2General Electric: Team Project Section 1:General Electric’s sources and uses statementOperating20172018Other Sources1.9B0.0Other Uses903.0B4.1B●General Electric Co.’s cash from operating activities increased from 6,099 in 2016 to11,394 in2017 but then declined significantly from 2017 to 4,662 2018.●General Electric Co.’s cash (used for) from investing activities declined from 62,613 in2016 to 3,940 in 2017 but then slightly increased from 2017 to 18,052 2018.●General Electric Co.’s cash used for financing activities increased from (89,920) in 2016to (21,055) in 2017 but then slightly declined from 2017 to (31,033) in 2018.●Looking at broad insights of General Electric’s Co.’s cash flow statement there is no cashflow trends. In each category of the statement the numbers rise and fall, no steadyincrease or decrease. If GE wants to survive and become a strong company, they need tofind one path to follow and stick to it. Management needs to step up and make changes toget debt paid off so the company can see and feel its profit.Activities20172018Net Cash from Operating10.4B4.2BNet Cash from Investing2.3B18.2BNet Cash from Financing891.0M(628.0M)
3General Electric: Team Project GE’s debt level has been constant at around US$134.59b over the previous year made upof current and long-term debt. At this constant level of debt, GE’s cash and short-terminvestments stands at US$18.21b for investing into the business. Moreover, GE has generatedcash from operations of US$10.43b during the same period of time, leading to an operating cashto total debt ratio of 7.75%, signaling that GE’s operating cash is not sufficient to cover its debt.This ratio can also be a sign of operational efficiency for loss making companies as traditionalmetrics such as return on asset (ROA) requires a positive net income. In GE’s case, it is able togenerate 0.077 cash from its debt capital.At the current liabilities level of US$61.89b liabilities, the company has been able tomeet these obligations given the level of current assets of US$140.11b, with a current ratio of2.26. Usually, for Industrials companies, this is a suitable ratio since there’s sufficient cashcushion without leaving too much capital idle or in low-earning investments.General Electric’s total debt outweighs its equity, the company is deemed highly levered.This isn’t uncommon for large companies because interest payments on debt are tax deductible,meaning debt can be a cheaper source of capital than equity. Accordingly, large companies often
4General Electric: Team Project have an advantage over small-caps through lower cost of capital due to cheaper financing.