GE Aerospace (NYSE:GE)

Goodwill

The goodwill balance displayed a gradual increase from 25,524 million USD in 2020, peaking at 26,182 million USD in 2021. Subsequently, it began to decline sharply, falling to 13,385 million USD by the end of 2023 and further down to 8,538 million USD in 2024, indicating possible disposals or impairments.

Customer-related Intangible Assets

Customer-related intangible assets decreased steadily from 6,862 million USD in 2020 to 3,850 million USD in 2024. Despite a slight uptick in 2023 to 6,201 million USD, the overall trend suggests amortization or asset write-downs over time.

Patents and Technology

The carrying amount of patents and technology experienced an initial increase from 8,191 million USD in 2020 to 8,592 million USD in 2021, followed by a decreasing trend to 2,744 million USD by 2024. The considerable decline after 2022 highlights significant amortization or disposals.

Capitalized Software

Capitalized software values remained relatively stable around 5,826 million USD in 2020 and 5,764 million USD in 2021 but declined markedly thereafter to 1,296 million USD by 2024. This downward trend suggests accelerated amortization or reduced capital expenditures in software development.

Trademarks and Other Intangible Assets

Trademarks and other intangible assets showed a substantial decrease from 778 million USD in 2020 to a low of 70 million USD in 2024, indicating systematic amortization or write-offs.

Intangible Assets Subject to Amortization (Gross Carrying Amount)

The gross carrying amount of intangible assets subject to amortization declined steadily from 21,657 million USD in 2020 to 7,960 million USD in 2024. This decreasing trend reflects disposals or impairment of such assets over the period.

Accumulated Amortization

Accumulated amortization increased slightly from -11,883 million USD in 2020 to -12,639 million USD in 2022, followed by a reduction in magnitude to -3,703 million USD in 2024. The reduction in accumulated amortization after 2022 could be related to asset impairment, disposals, or changes in accounting treatment.

Intangible Assets Subject to Amortization (Net)

Net intangible assets subject to amortization decreased from 9,774 million USD in 2020 to 4,257 million USD in 2024, confirming a consistent downward trend likely driven by amortization and asset disposals.

Indefinite-lived Intangible Assets

Values for indefinite-lived intangible assets appear minimal and sporadic, with 48 million USD in 2021 and 62 million USD in 2022, and missing data for other years, indicating limited impact on total intangibles.

Other Intangible Assets, Net

This measure closely follows the net intangible assets subject to amortization, showing a decline from 9,774 million USD in 2020 to 4,257 million USD in 2024, mirroring the reduction in overall intangible asset value.

Goodwill and Other Intangible Assets (Total)

The total balance of goodwill and other intangible assets peaked at 35,512 million USD in 2021 before decreasing significantly to 12,795 million USD in 2024. This substantial decline aligns with the decreases observed in both goodwill and individual intangible asset categories, suggesting considerable disposals, impairments, or write-downs during the period.

Total Assets

The reported total assets show a consistent declining trend over the five-year period, decreasing from 253,452 million US dollars in 2020 to 123,140 million US dollars in 2024. Similarly, the adjusted total assets, which exclude goodwill, also decline steadily from 227,928 million US dollars in 2020 to 114,602 million US dollars in 2024. This indicates a gradual reduction in the asset base, regardless of goodwill adjustments.

Shareholders’ Equity

The reported shareholders’ equity exhibits fluctuations throughout the period. It increases from 35,552 million US dollars in 2020 to a peak of 40,310 million US dollars in 2021, then decreases steadily to 19,342 million US dollars by 2024. The adjusted shareholders’ equity, which removes goodwill impacts, demonstrates a less volatile pattern, initially rising from 10,028 million US dollars in 2020 to 14,128 million US dollars in 2021, followed by a decline to 10,804 million US dollars in 2024, with a slight increase in 2023. This reflects variability in equity influenced by goodwill but confirms a downward trend on an adjusted basis.

Comparative Analysis

Both reported and adjusted figures show a diminishing scale of the company’s financial position over time. The difference between reported and adjusted assets narrows slightly but remains substantial, indicating a consistent goodwill presence on the balance sheet. The equity figures suggest that while reported equity is higher due to goodwill, the underlying equity excluding goodwill is significantly lower and experiences less dramatic changes. This points to a reduced net asset value when goodwill is excluded and signals potential concerns about asset quality and equity stability over the observed periods.

Total Asset Turnover

The reported total asset turnover exhibited an upward trend from 0.29 in 2020 to 0.40 in 2023, indicating an improvement in asset utilization over this period. However, this ratio decreased sharply to 0.29 in 2024, returning to its initial level. The adjusted total asset turnover followed a similar pattern but consistently showed higher values than the reported figures. It rose from 0.32 in 2020 to a peak of 0.45 in 2022, then slightly declined but remained relatively stable around 0.43 in 2023 before dropping to 0.31 in 2024. This suggests that excluding goodwill impacts reflects a more efficient use of assets across these years until the drop in 2024.

Financial Leverage

Reported financial leverage decreased from a high of 7.13 in 2020 to 4.93 in 2021, indicating a reduction in reliance on debt financing or increased equity. Subsequently, it increased steadily to 6.37 by 2024, suggesting a re-leveraging of the company over recent years. Adjusted financial leverage, which excludes goodwill effects, started at an elevated level of 22.73 in 2020, dramatically dropped to 12.22 in 2021, then fluctuated between 10.7 and 15.33 through to 2024. The adjusted figures consistently exceed reported values, reflecting a significant impact of goodwill on leverage assessment and indicating materially higher leverage when goodwill is excluded.

Return on Equity (ROE)

The reported ROE showed significant volatility, beginning at 16.04% in 2020, dropping sharply to a negative -16.17% in 2021, then recovering modestly to 0.62% in 2022. It surged to strong positive returns of 34.63% in 2023 and slightly decreased to 33.90% in 2024, revealing a substantial turnaround and improved profitability relative to equity in recent years. Adjusted ROE followed a similar but more extreme pattern, starting at an elevated 56.88% in 2020, plunging to a negative -46.15% in 2021, then gradually recovering to 2.13% in 2022, and reaching even higher peaks of 67.76% in 2023 and 60.68% in 2024. This indicates that goodwill adjustments amplify the swings in equity returns, reflecting significant underlying variances in profitability metrics.

Return on Assets (ROA)

Reported ROA was relatively low and exhibited considerable fluctuations, beginning at 2.25% in 2020, turning negative to -3.28% in 2021, then stabilizing at near-zero, 0.12% in 2022. It improved markedly to 5.81% in 2023 and slightly decreased to 5.32% in 2024. Adjusted ROA displays a similar trend but at marginally higher levels, starting at 2.5% in 2020, dropping to -3.78% in 2021, then slightly rising to 0.14% in 2022, followed by growth to 6.34% in 2023 and a small decrease to 5.72% in 2024. These patterns suggest increasing asset profitability after a period of decline, with adjustments for goodwill resulting in slightly improved returns.

The analysis of the financial data over the five-year period reveals notable trends in asset values and asset turnover ratios.

Total Assets

The reported total assets show a consistent decline from US$253,452 million in 2020 to US$123,140 million in 2024. This represents a reduction of over 50% throughout the timeframe. A similar decreasing trend is observed in the adjusted total assets, which exclude goodwill, decreasing from US$227,928 million in 2020 to US$114,602 million in 2024. The adjusted total assets follow a similar trajectory, marking a steady contraction in the asset base.

Total Asset Turnover

The reported total asset turnover ratio increases from 0.29 in 2020 to peak at 0.40 in 2023 before dropping back to 0.29 in 2024. This indicates an improvement in the company's efficiency in using its asset base to generate revenue through 2023, followed by a reversal to the initial level in the final year.

The adjusted total asset turnover, which is calculated using adjusted total assets, shows analogous behavior. It rises from 0.32 in 2020 to a high of 0.45 in 2022, then declines slightly to 0.43 in 2023, and further decreases to 0.31 in 2024. Despite the decline after 2022, the adjusted turnover remains above the initial level by 2024.

The peak in asset turnover ratios corresponds with periods when total assets were diminishing, suggesting the company may have improved asset utilization or revenue generation efficiency as the asset base shrank. However, the decline in turnover ratios in 2024 may indicate challenges in maintaining these efficiency gains.

Overall, the data suggests a significant reduction in asset holdings over the period analyzed, accompanied by an initially improving, but eventually faltering, ability to generate revenue relative to the asset base. The patterns in both reported and adjusted figures are closely aligned, confirming that adjustments for goodwill do not materially alter these observed trends.

The financial data exhibits a declining trend in total assets over the five-year period. Reported total assets decreased from 253,452 million USD in 2020 to 123,140 million USD in 2024. Similarly, adjusted total assets, which exclude goodwill, also followed a downward trend, falling from 227,928 million USD to 114,602 million USD within the same timeframe. This consistent reduction suggests a significant contraction in the asset base.

Shareholders’ equity demonstrates a mixed pattern with fluctuations over the years. Reported shareholders’ equity rose from 35,552 million USD in 2020 to a peak of 40,310 million USD in 2021, followed by a gradual decline to 19,342 million USD in 2024. Adjusted shareholders’ equity experienced an increase from 10,028 million USD in 2020 to 14,128 million USD in 2021, then decreased to 10,804 million USD in 2024, showing more volatility relative to the reported figures. The gap between reported and adjusted equity figures reflects the impact of goodwill and other intangible assets adjustments.

The financial leverage ratios present differing tendencies based on whether the reported or adjusted values are used. Reported financial leverage ratio decreased from 7.13 in 2020 to 4.93 in 2021, then increased steadily to 6.37 by 2024. In contrast, adjusted financial leverage, which excludes goodwill and provides a different perspective on debt reliance, shows a sharp decline from 22.73 in 2020 to 12.22 in 2021, followed by fluctuations and a relatively stable range between 10.61 and 15.33 from 2022 to 2024. The adjusted leverage figures are significantly higher than the reported ones, indicating substantial leverage when goodwill is excluded.

Overall, the company experienced a notable reduction in asset base and fluctuating equity levels, with considerable differences between reported and adjusted measures. Financial leverage remained elevated when adjusting for goodwill, highlighting the importance of considering intangible assets in evaluating financial stability and risk.

Shareholders’ Equity Trends

The reported shareholders’ equity demonstrates volatility over the observed period, increasing from US$35,552 million in 2020 to a peak of US$40,310 million in 2021, followed by a decline in subsequent years to US$19,342 million by 2024. Conversely, the adjusted shareholders’ equity, which accounts for goodwill adjustments, shows less persistent growth, rising from US$10,028 million in 2020 to US$14,128 million in 2021, then experiencing fluctuations and a downward movement to US$10,804 million in 2024. This suggests that adjustments related to goodwill considerably reduce the equity base, and the adjusted equity reflects a more restrained growth and eventual decline compared to reported figures.

Return on Equity (ROE) Analysis

The reported ROE experiences significant fluctuations, signaling variability in profitability relative to reported equity. It starts at 16.04% in 2020, sharply drops to a negative value of -16.17% in 2021, recovers marginally to 0.62% in 2022, then surges to over 34% in both 2023 and 2024. The adjusted ROE follows a similar volatility pattern but on a more pronounced scale, with much higher peaks and deeper troughs: beginning at 56.88% in 2020, plunging to -46.15% in 2021, rebounding slightly to 2.13% in 2022, and then rising substantially to 67.76% in 2023 and slightly declining to 60.68% in 2024. These figures indicate a more volatile and leveraged profitability when considering adjusted equity, which excludes goodwill, suggesting that intangible assets heavily influence the reported returns.

Summary of Financial Performance

The data reveals a period marked by considerable instability in both equity and profitability measures. The reported equity’s sharp decrease in later years contrasts with the adjusted equity’s relative steadiness, albeit at lower levels. Meanwhile, the ROE fluctuations, particularly the extreme variances observed in the adjusted ROE, highlight underlying risks and potential impacts from intangible asset valuations. The recovery in profitability beginning in 2023 is notable, suggesting operational improvements or other factors contributing to enhanced earnings relative to the shareholder base despite declining equity figures.

Total Assets (Reported and Adjusted)

There is a clear declining trend in total assets over the five-year period. Reported total assets decreased from US$253,452 million in 2020 to US$123,140 million in 2024, representing a significant contraction of approximately 51%. Adjusted total assets, which exclude goodwill, follow a similar downward trajectory, falling from US$227,928 million to US$114,602 million over the same period. The consistent reduction in both reported and adjusted assets suggests ongoing asset disposals, restructuring, or write-downs impacting the company’s asset base.

Return on Assets (ROA) – Reported

The reported ROA exhibits volatility throughout the period. It starts at a moderate positive level of 2.25% in 2020 but declines sharply to -3.28% in 2021, indicating a loss relative to asset base that year. This is followed by a recovery in 2022 to near break-even at 0.12%, and a notable improvement in 2023 and 2024, reaching 5.81% and 5.32% respectively. This pattern reflects operational challenges in 2021 followed by effective recovery measures and improved profitability.

Return on Assets (ROA) – Adjusted

The adjusted ROA, which excludes goodwill effects, mirrors the reported ROA trend but with slightly different magnitudes. It begins at 2.5% in 2020, dips further to -3.78% in 2021, then modestly recovers to 0.14% in 2022. Subsequently, it peaks at 6.34% in 2023 before slightly decreasing to 5.72% in 2024. This indicates that excluding goodwill allocation effects does not substantially alter the overall profit-generating efficiency trends but suggests a somewhat stronger performance in the recovery phase compared to the reported figures.

Insights and Implications

The sustained decline in asset levels alongside fluctuating ROA suggests a phase of restructuring or portfolio optimization aimed at stabilizing profitability. The negative ROA in 2021 implies that the company faced significant headwinds, possibly from market conditions or operational inefficiencies. The subsequent improvement in both reported and adjusted ROA indicates successful corrective actions, leading to enhanced asset utilization and returns. The difference between reported and adjusted figures implies that goodwill adjustments have a moderate impact on financial performance metrics but do not overwrite the overall trend.