Financial statement analysis and common stock valuation

Enterprise Value (EV)

Enterprise value is total company value (the market value of common equity, debt, and preferred equity) minus the value of cash and short-term investments.

• Current EV
• Historical EV

Income Statement

The income statement (statement of earnings) reports on the performance of GE Aerospace, the result of its operating activities.

Balance Sheet: Assets

The assets reports major classes and amounts of resources owned or controlled by GE Aerospace.

Capital Asset Pricing Model (CAPM)

CAPM is a theory concentrated with deriving the expected rates of return on risky assets based on the assets’ systematic risk levels. Systematic risk is the variability of returns that is due to macroeconomic factors that affect all risky assets. It cannot be eliminated by diversification.

• Rates of Return
• Variance and Covariance
• Systematic Risk (β) Estimation
• Expected Rate of Return

Analysis of Liquidity Ratios

Measures the adequacy of GE Aerospace cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Analysis of Long-term (Investment) Activity Ratios

Measures how efficiently GE Aerospace generates revenues from its investments in fixed or total assets.

• Long-term Activity Ratios (Summary)
• Net Fixed Asset Turnover
• Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
• Total Asset Turnover
• Equity Turnover

Price to FCFE (P/FCFE)

Free cash flow to equity is the cash flow available to GE Aerospace equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to Equity (FCFE)
• P to FCFE Ratio, Current
• P to FCFE Ratio, Historical

Common Stock Valuation Ratios
Quarterly Data

Relative valuation technique determine the value of GE Aerospace by comparing it to similar entities (like industry or sector) on the basis of several relative ratios that compare its stock price to relevant variables that affect the stock value, such as earnings, book value, and sales.

• Historical Valuation Ratios (Summary)
• Price to Earnings (P/E)
• Price to Operating Profit (P/OP)
• Price to Sales (P/S)
• Price to Book Value (P/BV)

Analysis of Short-term (Operating) Activity Ratios

Evaluates revenues and output generated by the GE Aerospace assets. Operating performance ratios describe the relationship between the GE Aerospace level of operations and the assets needed to sustain operating activities.

• Short-term Activity Ratios (Summary)
• Inventory Turnover
• Receivables Turnover
• Payables Turnover
• Working Capital Turnover
• Average Inventory Processing Period
• Average Receivable Collection Period
• Operating Cycle
• Average Payables Payment Period
• Cash Conversion Cycle

Present Value of Free Cash Flow to Equity (FCFE)

The FCFE valuation approach estimates the value of equity as the present value of future FCFE discounted at the required rate of return on equity.

• Intrinsic Stock Value (Valuation Summary)
• Required Rate of Return (r)
• FCFE Growth Rate (g)

Cash Flow Statement
Quarterly Data

The cash flow statement provides information about GE Aerospace cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on GE Aerospace balance sheet.

Analysis of Long-term (Investment) Activity Ratios
Quarterly Data

Measures how efficiently GE Aerospace generates revenues from its investments in fixed or total assets.

• Long-term Activity Ratios (Summary)
• Net Fixed Asset Turnover
• Total Asset Turnover
• Equity Turnover