Share
Explore BrainMass

GM's High Operating Leverage Problem

Standard & Poor's published a report on to address "questions that have been asked frequently'' about its credit rating of General Motors (GM). The rating company says the most frequently asked questions concern the consequences of the automaker losing its BBB- grade and falling to junk. Additionally, there are questions of why General Motors has the same rating as its finance unit and whether S&P is "reassessing'' its rating approach. The end result is that many feel that General Motors has become, "increasingly reliant'' on asset-backed bonds and that this is a reason to worry. To further examine GM's situation please answer the following questions:

Do you believe that GM suffered from "high operating leverage" problem?

If so, how would have you attempted to correct it?

What role do retirement benefits play?

Please need help in grasping the concepts and answerng the above mentioned questions.

Solution Preview

GM's High Operating Leverage Problem?
Standard & Poor's published a report on to address "questions that have been asked frequently'' about its credit rating of General Motors (GM). The rating company says the most frequently asked questions concern the consequences of the automaker losing its BBB- grade and falling to junk. Additionally, there are questions of why General Motors has the same rating as its finance unit and whether S&P is "reassessing'' its rating approach. The end result is that many feel that General Motors has become, "increasingly reliant'' on asset-backed bonds and that this is a reason to worry. To further examine GM's situation please answer the following questions:

Do you believe that GM suffered from "high operating leverage" problem?

If so, how would have you attempted to correct it?

What role do retirement benefits play?

Please need help in grasping the concepts and answerng ...

Solution Summary

Solution discusses GM's High Operating Leverage Problem

$2.19