An Overview of General Electric's Balance Sheet


The Presentation inside:

Slide 0

GE'S BALANCE SHEET 3 LESSONS FOR INVESTORS


Slide 1

GENERAL ELECTRIC'S BALANCE SHEET CASTS LIGHT ON THREE OF THE COMPANY'S MOST IMPORTANT TRAITS.


Slide 2

SIZE | LIQUIDITY | SOLVENCY


Slide 3

ARE THERE ENOUGH CURRENT ASSETS (CASH & EQUIVALENTS) TO COVER CURRENT LIABILITIES? SIZE | LIQUIDITY | SOLVENCY ASSETS & EQUITY DOES EQUITY EXCEED DEBT?


Slide 4

THESE TRAITS GIVE INVESTORS A SENSE OF GENERAL ELECTRIC'S GROWTH POTENTIAL, AS WELL AS OF THE VULNERABILITY OF ITS BUSINESS MODEL.


Slide 5

BEFORE DIGGING INTO THESE TRAITS, LET’S BRIEFLY REVIEW THE BALANCE SHEET ITSELF.


Slide 6

THE BALANCE SHEET 1. THE BALANCE SHEET REVEALS A COMPANY’S ASSETS, LIABILITIES, AND OWNERS’ EQUITY ON THE FINAL DAY OF A FISCAL QUARTER OR YEAR. LIABILITIES ASSETS EQUITY 2. THIS IS WHY IT’S OFTEN REFERRED TO AS A SNAPSHOT OF A COMPANY’S FINANCIAL CONDITION. 3. THE “ACCOUNTING EQUATION” HOLDS THAT ASSETS MUST ALWAYS EQUAL LIABILITIES PLUS OWNERS’ EQUITY.


Slide 7

1. SIZE


Slide 8

YOU PROBABLY WON'T BE SURPRISED TO HEAR THAT GENERAL ELECTRIC IS ONE OF THE BIGGEST COMPANIES IN AMERICA.


Slide 9

4 WAYS TO MEASURE GE'S SIZE $581 billion $312 billion $111 billion $148 billion Market Total Shareholders' Revenue Capitalization Assets Equity (ttm) FOUND ON GENERAL ELECTRIC'S BALANCE SHEET


Slide 10

11TH 9TH GE IS THE 9TH BIGGEST COMPANY ON THE S&P 500 BASED ON EQUITY. IT'S THE 11TH LARGEST WHEN MEASURED BY ASSETS.


Slide 11

THANKS TO GENERAL ELECTRIC'S ALREADY CONSIDERABLE SIZE, IT ISN'T LIKELY TO GROW AS FAST AS, SAY, A NEWLY LISTED GROWTH STOCK.


Slide 12

2. LIQUIDITY


Slide 13

THE CURRENT RATIO IS A COMMON WAY TO MEASURE LIQUIDITY.


Slide 14

IT’S CALCULATED BY DIVIDING A COMPANY’S CURRENT ASSETS BY ITS CURRENT LIABILITIES.


Slide 15

GE'S CURRENT ASSETS $256 BILLION $84 BILLION GE'S CURRENT LIABILITIES = 3.03 GE'S CURRENT RATIO


Slide 16

HOW DOES GENERAL ELECTRIC'S CURRENT RATIO COMPARE TO THAT OF OTHER LARGE-CAP STOCKS?


Slide 17

THE CURRENT RATIOS OF THE 100 BIGGEST S&P 500 COMPANIES ←CURRENT RATIO → 6 5 4 3 2 54% OF S&P 500 COMPANIES HAVE CURRENT RATIOS BETWEEN 0.75 AND 2.0 1 - ← 100 BIGGEST S&P 500 COMPANIES →


Slide 18

IN SUM, BECAUSE GENERAL ELECTRIC'S CURRENT RATIO EXCEEDS 2.0, IT'S MORE LIQUID (AND THUS PRESUMABLY SAFER) THAN THE TYPICAL LARGE-CAP STOCK.


Slide 19

3. SOLVENCY


Slide 20

LAST BUT NOT LEAST IS SOLVENCY, WHICH IS MEASURED BY THE DEBT-TOEQUITY RATIO.


Slide 21

THIS IS CALCULATED BY DIVIDING A COMPANY’S DEBT BY ITS EQUITY.


Slide 22

GE'S DEBT $243 BILLION $111 BILLION GE'S EQUITY = 2.18 GE'S DEBT-TOEQUITY RATIO


Slide 23

THERE’S NO HARD-AND-FAST RULE WHEN IT COMES TO THE DEBT-TOEQUITY RATIO, THOUGH A SMALLER RATIO (LESS THAN 1) IMPLIES THAT A COMPANY IS BETTER POSITIONED TO SURVIVE AN INTERUPTION TO ITS REVENUE.


Slide 24

HOW DOES GENERAL ELECTRIC'S DEBTTO-EQUITY RATIO COMPARE? 3.5 3.0 2.98 2.5 2.18 2.17 2.0 1.5 1.0 0.56 0.49 0.5 0.28 0.20 JNJ XOM 0.0 IBM MCD COST PG GE


Slide 25

WHILE GE'S DEBT-TO-EQUITY RATIO EXCEEDS 1.0, IT'S IN GOOD COMPANY, AS 185 OTHER S&P 500 COMPANIES ARE IN THE SAME BOAT.


Slide 26

Looking for more information like this? The Motley Fool’s mission is to help the world invest better. We’ve done this over the past 20 years by thinking long term and outside the box – even if that means turning Wall Street on its head. To receive a special free report about what The Motley Fool thinks might be the next big industry to come out of Silicon Valley, just click here now.


Slide 27


×

HTML:





Ссылка: