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General Electric Co. (GE)
Analysis of Inventory
Advanced level
- Accounting Policy on Inventory
- Inventory Disclosure
- Adjustment to Inventory: Conversion from LIFO to FIFO
- Adjusted Financial 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)
Accounting Policy on Inventory
All inventories are stated at lower of cost or realizable values. Effective January 1, 2018, GE voluntarily changed the cost method of the GE U.S. inventories that were previously measured on a last-in, first-out (LIFO) basis to first-in, first-out (FIFO) basis.
Source: 10-K (filing date: 2019-02-26).
Inventory Disclosure
General Electric Co., balance sheet: inventory
US$ in millions
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |||||||
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Raw materials and work in process | ![]() |
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Finished goods | ![]() |
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Unbilled shipments | ![]() |
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Inventories at FIFO | ![]() |
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Revaluation to LIFO | ![]() |
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Inventories at LIFO | ![]() |
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Based on: 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), 10-K (filing date: 2015-02-27).
Item | Description | The company |
---|---|---|
Inventories at LIFO | Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. | General Electric Co.’s inventories at LIFO decreased from 2016 to 2017 and from 2017 to 2018. |
Adjustment to Inventory: Conversion from LIFO to FIFO
Adjusting LIFO Inventory to FIFO (Current) Cost
US$ in millions
Based on: 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), 10-K (filing date: 2015-02-27).
General Electric Co.’s inventory value on Dec 31, 2018 would be $19,271 (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, 2018 were $19,271 . General Electric Co.’s inventories would have been $— higher than reported on Dec 31, 2018 if the FIFO method had been used instead.
General Electric Co., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: LIFO vs. FIFO (Summary)
General Electric Co., adjusted financial ratios
Based on: 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), 10-K (filing date: 2015-02-27).
Financial 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 deteriorated from 2016 to 2017 and from 2017 to 2018. |
Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | General Electric Co.’s adjusted net profit margin ratio deteriorated from 2016 to 2017 and from 2017 to 2018. |
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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
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 ratio increased from 2016 to 2017 and from 2017 to 2018. |
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. | General Electric Co.’s adjusted ROE deteriorated from 2016 to 2017 and from 2017 to 2018. |
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | General Electric Co.’s adjusted ROA deteriorated from 2016 to 2017 and from 2017 to 2018. |
General Electric Co., Financial Ratios: Reported vs. Adjusted
Adjusted Current Ratio
Based on: 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), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Current ratio = Current assets ÷ Current liabilities
= ÷
=
2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷
=
Liquidity 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 deteriorated from 2016 to 2017 and from 2017 to 2018. |
Adjusted Net Profit Margin
Based on: 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), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Net profit margin = 100 × Net earnings (loss) attributable to the Company ÷ Sales of goods and services
= 100 × ÷
=
2 Adjusted net profit margin = 100 × Adjusted net earnings (loss) attributable to the Company ÷ Sales of goods and services
= 100 × ÷
=
Profitability 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 ratio deteriorated from 2016 to 2017 and from 2017 to 2018. |
Adjusted Total Asset Turnover
Based on: 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), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Total asset turnover = Sales of goods and services ÷ Total assets
= ÷
=
2 Adjusted total asset turnover = Sales of goods and services ÷ Adjusted total assets
= ÷
=
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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Adjusted Financial Leverage
Based on: 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), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Financial leverage = Total assets ÷ Total GE shareowners’ equity
= ÷
=
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total GE shareowners’ equity
= ÷
=
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. |
General Electric Co.’s adjusted financial leverage ratio increased from 2016 to 2017 and from 2017 to 2018. |
Adjusted Return on Equity (ROE)
Based on: 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), 10-K (filing date: 2015-02-27).
2018 Calculations
1 ROE = 100 × Net earnings (loss) attributable to the Company ÷ Total GE shareowners’ equity
= 100 × ÷
=
2 Adjusted ROE = 100 × Adjusted net earnings (loss) attributable to the Company ÷ Adjusted total GE shareowners’ equity
= 100 × ÷
=
Profitability 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 deteriorated from 2016 to 2017 and from 2017 to 2018. |
Adjusted Return on Assets (ROA)
Based on: 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), 10-K (filing date: 2015-02-27).
2018 Calculations
1 ROA = 100 × Net earnings (loss) attributable to the Company ÷ Total assets
= 100 × ÷
=
2 Adjusted ROA = 100 × Adjusted net earnings (loss) attributable to the Company ÷ Adjusted total assets
= 100 × ÷
=
Profitability 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 deteriorated from 2016 to 2017 and from 2017 to 2018. |