Essay on Stock Market and Services Textbook Page

1575 WordsOct 9, 20147 Pages
1. Reviewing GM's financial information in GM Exhibit 1 and its stock price in GM Exhibit 2, when do you first see signs of GM's impending financial distress? The sign of GM’s impending financial distress is first seen in 2005. GM reported a net loss of more than $10 billion and has continued to post annual losses since that time with losses reaching almost $31 billion in 2008. GM's cash flow from operations in 2005 was a negative $16.8 billion. Reviewing GM’s stock price, we can see that the stock price also decreased dramatically started in 2004 to 2008. In 2005, GM’s stock traded around $19 per share and reached the lowest of $1.45 per share on March 2009. Source: Auditing and Assurance Services Textbook page C11-C13. 2. In…show more content…
Deloitte & Touche definitely should have issued a going-concern opinion earlier for GM so that customers, suppliers, investors, and creditors could be aware of the situation. Issuing a going-concern opinion might promote timelier rescue activity. Source: Auditing and Assurance Services Textbook page C11-C13. 4. What economic factors existing in the United States during 2008 might have accelerated Deloitte & Touche's decision to issue an audit opinion modified to disclose going-concern uncertainties? There are some factors existing in the United States during 2008 might have accelerated Deloitte & Touche’s decision to issue an audit opinion modified to disclose going-concern uncertainties. The Global Financial Crisis or 2008 financial crisis is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. For fiscal year 2008, in addition to General Motors, seven other Fortune 500 companies (Ausbury Automotive Group, Charter International, Lear Corp, MGM Mirage, Pilgrim’s Pride Corporation, Sonic Automotive, Inc., and TWR Automotive Holdings Corp.) received going-concern opinions; no Fortune 500 companies had received such opinions in 2007. For a broader universe of companies, the number of all companies filing

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