General Electric Co. (GE)

LOSSES ON FINANCING RECEIVABLES

GE's financing receivables portfolio consists of a variety of loans and leases, including both larger-balance, non-homogeneous loans and leases and smaller-balance homogeneous loans and leases. GE routinely evaluates the entire portfolio for potential specific credit or collection issues that might indicate an impairment.

Losses on financing receivables are recognized when they are incurred, which requires GE to make the best estimate of probable losses inherent in the portfolio. The method for calculating the best estimate of losses depends on the size, type and risk characteristics of the related financing receivable. Such an estimate requires consideration of historical loss experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers and market sectors, collateral values, and the present and expected future levels of interest rates. The underlying assumptions, estimates and assessments GE uses to provide for losses are updated periodically to reflect the view of current conditions. Changes in such estimates can significantly affect the allowance and provision for losses. It is possible that GE will experience credit losses that are different from the current estimates. Write-offs are deducted from the allowance for losses when GE judges the principal to be uncollectible and subsequent recoveries are added to the allowance at the time cash is received on a written-off account.

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

Based on: 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), 10-K (filing date: 2014-02-27).

2017 Calculations

Ratio	Description	The company
Allowance as a percentage of current receivables, gross	Allowance for doubtful accounts divided by the gross accounts receivable.	General Electric Co.'s allowance as a percentage of current receivables, gross increased from 2015 to 2016 and from 2016 to 2017.

Based on: 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), 10-K (filing date: 2014-02-27).

2017 Calculations

Ratio	Description	The company
Allowance as a percentage of financing receivables, gross	Allowance for credit losses divided by the gross financing receivable.	General Electric Co.'s allowance as a percentage of financing receivables, gross declined from 2015 to 2016 but then slightly increased from 2016 to 2017.