Essay about Financial Analysis of General Electric

General Electric Company (GE) is a diversified technology, media and financial services company. With products and services ranging from aircrafts engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and industrial products, it serves in more than 100 countries. This analysis will use financial ratios to see just how GE is performing as a Fortune 500 company. The first thing to analyze is GE’s capacity to pay its debts as they come due or in other words its liquidity. GE consolidated liquidity position is adequate. GE’s liquidity is supported both by the firm’s consistent earnings track record and its ability to quickly divest business or assets to fit†¦show more content†¦These agencies have given the highest debt ratings to GE and GE Capital (long-term rating AAA/Aaa; short-term rating A-1+/P-1) (4). One of their strategic objectives is to maintain these ratings, as they serve to lower our cost of funds and to facilitate their access to a variety of lenders. They manage our businesses in a fashion that is consistent with maintaining these ratings. In their history, they have never violated any conditions either at GE, GECS or GE Capital. They believe that under any reasonable future economic developments, the likelihood that any such arrangements could have a significant effect on operations, cash flows or financial position is remote. Next is how the ratios relate to the firm’s stock price to its earnings, cash flow and book value per share. The ratios for GE stock are very discouraging. This stock is in the diversified industry, which has generated market-like returns over the past 5- and 10-year periods. Yet compared to its industry peers, this stock has been one of the worst performers over the past five years (10-year returns are unavailable). One should keep in mind when looking at a stock or industrys record that historic returns a re not necessarily a predictor of future performance. Persistent strength or weakness, however, may very well say something about the structure of an industry or quality of a companys management. 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