Financial Analysis The General Electric Company

Introduction Financial analysis gives the clear outlook of the performance parameters of an organization. It helps in evaluating and comparing the present as well past performance. This analysis is an important tool for the management, investors as well as the outsiders who deal with organization. This analysis presents the way of functioning and the direction in which an organization is moving. The analysis is done with the help of common size analysis, comparative analysis and Ratio Analysis. The analysis is done with the help of respective annual reports of the companies. About the company The General Electric Company is an American multinational company incorporated in Schenectady, New York and the headquarters are situated in†¦show more content†¦Greater the profitability, larger is the chances of appraisal. Thus, managers are always interested to evaluate the various financial ratios of the company. The equity investors are interested in knowing about the profitability, solvency and market ratios of the company. Higher profitability ratio will increase the market value of the company. The market ratios like price earnings ratio, earnings per share, dividend yield, etc. tells the exact position of the company’s share in the market. Favorable market ratio indicates the increase in market capitalization for investors. The equity investors are also interested in knowing the solvency ratio as high debt will pose danger to the ownership of the company. Higher debt is harmful for the liquidity position of the company and in some worst cases; the company even faces the risk of liquidation. The long-term creditors and short term creditors are mainly concerned about the liquidity and solvency position of the company. The increase in the debt increases the debt equity ratio of the company. Generally less investor are interested in the company with high debt. If the liquidity position of the company is not proper then the creditors faces the risk of their dues being not paid. Therefore, ratio analysis plays an utmost important role in the performance evaluation of a company. Horizontal Analysis The horizontal analysis is alsoShow MoreRelatedGeneral Electric Company Financial Analysis1916 Words   |  8 PagesBusiness Analysis II: General Electric Company Financial Analysis Cristina Mota Crespo University of Phoenix MGT/521 Management September 26, 2012 Prof. Elsie Jimenez-Galarza General Electric Company Financial Analysis This essay is continuation of the financial evaluation from last week; we had to choose a company among the Fortune 500 in my case I chose GE Company. 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