Liquidity ratios
Current ratio = Current Assets / Current Liabilities
Current ratio = 405,763 / 166,210 = 2.44
Current ratio = 419,673 / 145,320 = 2.89
Asset turnover ratios
Inventory Turnover = Cost of Sales / Average Inventory
Inventory Turnover = 51,455 / 13,792 = 3.73 Times
Inventory Turnover = 46,005 / 11,526 = 3.99 Times
Financial leverage ratios
Debt-to-Equity Ratio = Total Debt / Total Equity
Debt-to-Equity Ratio = 599,108 / 118,134 = 5.07
Debt-to-Equity Ratio = 623,595 / 124,198 = 5.02
Profitability ratios
Return on Assets = Net Income / Total Assets
Return on Assets = 14,151 / 717,242 = 1.97%
Return on Assets = 11,644 / 747,793 = 1.56%
Dividend policy ratios
Payout Ratio = Dividends Per Share / Earnings Per Share
Payout Ratio = 0.61 / 1.23 = 49.59%
Payout Ratio = 0.46 / 1.06 = 43.40%
General Electric Company is financially healthy. The company is able to meet its short-term financial obligations. It utilizes its assets effectively. The high inventory turnover ratios indicate how effective the company is in managing the assets. The high debt-to-equity ratios show that the company is financed more by the outsiders. It greatly relies on long-term debts in financing its operations. The company is successful in generating profits. Its assets are effectively used to generate profits. The rate of return to the owners is high. Besides, there are high prospects of a high future rate of return.
General Electric Company (2012). GE 2011 ANNUAL REPORT. Retrieved July 3, 2012 from http://www.ge.com/ar2011/pdf/GE_AR11_EntireReport.pdf
NetMBA.com (2010). Financial Ratios. Retrieved July 4, 2012 from http://www.netmba.com/finance/financial/ratios/
