Using GE and the following link: https://www.sec.gov/Archives/edgar/data/40545/0
ID: 2562914 • Letter: U
Question
Using GE and the following link:
https://www.sec.gov/Archives/edgar/data/40545/000004054517000010/ge10k2016.htm
What is the date on the balance sheet?
What are the major noncurrent asset accounts and comment on any significant changes over the last two years in these accounts.
What are the major noncurrent liability accounts and comment on any significant changes over the last two years in these accounts.
Comment on any significant changes in the stockholders equity.
Comment on whether the financing for the investment in assets primarily comes from liabilities or stockholders equity.
What are the major revenue and expense accounts on the most recent income statement?
What percentage of revenues go toward covering expenses and what percentage of revenues are in excess of expenses (i.e. the net profit margin expressed as a percentage).
What are the total liabilities at the end of the most current year?
Did the company report any prepaid expenses? If so, list the amount.
Explanation / Answer
1. The date on the balance sheet is December 31, 2016.
2. Major non current asset accounts are property, plant and equipment (PPE), goodwill and investment in GE Capital. PPE saw a year on year decline in 2016 . Goodwill saw a year on year increase and investment in GE Capital is nil for both 2016 and 2015.
3. Major non current liability accounts are long term borrowings, investment contracts and non-current compensations. Long term borrowings declined significantly on a year on year basis in 2016. Investment contracts and non-current compensations witnessed a year on year increase in 2016.
4. Total stockholder’s equity declined to 75,828 in 2016 from 98,274 in 2015. This is due to increase in treasury stocks in 2016 to 83,038 from 63,539 in 2015.
5. Financing for investment in assets mainly comes from liabilities and not equity as can be seen from the company’s balance sheet. Liabilities as a % of total assets = 284668/365183 = 78%. The balance 22% belongs to equity.
6. Major revenue is sale of goods and this is followed by sale of services. Major expenses are cost of goods sold and cost of services sold.
7. % of revenues that go towards covering expenses = Total expenses/revenue = (123,693 – 8,540)/123,693 = 93.1%. The balance i.e. 1-93.1% = 6.9% is the % of revenue in excess of expenses.
8. Total liabilities at the end of 2016 = $284,668 (in millions).
9. Yes prepaid expenses were $3,320 million for prepaid insurance, taxes and other expenses in 2016.
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