
  138,453
  144,606
  151,112
  157,988
  165,247
  172,906
  180,984
  189,499
  198,470
  207,918
  217,866
  228,337
  239,356
  250,948
  263,141
Working capital, $m
  -13,513
  -13,824
  -14,180
  -14,578
  -15,020
  -15,505
  -16,033
  -16,605
  -17,221
  -17,882
  -18,589
  -19,343
  -20,146
  -21,000
  -21,906
  -22,866
  -23,882
  -24,957
  -26,092
  -27,291
  -28,556
  -29,890
  -31,297
  -32,778
  -34,339
  -35,982
  -37,711
  -39,531
  -41,445
  -43,459
Total debt, $m
  97,756
  101,919
  106,679
  112,022
  117,942
  124,438
  131,511
  139,168
  147,417
  156,270
  165,741
  175,847
  186,607
  198,043
  210,178
  223,037
  236,649
  251,044
  266,254
  282,314
  299,259
  317,129
  335,966
  355,813
  376,716
  398,724
  421,889
  446,266
  471,911
  498,885
Total liabilities, $m
  181,018
  185,181
  189,941
  195,284
  201,204
  207,700
  214,773
  222,430
  230,679
  239,532
  249,003
  259,109
  269,869
  281,305
  293,440
  306,299
  319,911
  334,306
  349,516
  365,576
  382,521
  400,391
  419,228
  439,075
  459,978
  481,986
  505,151
  529,528
  555,173
  582,147
Total equity, $m
  35,770
  36,593
  37,533
  38,589
  39,759
  41,042
  42,440
  43,953
  45,583
  47,333
  49,204
  51,201
  53,327
  55,587
  57,985
  60,526
  63,216
  66,061
  69,066
  72,239
  75,588
  79,119
  82,841
  86,763
  90,894
  95,243
  99,820
  104,637
  109,705
  115,035
Total liabilities and equity, $m
  216,788
  221,774
  227,474
  233,873
  240,963
  248,742
  257,213
  266,383
  276,262
  286,865
  298,207
  310,310
  323,196
  336,892
  351,425
  366,825
  383,127
  400,367
  418,582
  437,815
  458,109
  479,510
  502,069
  525,838
  550,872
  577,229
  604,971
  634,165
  664,878
  697,182
Debt-to-equity ratio
  2.730
  2.790
  2.840
  2.900
  2.970
  3.030
  3.100
  3.170
  3.230
  3.300
  3.370
  3.430
  3.500
  3.560
  3.620
  3.680
  3.740
  3.800
  3.860
  3.910
  3.960
  4.010
  4.060
  4.100
  4.140
  4.190
  4.230
  4.260
  4.300
  4.340
Adjusted equity ratio
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,558
  3,595
  3,633
  3,673
  3,714
  3,757
  3,802
  3,849
  3,898
  3,949
  4,430
  4,486
  4,546
  4,608
  4,673
  4,742
  4,814
  4,889
  4,969
  5,052
  5,140
  5,232
  5,328
  5,430
  5,537
  5,649
  5,766
  5,890
  6,020
  6,156
Depreciation, amort., depletion, $m
  8,767
  8,955
  9,171
  9,412
  9,680
  9,973
  10,293
  10,639
  11,012
  11,412
  11,255
  11,712
  12,199
  12,715
  13,264
  13,845
  14,461
  15,111
  15,799
  16,525
  17,291
  18,098
  18,950
  19,847
  20,792
  21,787
  22,834
  23,936
  25,095
  26,314
Funds from operations, $m
  12,325
  12,551
  12,804
  13,085
  13,394
  13,730
  14,095
  14,488
  14,910
  15,361
  15,685
  16,199
  16,744
  17,323
  17,937
  18,587
  19,274
  20,000
  20,767
  21,577
  22,430
  23,330
  24,278
  25,277
  26,328
  27,435
  28,600
  29,825
  31,114
  32,470
Change in working capital, $m
  -265
  -311
  -355
  -399
  -442
  -485
  -528
  -572
  -616
  -661
  -707
  -754
  -803
  -854
  -906
  -960
  -1,016
  -1,075
  -1,135
  -1,199
  -1,265
  -1,334
  -1,406
  -1,482
  -1,560
  -1,643
  -1,729
  -1,820
  -1,914
  -2,014
Cash from operations, $m
  12,590
  12,861
  13,159
  13,484
  13,836
  14,215
  14,623
  15,060
  15,526
  16,022
  16,392
  16,953
  17,547
  18,177
  18,843
  19,547
  20,290
  21,075
  21,903
  22,776
  23,695
  24,664
  25,684
  26,759
  27,889
  29,078
  30,329
  31,645
  33,029
  34,484
Maintenance CAPEX, $m
  -8,015
  -8,182
  -8,371
  -8,586
  -8,827
  -9,095
  -9,388
  -9,708
  -10,054
  -10,427
  -10,827
  -11,255
  -11,712
  -12,199
  -12,715
  -13,264
  -13,845
  -14,461
  -15,111
  -15,799
  -16,525
  -17,291
  -18,098
  -18,950
  -19,847
  -20,792
  -21,787
  -22,834
  -23,936
  -25,095
New CAPEX, $m
  -1,676
  -1,882
  -2,151
  -2,415
  -2,676
  -2,936
  -3,197
  -3,461
  -3,729
  -4,002
  -4,281
  -4,568
  -4,864
  -5,169
  -5,485
  -5,813
  -6,153
  -6,507
  -6,875
  -7,259
  -7,660
  -8,078
  -8,515
  -8,971
  -9,449
  -9,948
  -10,471
  -11,019
  -11,592
  -12,193
Cash from investing activities, $m
  -9,691
  -10,064
  -10,522
  -11,001
  -11,503
  -12,031
  -12,585
  -13,169
  -13,783
  -14,429
  -15,108
  -15,823
  -16,576
  -17,368
  -18,200
  -19,077
  -19,998
  -20,968
  -21,986
  -23,058
  -24,185
  -25,369
  -26,613
  -27,921
  -29,296
  -30,740
  -32,258
  -33,853
  -35,528
  -37,288
Free cash flow, $m
  2,899
  2,797
  2,638
  2,483
  2,333
  2,184
  2,037
  1,890
  1,743
  1,593
  1,284
  1,129
  971
  809
  642
  470
  292
  108
  -84
  -282
  -489
  -704
  -928
  -1,162
  -1,407
  -1,662
  -1,928
  -2,207
  -2,499
  -2,804
Issuance/(repayment) of debt, $m
  3,537
  4,163
  4,759
  5,343
  5,920
  6,496
  7,074
  7,657
  8,249
  8,853
  9,471
  10,106
  10,760
  11,436
  12,135
  12,859
  13,612
  14,395
  15,210
  16,059
  16,945
  17,870
  18,837
  19,847
  20,903
  22,008
  23,165
  24,376
  25,645
  26,974
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,537
  4,163
  4,759
  5,343
  5,920
  6,496
  7,074
  7,657
  8,249
  8,853
  9,471
  10,106
  10,760
  11,436
  12,135
  12,859
  13,612
  14,395
  15,210
  16,059
  16,945
  17,870
  18,837
  19,847
  20,903
  22,008
  23,165
  24,376
  25,645
  26,974
Total cash flow (excl. dividends), $m
  6,436
  6,961
  7,397
  7,826
  8,253
  8,680
  9,111
  9,547
  9,992
  10,446
  10,755
  11,235
  11,732
  12,245
  12,777
  13,330
  13,904
  14,503
  15,126
  15,777
  16,456
  17,166
  17,908
  18,684
  19,496
  20,346
  21,237
  22,169
  23,146
  24,170
Retained Cash Flow (-), $m
  -769
  -823
  -940
  -1,056
  -1,170
  -1,284
  -1,398
  -1,513
  -1,630
  -1,749
  -1,872
  -1,997
  -2,126
  -2,260
  -2,398
  -2,541
  -2,690
  -2,845
  -3,006
  -3,173
  -3,348
  -3,531
  -3,722
  -3,922
  -4,131
  -4,349
  -4,578
  -4,817
  -5,068
  -5,330
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  5,667
  6,138
  6,456
  6,770
  7,083
  7,397
  7,713
  8,034
  8,362
  8,697
  8,883
  9,238
  9,605
  9,985
  10,379
  10,789
  11,215
  11,658
  12,121
  12,604
  13,108
  13,635
  14,186
  14,763
  15,366
  15,998
  16,659
  17,352
  18,079
  18,840
Discount rate, %
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
  5,266
  5,264
  5,072
  4,832
  4,554
  4,244
  3,912
  3,564
  3,209
  2,853
  2,460
  2,132
  1,820
  1,531
  1,268
  1,032
  825
  648
  498
  376
  277
  199
  140
  96
  64
  42
  26
  16
  9
  5
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

General Motors Company designs, builds and sells cars, trucks, crossovers and automobile parts. The Company's segments include GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO), GM South America (GMSA) and General Motors Financial Company, Inc. (GM Financial). The Company provides automotive financing services through General Motors Financial Company, Inc. The Company develops, manufactures and/or markets vehicles in North America under the brands, including Buick, Cadillac, Chevrolet and GMC. The Company also develops, manufactures and/or markets vehicles outside North America under the brands, including Buick, Cadillac, Chevrolet, GMC, Holden, Opel and Vauxhall. The Company offers a range of after-sale vehicle services and products through the dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties. GM Financial is an automotive finance company, which provides automobile finance solutions.

FINANCIAL RATIOS  of  General Motors (GM)

Valuation Ratios
P/E Ratio 6.3
Price to Sales 0.4
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 3.6
Price to Free Cash Flow -4.7
Growth Rates
Sales Growth Rate 9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.6%
Cap. Spend. - 3 Yr. Gr. Rate 24.3%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 117.1%
Total Debt to Equity 171.4%
Interest Coverage 6
Management Effectiveness
Return On Assets 5.4%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 8.5%
Ret/ On T. Cap. - 3 Yr. Avg. 8%
Return On Equity 22.5%
Return On Equity - 3 Yr. Avg. 19.5%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 12.8%
Gross Margin - 3 Yr. Avg. 11.2%
EBITDA Margin 14.7%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 5.7%
Oper. Margin - 3 Yr. Avg. 3.5%
Pre-Tax Margin 7%
Pre-Tax Margin - 3 Yr. Avg. 4.9%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 20.7%
Eff/ Tax Rate - 3 Yr. Avg. 0.5%
Payout Ratio 25.1%

GM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GM stock intrinsic value calculation we used $145588 million for the last fiscal year's total revenue generated by General Motors. The default revenue input number comes from 2017 income statement of General Motors. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GM stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.6%, whose default value for GM is calculated based on our internal credit rating of General Motors, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of General Motors.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GM stock the variable cost ratio is equal to 93.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for GM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for General Motors.

Corporate tax rate of 27% is the nominal tax rate for General Motors. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GM are equal to 55.1%.

Life of production assets of 10 years is the average useful life of capital assets used in General Motors operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GM is equal to -9.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $35001 million for General Motors - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1465 million for General Motors is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of General Motors at the current share price and the inputted number of shares is $57.7 billion.

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