Posted: September 13th, 2017

Company's financial research

Company’s financial research

Order Description

General Electric Company (GE) is a US multinational conglomerate corporation with diverse operations
across a number of industries including power & water, oil & gas, energy, aviation, healthcare,
transport and finance. GE is listed on the New York Stock Exchange (NYSE:GE). The company has its
origins dating back to the famous inventor Thomas Edison when the Edison General Electric Company
was first established 1889. Over many decades GE has established a reputation for innovation,
excellence and superior management as well as high returns to shareholders.
GE’s financials can be found at https://www.nyse.com/quote/XNYS:GE/sec. The latest 2014 Annual
Report (Form 10-K Summary – http://www.ge.com/ar2014/pdf/GE_2014_Form_10K_Summary.pdf)
will be helpful to your answers. To avoid confusion we are assessing the consolidated operations of
GE Company which includes the industrial divisions and also the subsidiary GE Capital.
1. Business plan and strategy
a. Describe the historic business model of GE that has been successful over many recent
decades.
b. Summarise what changes to the business model and strategy the Board and
management is currently undertaking.
2. Calculate the following financial items for GE for in respect of the financial year ending 31
December 2014 (FY14)
a. No of issued shares
b. Market capitalisation of GE
c. Enterprise Value of GE
d. Return on Equity (ROE)
e. Annual Earnings per share (EPS) for FY14
f. Net Debt at 31 December 2014
g. Net Debt to Equity gearing ratio at 31 December 2014
h. Interest Cover for FY14
i. Book value per share at 31 December 2014
j. Net tangible assets per share at 31 December 2014
3. Forecast calendar 2015 EPS for GE using an assumed EPS growth rate, stating any reasons or
assumptions.
4. Determine a relevant PE valuation multiple for GE in respect of 2015 earnings, giving reasons
for your adopted multiple.
5. Indicate a reasonable valuation per share for GE based on Q3 and Q4 above.
6. Highlight 3 significant risks to your assessed valuation in Q5.