Prior to beginning work on this discussion forum, read Chapter 5 in the course textbook, Using Financial Accounting Information: The Alternative to Debits and Credits.
You may consider using the same company and annual reports that you chose in your
Week 1 – Discussion Forum
, Reading and Using the Annual Report Case Study. This choice will only work if the company generates the bulk of its revenue from the sale of goods and maintains inventory. If not, then you will need to select another company for this analysis. Choose a company that a fellow student has not already posted.
Address the following:
Your initial response should be a minimum of 200 words. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource, in addition to the text.
Attached is the discussion from Week 1 needed to answer this discussion
Mycompany of interest that trades on the New York Stock Exchange is General Electric (GE). Current ratio = current assets/current liabilities Year 2019: Current assets = $126.066 billion
Current liabilities = $74.259 billion
Current ratio = 126.066/74.259
CR = 1.698: 1
This current ratio indicates that General Electric can meet its current liabilities 1.698 times using its current assets before they are depleted. Year 2018: Current assets = $107.922 billion
Current liabilities = $60. 451 billion
Current ratio = 107.922/60.451
CR = 1.785:1
This ratio shows that GE can meet its current liabilities using its current assets 1.785 times. In comparing these two ratios, GE performed better in the year 2018 as compared to 2020.
Profit margin = gross profit/revenue * 100
Year 2019: Gross Profit = $25.186 billion
Revenue = 95.214 billion
Profit margin = 25.186/95.214 * 100
PM = 26.45%
This ratio indicates that 26.45% of total sales was gross profit.
Year 2018: Gross profit = 24. 194 billion
Revenue = 97.0112 billion
Profit margin = 24.194/97.0112 * 100
PM = 24.94%
This ratio shows that 24.94% of sales was gross profit.
In the latest report, the management discussion and analysis comments show that GE’s unrealized losses are attributed to the fair value of its securities which have been in a loss position. The comments also indicate that the current valuation was also not well adhered to thus altering the results. GE’s 2019 financial year auditor was Klynveld Peat Marwick Goerdeler (KPMG). KPMG gave an unqualified report for the year 2019.
GE has been on the right trajectory in terms of performance over time and has established sound accounting mechanisms and reporting. In the latest audited financial reports, it has had a truthful and fair presentation of financial transactions. (Casey & Pearce, 2018)
References
Casey, D., & Pearce, D. (Eds.). (2018). More Than Management Development: Action Learning at General Electric Company. Routledge.
Wise, G. (2020). Willis R. Whitney, General Electric and the Origins of US Industrial Research. Plunkett Lake Press.
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