General Electric in 3Q15 and Beyond: Transformation at Work
GE’s balance sheet
General Electric (GE) reported $581.3 billion in consolidated assets as of September 30, 2015. However, since GE is planning to let go of the majority of its financial services (XLF) business including Synchrony Financial (SYF), we’ll focus on the balance sheet of the industrial segment and the finance verticals that GE is expected to retain. Industrial plus verticals reported $226.1 billion in total assets as of September 30, 2015.
GE’s debt profile
Industrial plus verticals boasts a much cleaner balance sheet than consolidated GE. The segment had $20.7 billion in debt as of June 30, 2015, against equity of $111.7 billion, implying a debt-to-equity ratio of less than 0.2x. Even after adjusting the equity for $62.6 billion goodwill and intangible assets, the tangible debt-to-equity ratio comes to a conservative 0.4x. No wonder GE proudly boasts an investment grade credit rating of AA+ from Standard and Poor’s (MHFI) and A1 from Moody’s (MCO). For more information on what these ratings mean, please read our overview of credit ratings.
GE reported a $63.2 billion investment in GECC (General Electric Capital Corporation). GECC’s asset sales may further improve GE’s balance sheet and credit metrics.
GE’s liquidity
GE had $16.9 billion in cash and cash equivalents on the industrial plus verticals balance sheet as of September 30, 2015. Moreover, the sale of GECC’s assets and dividends may improve the already strong liquidity position further. Based on the company guidance, it expects to generate cash from operations of about $9.9 billion in 4Q15 subject to $2.5 billion in dividends from GECC.
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