Economic and Financial Analysis: General Electric



Economic and Financial Analysis: General Electric

General Electric is a technology and financial services corporation. Co.'s segments include: Energy Infrastructure, which develops and implements products and technologies related to wind, oil, gas and water; Aviation, which provides jet engines and related services; Healthcare, which manufactures, sells and services diagnostic imaging systems; Transportation, which provides diesel-electric locomotives and drive technologies; Home & Business Solutions, which provides home appliances, lamp products and plant automation, software, hardware and embedded computing systems; and GE Capital, which provides loans and leases and fleet management, among others (Annual Report, 2011). Due to its diverse product line, it is present in different industries thus allowing it to grasp greater market share and becoming the market leader in the electronics industry of the United States with the sales revenue of $147 billion as of 2011. The closest competitors in the market are Eaton Corp ($ 16 billion), Lear Corp ($ 14 billion) and Harris Corp ($5 billion).

Over the period of last five years (2007-11), the company revenue has declined drastically from $172 billion in 2007 to $ 147 billion in 2011 marking a decline of approx. 17% (Yahoo Finance, 2012). The primary cause for this decline is 2007-8 financial crises which impacted the entire global market affecting the sales and profitability of companies in all major sectors. The chart shows that the revenue has continually declined since 2007. General electric is the biggest player in this industry in terms of the assets. The company reported total assets of worth $ 717 billion in 2011 while total liabilities of the company stood at $600 billion. In the rest of the industry, asset base of its competitors in the market are Eaton Corp ($ 10 billion), Lear Corp ($ 7 billion) and Harris Corp ($5.5 billion).

When it comes to evaluation of any business, it is necessary to review the performance of the company from view of suppliers and other sources of short term finances which required liquidity analysis of the business (Wild, 2005). Even the company is making substantial profits; it still gets insolvent if it does not have appropriate liquidity management. So it is necessary for suppliers to analyze the capability of the company to meet all its debt. The liquidity ratio analysis of the company illustrates that the company has taken measures to improve its overall liquidity position in response to the financial ...