General Electric Financial Reporting Analysis
Target Company Selection Process
The target company we decided on for our financial analysis is General Electric. At first we were looking at Starbucks, as it is a rapidly growing multinational corporation, but after some research we discovered that the earnings per share growth of Starbucks is 40.2%. Therefore Starbucks did not meet the requirement set at 50% EPS growth to be considered a truly “rapidly growing company”. We then continued our research and were able to find that General Electric has current EPS growth at 59.6%, which meets the requirement. Also, by searching through the annual 10-K we found the following information, which shows that GE is truly a multinational company and has more than 10% sales in other countries.
The following information is from page 8 of GE’s 2010 Form 10-K Annual Report filed in SEC EDGAR:
Our global growth is subject to economic and political risks. We conduct our operations in virtually every part of the world. In 2010, approximately 53% of our revenue was attributable to activities outside the United States. Our operations are subject to the effects of global competition. They are also affected by local economic environments, including inflation, recession and currency volatility. Political changes, some of which may be disruptive, can interfere with our supply chain, our customers and all of our activities in a particular location. While some of these risks can be hedged using derivatives or other financial instruments and some are insurable, such attempts to mitigate these risks are costly and not always successful, and our ability to engage in such mitigation has decreased or become even more costly as a result of more volatile market conditions.
2. History of General Electric
In 1876 Thomas Alva Edison invented perhaps the greatest innovation of the age-a successful incandescent electric lamp. The Edison General Electric Company was established in 1890 and combined with the Thomas-Houston Company in 1892,
The target company we decided on for our financial analysis is General Electric. At first we were looking at Starbucks, as it is a rapidly growing multinational corporation, but after some research we discovered that the earnings per share growth of Starbucks is 40.2%. Therefore Starbucks did not meet the requirement set at 50% EPS growth to be considered a truly “rapidly growing company”. We then continued our research and were able to find that General Electric has current EPS growth at 59.6%, which meets the requirement. Also, by searching through the annual 10-K we found the following information, which shows that GE is truly a multinational company and has more than 10% sales in other countries.
The following information is from page 8 of GE’s 2010 Form 10-K Annual Report filed in SEC EDGAR:
Our global growth is subject to economic and political risks. We conduct our operations in virtually every part of the world. In 2010, approximately 53% of our revenue was attributable to activities outside the United States. Our operations are subject to the effects of global competition. They are also affected by local economic environments, including inflation, recession and currency volatility. Political changes, some of which may be disruptive, can interfere with our supply chain, our customers and all of our activities in a particular location. While some of these risks can be hedged using derivatives or other financial instruments and some are insurable, such attempts to mitigate these risks are costly and not always successful, and our ability to engage in such mitigation has decreased or become even more costly as a result of more volatile market conditions.
2. History of General Electric
In 1876 Thomas Alva Edison invented perhaps the greatest innovation of the age-a successful incandescent electric lamp. The Edison General Electric Company was established in 1890 and combined with the Thomas-Houston Company in 1892,