General Electric Co. (GE)

Inventory Accounting Policy

All inventories are stated at the lower of cost or realizable values. Cost for a significant portion of GE U.S. inventories is determined on a last-in, first-out (LIFO) basis. Cost of other GE inventories is determined on a first-in, first-out (FIFO) basis. LIFO was used for 38% and 41% of GE inventories at December 31, 2011 and 2010, respectively. GECS inventories consist of finished products held for sale; cost is determined on a FIFO basis.

Source: General Electric Co., Annual Report

Inventory Disclosure

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General Electric Co., Statement of Financial Position, Inventory

USD $ in millions

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Raw materials and work in process
	Finished goods
	Unbilled shipments
	Inventories at FIFO
	Revaluation to LIFO
	Inventories at LIFO

Source: Based on data from General Electric Co. Annual Reports

Item	Description	The company
Raw materials and work in process	The aggregate carrying amount as of the balance sheet date of items held by the entity which are partially completed at the time of measurement and unprocessed items that will go through the production process and become part of the final product. Includes supplies used directly or indirectly in the manufacturing or production process. This element may be used when the reporting entity combines work in process and raw materials into an aggregate amount.	General Electric Co.'s raw materials and work in process declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
Finished goods	Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale.	General Electric Co.'s finished goods increased from 2009 to 2010 and from 2010 to 2011.
Inventories at LIFO	Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer).	General Electric Co.'s inventories at LIFO declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.

Adjustment to Inventory: from LIFO to FIFO

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Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in millions

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Adjustment to Inventories
	Inventories at LIFO (as reported)
	Add: LIFO reserve, ending balance
	Inventories at FIFO (adjusted)
	Adjustment to Current Assets
	Current assets (as reported)
	Add: LIFO reserve, ending balance
	Current assets (adjusted)
	Adjustment to Total Assets
	Total assets (as reported)
	Add: LIFO reserve, ending balance
	Total assets (adjusted)
	Adjustment to GE Shareowners’ Equity
	GE shareowners’ equity (as reported)
	Add: LIFO reserve, ending balance
	GE shareowners’ equity (adjusted)
	Adjustment to Net Earnings Attributable To The Company
	Net earnings attributable to the Company (as reported)
	Add: Increase (decrease) in LIFO reserve, ending balance
	Net earnings attributable to the Company (adjusted)

General Electric Co.'s inventory value on Dec 31, 2011 would be $14,191 (in millions) if the FIFO inventory method was used instead of LIFO. General Electric Co.'s inventories, valued on a LIFO basis, on Dec 31, 2011 were $13,741 . General Electric Co.'s inventories would have been $450 higher than reported on Dec 31, 2011 if the FIFO method had been used instead.

Adjusted Ratios: LIFO vs. FIFO (Summary)

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General Electric Co., adjusted ratios

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Current Ratio
Reported current ratio (LIFO)
Adjusted current ratio (FIFO)
Net Profit Margin
Reported net profit margin (LIFO)	%	%	%	%	%
Adjusted net profit margin (FIFO)	%	%	%	%	%
Total Asset Turnover
Reported total asset turnover (LIFO)
Adjusted total asset turnover (FIFO)
Financial Leverage
Reported financial leverage (LIFO)
Adjusted financial leverage (FIFO)
Return on Equity (ROE)
Reported ROE (LIFO)	%	%	%	%	%
Adjusted ROE (FIFO)	%	%	%	%	%
Return on Assets (ROA)
Reported ROA (LIFO)	%	%	%	%	%
Adjusted ROA (FIFO)	%	%	%	%	%

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	General Electric Co.'s adjusted current ratio improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	General Electric Co.'s adjusted net profit margin improved from 2009 to 2010 and from 2010 to 2011.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	General Electric Co.'s adjusted total asset turnover deteriorated from 2009 to 2010 and from 2010 to 2011.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	General Electric Co.'s adjusted financial leverage increased from 2009 to 2010 and from 2010 to 2011.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	General Electric Co.'s adjusted ROE improved from 2009 to 2010 and from 2010 to 2011.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	General Electric Co.'s adjusted ROA improved from 2009 to 2010 and from 2010 to 2011.

Adjusted Current Ratio

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		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Current assets (USD $ in millions)
	Current liabilities (USD $ in millions)

	Current ratio¹
	Adjusted: from LIFO to FIFO
	Adjusted current assets (USD $ in millions)
	Current liabilities (USD $ in millions)

	Adjusted current ratio²

2011 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= ÷ =

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	General Electric Co.'s adjusted current ratio improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

Adjusted Net Profit Margin

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	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
As Reported
Net earnings attributable to the Company (USD $ in millions)
Sales revenue (USD $ in millions)

Net profit margin¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net earnings attributable to the Company (USD $ in millions)
Sales revenue (USD $ in millions)

Adjusted net profit margin²	%	%	%	%	%

2011 Calculations

¹ Net profit margin = 100 × Net earnings attributable to the Company ÷ Sales revenue
= 100 × ÷ = %

² Adjusted net profit margin = 100 × Adjusted net earnings attributable to the Company ÷ Sales revenue
= 100 × ÷ = %

Ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	General Electric Co.'s adjusted net profit margin improved from 2009 to 2010 and from 2010 to 2011.

Adjusted Total Asset Turnover

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		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Sales revenue (USD $ in millions)
	Total assets (USD $ in millions)

	Total asset turnover¹
	Adjusted: from LIFO to FIFO
	Sales revenue (USD $ in millions)
	Adjusted total assets (USD $ in millions)

	Adjusted total asset turnover²

2011 Calculations

¹ Total asset turnover = Sales revenue ÷ Total assets
= ÷ =

² Adjusted total asset turnover = Sales revenue ÷ Adjusted total assets
= ÷ =

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	General Electric Co.'s adjusted total asset turnover deteriorated from 2009 to 2010 and from 2010 to 2011.

Adjusted Financial Leverage

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		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Total assets (USD $ in millions)
	GE shareowners’ equity (USD $ in millions)

	Financial leverage¹
	Adjusted: from LIFO to FIFO
	Adjusted total assets (USD $ in millions)
	Adjusted gE shareowners’ equity (USD $ in millions)

	Adjusted financial leverage²

2011 Calculations

¹ Financial leverage = Total assets ÷ GE shareowners’ equity
= ÷ =

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted gE shareowners’ equity
= ÷ =

Ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	General Electric Co.'s adjusted financial leverage increased from 2009 to 2010 and from 2010 to 2011.

Adjusted Return On Equity (ROE)

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	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
As Reported
Net earnings attributable to the Company (USD $ in millions)
GE shareowners’ equity (USD $ in millions)

ROE¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net earnings attributable to the Company (USD $ in millions)
Adjusted gE shareowners’ equity (USD $ in millions)

Adjusted ROE²	%	%	%	%	%

2011 Calculations

¹ ROE = 100 × Net earnings attributable to the Company ÷ GE shareowners’ equity
= 100 × ÷ = %

² Adjusted ROE = 100 × Adjusted net earnings attributable to the Company ÷ Adjusted gE shareowners’ equity
= 100 × ÷ = %

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	General Electric Co.'s adjusted ROE improved from 2009 to 2010 and from 2010 to 2011.

Adjusted Return On Assets (ROA)

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	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
As Reported
Net earnings attributable to the Company (USD $ in millions)
Total assets (USD $ in millions)

ROA¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net earnings attributable to the Company (USD $ in millions)
Adjusted total assets (USD $ in millions)

Adjusted ROA²	%	%	%	%	%

2011 Calculations

¹ ROA = 100 × Net earnings attributable to the Company ÷ Total assets
= 100 × ÷ = %

² Adjusted ROA = 100 × Adjusted net earnings attributable to the Company ÷ Adjusted total assets
= 100 × ÷ = %

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	General Electric Co.'s adjusted ROA improved from 2009 to 2010 and from 2010 to 2011.

General Electric Co. (GE) | Analysis of Inventory

Inventory Accounting Policy

Inventory Disclosure

Adjustment to Inventory: from LIFO to FIFO

Adjusted Ratios: LIFO vs. FIFO (Summary)

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return On Equity (ROE)

Adjusted Return On Assets (ROA)

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