Balance Sheet: Liabilities and Stockholders’ Equity
The balance sheet provides creditors, investors, and analysts with information on company resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company assets as well as an indication of cash flows that may come from receivables and inventories.
Liabilities represents obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity.
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GE Aerospace, consolidated balance sheet: liabilities and stockholders’ equity
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
A significant shift in the company’s financial structure is evident over the five-year period. Total liabilities decreased substantially, while stockholders’ equity experienced a more pronounced decline, resulting in a considerable reduction in total liabilities and equity. This suggests a strategic restructuring or significant asset sales.
- Current Liabilities
- Current liabilities demonstrate volatility, peaking at US$56,947 million in 2022 before decreasing significantly to US$34,392 million in 2024. This fluctuation is driven by changes in several components. Accounts payable initially remained relatively stable, then decreased sharply in 2024. Progress collections increased between 2020 and 2023, but then experienced a substantial decrease in 2024. A notable increase in contract liabilities and deferred income occurred in 2024, while short-term borrowings decreased significantly from 2020 to 2023, with a slight increase in 2024.
- Non-Current Liabilities
- Non-current liabilities exhibited a consistent downward trend from US$160,309 million in 2020 to US$69,184 million in 2024. Long-term borrowings contributed significantly to this decline, decreasing from US$70,288 million to US$17,234 million. Insurance liabilities and annuity benefits remained relatively stable, while non-current compensation and benefits decreased steadily. All other liabilities also showed a consistent decline.
- Total Liabilities
- Total liabilities decreased from US$216,378 million in 2020 to US$103,576 million in 2024. The most substantial reduction occurred between 2020 and 2023, with a more moderate decrease in 2024. This decline is attributable to the reductions observed in both current and non-current liabilities.
- Stockholders’ Equity
- Stockholders’ equity experienced a more dramatic decline, falling from US$35,552 million in 2020 to US$19,342 million in 2024. Retained earnings decreased from US$92,247 million to US$80,488 million over the period. The common stock held in treasury remained consistently negative, with a slight increase in absolute value in 2024. Accumulated other comprehensive income (loss) fluctuated, ending with a larger loss in 2024 compared to 2020. The value of common stock remained relatively constant.
- Total Liabilities and Equity
- The combined effect of decreasing liabilities and equity resulted in a substantial reduction in total liabilities and equity, from US$253,451 million in 2020 to US$123,140 million in 2024. This represents a significant contraction of the company’s overall financial size.
The decrease in liabilities, particularly long-term borrowings, suggests debt reduction efforts. However, the more significant decline in stockholders’ equity, especially retained earnings, warrants further investigation to understand the underlying causes, such as potential share repurchases, dividend payouts, or significant losses. The increase in contract liabilities and deferred income in 2024 may indicate a shift in revenue recognition practices or increased upfront payments from customers.