Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

General Electric Co. (NYSE:GE)

Analysis of Goodwill and Intangible Assets

Advanced level


Goodwill and Intangible Asset Disclosure

General Electric Co., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Goodwill 26,734  59,614  83,968  70,438  65,526 
Customer-related 6,770  10,214  10,614  9,172  8,650 
Patents and technology 8,180  10,332  10,271  8,693  8,543 
Capitalized software 5,822  7,437  8,064  7,652  7,375 
Present value of future profits —  —  —  684  651 
Trademarks & other 738  1,530  1,669  1,580  1,771 
Intangible assets subject to amortization, gross carrying amount 21,510  29,513  30,618  27,781  26,990 
Accumulated amortization (10,857) (13,576) (12,562) (11,445) (10,356)
Intangible assets subject to amortization, net 10,653  15,937  18,056  16,336  16,634 
Indefinite-lived intangible assets —  2,222  2,217  100  110 
Other intangible assets, net 10,653  18,159  20,273  16,436  16,744 
Goodwill and other intangible assets 37,387  77,773  104,241  86,874  82,270 

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. General Electric Co.’s goodwill decreased from 2017 to 2018 and from 2018 to 2019.
Other intangible assets, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. General Electric Co.’s other intangible assets, net decreased from 2017 to 2018 and from 2018 to 2019.
Goodwill and other intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. General Electric Co.’s goodwill and other intangible assets decreased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Goodwill

General Electric Co., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 266,048  309,129  377,945  365,183  492,692 
Less: Goodwill 26,734  59,614  83,968  70,438  65,526 
Total assets (adjusted) 239,314  249,515  293,977  294,745  427,166 
Adjustment to Total GE Shareholders’ Equity
Total GE shareholders’ equity (as reported) 28,316  30,981  64,263  75,828  98,274 
Less: Goodwill 26,734  59,614  83,968  70,438  65,526 
Total GE shareholders’ equity (adjusted) 1,582  (28,633) (19,705) 5,390  32,748 

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).


General Electric Co., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

General Electric Co., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover
Reported total asset turnover 0.33 0.37 0.30 0.30 0.21
Adjusted total asset turnover 0.37 0.46 0.39 0.37 0.25
Financial Leverage
Reported financial leverage 9.40 9.98 5.88 4.82 5.01
Adjusted financial leverage 151.27 54.68 13.04
Return on Equity (ROE)
Reported ROE -17.58% -72.16% -9.00% 11.65% -6.23%
Adjusted ROE -314.73% 163.84% -18.71%
Return on Assets (ROA)
Reported ROA -1.87% -7.23% -1.53% 2.42% -1.24%
Adjusted ROA -2.08% -8.96% -1.97% 3.00% -1.43%

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

Financial 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 ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
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.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. General Electric Co.’s adjusted ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level.

General Electric Co., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Sales of goods and services 87,487  113,544  113,192  110,390  105,808 
Total assets 266,048  309,129  377,945  365,183  492,692 
Activity Ratio
Total asset turnover1 0.33 0.37 0.30 0.30 0.21
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Sales of goods and services 87,487  113,544  113,192  110,390  105,808 
Adjusted total assets 239,314  249,515  293,977  294,745  427,166 
Activity Ratio
Adjusted total asset turnover2 0.37 0.46 0.39 0.37 0.25

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

2019 Calculations

1 Total asset turnover = Sales of goods and services ÷ Total assets
= 87,487 ÷ 266,048 = 0.33

2 Adjusted total asset turnover = Sales of goods and services ÷ Adjusted total assets
= 87,487 ÷ 239,314 = 0.37

Activity 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 ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 266,048  309,129  377,945  365,183  492,692 
Total GE shareholders’ equity 28,316  30,981  64,263  75,828  98,274 
Solvency Ratio
Financial leverage1 9.40 9.98 5.88 4.82 5.01
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 239,314  249,515  293,977  294,745  427,166 
Adjusted total GE shareholders’ equity 1,582  (28,633) (19,705) 5,390  32,748 
Solvency Ratio
Adjusted financial leverage2 151.27 54.68 13.04

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

2019 Calculations

1 Financial leverage = Total assets ÷ Total GE shareholders’ equity
= 266,048 ÷ 28,316 = 9.40

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total GE shareholders’ equity
= 239,314 ÷ 1,582 = 151.27

Solvency 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.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings (loss) attributable to the Company (4,979) (22,355) (5,786) 8,831  (6,126)
Total GE shareholders’ equity 28,316  30,981  64,263  75,828  98,274 
Profitability Ratio
ROE1 -17.58% -72.16% -9.00% 11.65% -6.23%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net earnings (loss) attributable to the Company (4,979) (22,355) (5,786) 8,831  (6,126)
Adjusted total GE shareholders’ equity 1,582  (28,633) (19,705) 5,390  32,748 
Profitability Ratio
Adjusted ROE2 -314.73% 163.84% -18.71%

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

2019 Calculations

1 ROE = 100 × Net earnings (loss) attributable to the Company ÷ Total GE shareholders’ equity
= 100 × -4,979 ÷ 28,316 = -17.58%

2 Adjusted ROE = 100 × Net earnings (loss) attributable to the Company ÷ Adjusted total GE shareholders’ equity
= 100 × -4,979 ÷ 1,582 = -314.73%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings (loss) attributable to the Company (4,979) (22,355) (5,786) 8,831  (6,126)
Total assets 266,048  309,129  377,945  365,183  492,692 
Profitability Ratio
ROA1 -1.87% -7.23% -1.53% 2.42% -1.24%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net earnings (loss) attributable to the Company (4,979) (22,355) (5,786) 8,831  (6,126)
Adjusted total assets 239,314  249,515  293,977  294,745  427,166 
Profitability Ratio
Adjusted ROA2 -2.08% -8.96% -1.97% 3.00% -1.43%

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

2019 Calculations

1 ROA = 100 × Net earnings (loss) attributable to the Company ÷ Total assets
= 100 × -4,979 ÷ 266,048 = -1.87%

2 Adjusted ROA = 100 × Net earnings (loss) attributable to the Company ÷ Adjusted total assets
= 100 × -4,979 ÷ 239,314 = -2.08%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. General Electric Co.’s adjusted ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level.