GM Invested Capital vs Enterprise Value Analysis

GM -- USA Stock  

Quarterly Earning Report: October 30, 2019  

GM financial indicator trend analysis is much more than just examining General Motors latest accounting drivers to predict future trends. We encourage investors to analyze account correlations over time for multiple indicators to determine whether General Motors is a good investment. Please check the relationship between GM Invested Capital and its Enterprise Value accounts. Please also check Risk vs Return Analysis.

Invested Capital vs Enterprise Value

Accounts Relationship

Invested Capital vs Enterprise Value

Significance: Very Strong Relationship

Invested Capital diversification synergy
Overlapping area represents amount of trend that can be explained by analyzing historical patterns of General Motors Invested Capital account and Enterprise Value

Correlation Coefficient

Relationship DirectionPositive 
Relationship StrengthStrong

Invested Capital

Invested capital represents the total cash investment that shareholders and debt holders have contributed to General Motors Company. There are two different methods for calculating General Motors invested capital: operating approach and financing approach. Understanding ##company1# invested capital allows investors to calculate measures of performance such as return on invested capital or return on capital employed. Invested capital is an input into the calculation of Return on Invested Capital; and is calculated as: [Debt] plus [Assets] minus [Intangibles] minus [CashnEq] minus [LiabilitiesC]. Please note this calculation method is subject to change.

Enterprise Value

Enterprise Value (or EV) is usually referred to as GM theoretical takeover price. In the event of an acquisition, an acquirer would have to take on General Motors debt, but would also pocket its cash. Enterprise Value is more accurate representation of GM value than its market capitalization because it takes into account all of General Motors Company existing debt. Enterprise value is a measure of the value of a business as a whole; calculated as [MarketCap] plus [DebtUSD] minus [CashnEqUSD].