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

General Electric Co. (NYSE:GE)

Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

General Electric Co., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total undiscounted future operating lease payments 5,648  5,253  4,192  4,167 
Discount rate1 3.40% 2.94% 2.83% 3.03%
 
Total present value of future operating lease payments 4,974  4,733  3,779  3,730 

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).

1 Weighted-average interest rate for General Electric Co.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.40%
2019 1,088  2019 1,088  1,052 
2020 938  2020 938  877 
2021 776  2021 776  702 
2022 681  2022 681  596 
2023 565  2023 565  478 
2024 and thereafter 1,600  2024 565  462 
2025 565  447 
2026 470  360 
Total: 5,648  5,648  4,974 

Based on: 10-K (filing date: 2019-02-26).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.94%
2018 1,081  2018 1,081  1,050 
2019 908  2019 908  857 
2020 748  2020 748  686 
2021 638  2021 638  568 
2022 578  2022 578  500 
2023 and thereafter 1,300  2023 578  486 
2024 578  472 
2025 144  114 
Total: 5,253  5,253  4,733 

Based on: 10-K (filing date: 2018-02-23).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.83%
2017 798  2017 798  776 
2018 722  2018 722  683 
2019 621  2019 621  571 
2020 524  2020 524  469 
2021 427  2021 427  371 
2022 and thereafter 1,100  2022 427  361 
2023 427  351 
2024 246  197 
Total: 4,192  4,192  3,779 

Based on: 10-K (filing date: 2017-02-24).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.03%
2016 794  2016 794  771 
2017 707  2017 707  666 
2018 591  2018 591  540 
2019 519  2019 519  461 
2020 456  2020 456  393 
2021 and thereafter 1,100  2021 456  381 
2022 456  370 
2023 188  148 
Total: 4,167  4,167  3,730 

Based on: 10-K (filing date: 2016-02-26).


Adjustments to Financial Statements for Operating Leases

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 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  4,974  4,733  3,779  3,730 
Total assets (adjusted) 266,048  314,103  382,678  368,962  496,422 
Adjustment to Total Debt
Total debt (as reported) 90,882  109,958  134,591  136,211  198,276 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  4,974  4,733  3,779  3,730 
Add: Operating lease liabilities 3,162  —  —  —  — 
Total debt (adjusted) 94,044  114,932  139,324  139,990  202,006 

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).

1, 2 Equal to total present value of future operating lease payments.


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


Adjusted Financial Ratios for Operating Leases (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 Turnover1
Reported total asset turnover 0.33 0.37 0.30 0.30 0.21
Adjusted total asset turnover 0.33 0.36 0.30 0.30 0.21
Debt to Equity2
Reported debt to equity 3.21 3.55 2.09 1.80 2.02
Adjusted debt to equity 3.32 3.71 2.17 1.85 2.06
Return on Assets3 (ROA)
Reported ROA -1.87% -7.23% -1.53% 2.42% -1.24%
Adjusted ROA -1.87% -7.12% -1.51% 2.39% -1.23%

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 slightly deteriorated from 2018 to 2019.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. General Electric Co.’s adjusted debt to equity ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
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 Operating Leases
Selected Financial Data (US$ in millions)
Sales of goods and services 87,487  113,544  113,192  110,390  105,808 
Adjusted total assets 266,048  314,103  382,678  368,962  496,422 
Activity Ratio
Adjusted total asset turnover2 0.33 0.36 0.30 0.30 0.21

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 ÷ 266,048 = 0.33

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 slightly deteriorated from 2018 to 2019.

Adjusted Debt to Equity

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 debt 90,882  109,958  134,591  136,211  198,276 
Total GE shareholders’ equity 28,316  30,981  64,263  75,828  98,274 
Solvency Ratio
Debt to equity1 3.21 3.55 2.09 1.80 2.02
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 94,044  114,932  139,324  139,990  202,006 
Total GE shareholders’ equity 28,316  30,981  64,263  75,828  98,274 
Solvency Ratio
Adjusted debt to equity2 3.32 3.71 2.17 1.85 2.06

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 Debt to equity = Total debt ÷ Total GE shareholders’ equity
= 90,882 ÷ 28,316 = 3.21

2 Adjusted debt to equity = Adjusted total debt ÷ Total GE shareholders’ equity
= 94,044 ÷ 28,316 = 3.32

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. General Electric Co.’s adjusted debt-to-equity ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

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 Operating Leases
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 266,048  314,103  382,678  368,962  496,422 
Profitability Ratio
Adjusted ROA2 -1.87% -7.12% -1.51% 2.39% -1.23%

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 ÷ 266,048 = -1.87%

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.