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Pro-Forma Financial Statements (I/S, B/S and St


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This is exactly what the professor ask for 

Pro-Forma Financial Statements (I/S, B/S and Statement of Cash Flows) with deltas out 3 years and analysis Each year must have 2 columns: 1 with your strategy and 1 without your strategy.

Include Pro-Forma ratios for the first year out with deltas contrasting from the most current year?s ratios

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Running head: GENERAL ELECTRIC

 

1 General Electric

 

Jessica Adkins

 

Liberty University

 

May 5, 2016 The General Electric is an American multinational company. The company operates in

 

many fields. As of 2015, It have business in following sectors: Appliances, Power and Water, Oil

 

and Gas, Energy Management, Aviation, Healthcare, Transportation and Capital which cater to General Electric 2 the needs of Home Appliances, Financial services, Medical devices, Life Sciences,

 

Pharmaceutical, Automotive, Software Development and Engineering industries. (CNN, 2016).

 

There are three classes of alternatives strategy:

 

1. Stability Strategy

 

2. Expansion Strategy

 

3. Retrenchment Strategy

 

Stability Strategy

 

The stability strategy took place while a firm doesn?t change its existing activities

 

in long time. The stable firms don?t look for changes in their strategy too frequent. The

 

firm who are not changing any strategy but doing well are using stability strategy.

 

Prerequisite for stability strategy:

 

o Company will exist in the same market and will deal in the same product and

 

services.

 

o The strategy focuses on incremental improvement of functional performance.

 

Stability strategy does not mean ?Do nothing Strategy?. It involves the process of

 

keeping track of new development to ensure that strategy continues to make sense by

 

making the business stable. This strategy is typical for nature business organization. The features of stable strategy are as follows:

 

Safeguard of existing interest.

 

Safeguard of existing strength.

 

It focuses on self-objective.

 

Return on resources.

 

Advantages of Stability Strategy:

 

All decisions making through top management

 

It provides clear directions to all employees

 

It allows large organization to use economics of scale.

 

Disadvantages of Stability Strategy:

 

This lead to poor communication between departments.

 

Customers also affected due to lack of cooperation. Benefits to GE:

 

General electric is an established company. The stability strategy fits better for this

 

organization as they can go through a process that doesn?t require it to make any major changes. General Electric 3 It saves time and money and provide a better platform for employees that results in more

 

productivity. It provide safeguard to existing strategies that results in better outcome.

 

Expansion Strategy

 

Horizontal Diversification:

 

Sort of enhancement under which firm creates or procures new items that are

 

unique from the main business or innovation, however which may appealing to its present

 

clients.

 

In an expansion technique, the center point is improvement of current business.

 

This activity can be likened with dynamism, force, guarantee and accomplishment of

 

current existing business. An organization progressing is more dynamic and ambitious as

 

opposed to an enterprise on hold and stand. Since, on the off chance that you remain on

 

the ideal spot, you will be keep running over by another person on the off chance that you

 

don't move. Expansion concentrates on renewal of objective and headings, it quantifies

 

activities, and it gauges venture, investigation and enthusiasm for new item.

 

The reasons for Expansion are: For acquiring better market share. Optimum utilization of available resources.

 

Ways of Expansion Expansion through diversifications. Expansion through acquisition of and merger with other companies.

 

Advantages of Expansion Strategy: Economics of scale New customers

 

Disadvantages of Expansion Strategy: Capital requirements Spread too thin

 

Benefits of Expansion

 

Expansion takes the company to new path where there are lots of promises and

 

pitfalls. It provides different new sources to the organization that earns money and enable

 

its financial goal. The General Electric followed the same method. They increased the

 

size of their business. They have expanded it in many sectors that earned great financial General Electric 4 benefit for the company indeed. The income statement clearly reflects the changes on

 

which this company is moving on a same pace in the market while many companies are

 

facing loss in every steps.

 

Diversification:

 

It empowers the business to go into new products, new product line, new services

 

and new market. It involves substantially different kinds of skills, different kinds of

 

knowledge, and different kinds of technology. It helps the company to introduce new and

 

varieties of product to the customer that increase the sales as well as provide a better

 

platform. The general electric also follow the same rules and they have a diverse range of

 

products in the market.

 

Retrenchment Strategy:

 

A procedure utilized by organizations to decrease the differing qualities or the

 

general size of the operations of the organization. This system is frequently utilized as a

 

part of request to cut costs with the objective of turning into a more money related stable

 

business. The procedure includes pulling back from certain business sectors or the

 

cessation of offering certain items or administration so as to make an advantageous

 

turnaround

 

Types of retrenchment: Turnaround

 

Divestment

 

Liquidation Advantages of retrenchment strategy: Poor performance of firm Better opportunities in the environment

 

Disadvantages of retrenchment strategy:

 

High cost

 

Competition from government subsidized industries. General Electric 5 Benefits of Retrenchment

 

The general electric successfully applied that strategy to cut costs and earn different

 

benefits in the market. The financial statements indicates the expenses are being decreased

 

for General electric over the timeframe. It provided them more efficient way of increasing the

 

profit by removing unnecessary costs.

 

Competitive Strategy:

 

In an industry, company does want to gain a competitive advantage that will work against

 

rivalry and achieve profitability. Porter?s suggests three generic strategies for creating

 

defendable position in the long run and out forming competitors:

 

1) Cost Leadership

 

2) Differentiation

 

3) Focus or Niche Strategy

 

Cost Leadership In Cost Leadership Strategy, company has lowest per unit cost in the industry. Lowest per unit cost among rivals is highly competitive and return or profits will be low. Lowest cost among rivals where each firm enjoys pricing power and high profits. Cost leadership is independent of market structure. Cost leadership is a defendable strategy because: It defends the firm against powerful buyers. Buyers can down the price. General Electric 6 If defends the firm against powerful suppliers. It provides flexibility to increase in input

 

costs. Cost leadership strategy also provides entry barriers. Differentiation A firm is offering unique product. A firm is creating its own market. There are different approaches of differentiation which are as follows:

 

o Different design

 

o Brand image

 

o Number of features

 

o New Technology Differentiation is a defendable strategy because: It reduces competitive rivalry by creating brand loyalty. Uniqueness creates barriers and reduces substitutes. Higher margins provide deal with powerful suppliers. Differentiation also mitigates buyer power. Focus or Niche Strategy In this strategy, firms focus on a particular buyer group, product segment or geographical

 

markets. General Electric 7 When firms focus on low cost and differentiation at achieving their objectives industry

 

wide, the focus or niche strategy is built. Focus strategy is to achieve either a low cost advantage or differentiation. Benefits of Competitive Strategy:

 

It is the most useful strategy used by an organization to achieve good position in the

 

market. It enables the company to keep them step ahead. The observance of financial

 

documentation provide the success ratio for this company. It had enough growth over the time. It

 

indicates that competitors were unable to challenge them because of their competitive strategies

 

applied in the market. Income Statement Period Ending Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 General Electric Total Revenue

 

Cost of Revenue

 

Gross Profit

 

Operating Expenses

 

Research Development

 

Selling General and Administrative

 

Non Recurring

 

Others

 

Total Operating Expenses 8 117,386,000 117,184,000

 

85,298,000

 

86,234,000

 

32,088,000

 

30,950,000 113,245,000

 

82,502,000

 

30,743,000 20,439,000

 

- 17,963,000

 

- 18,773,000

 

- Operating Income or Loss

 

Income from Continuing Operations

 

Total Other Income/Expenses Net

 

Earnings Before Interest And Taxes

 

Interest Expense

 

Income Before Tax

 

Income Tax Expense

 

Minority Interest

 

Net Income From Continuing Ops

 

Non-recurring Events

 

Discontinued Operations

 

Extraordinary Items

 

Effect Of Accounting Changes

 

Other Items 11,649,000 12,987,000 11,970,000 11,649,000

 

3,463,000

 

8,186,000

 

6,485,000

 

(332,000)

 

1,700,000 12,986,000

 

2,723,000

 

10,263,000

 

773,000

 

(112,000)

 

9,490,000 11,970,000

 

2,870,000

 

9,100,000

 

1,219,000

 

(298,000)

 

7,881,000 (7,495,000)

 

- 5,855,000

 

- 5,475,000

 

- Net Income

 

Preferred Stock And Other Adjustments

 

Net Income Applicable To Common Shares (6,126,000) 15,233,000

 

(18,000)

 

(6,145,000) 15,233,000 13,057,000

 

13,057,000 Balance Sheet

 

Period Ending Assets

 

Current Assets

 

Cash And Cash Equivalents

 

Short Term Investments

 

Net Receivables

 

Inventory Dec 31, 2015 Dec 31, 2014 70,483,000

 

31,973,000

 

45,856,000

 

22,515,000 70,025,000

 

35,505,000

 

42,943,000

 

17,689,000 Dec 31, 2013 88,555,000

 

43,981,000

 

272,442,000

 

17,325,000 General Electric Other Current Assets

 

Total Current Assets

 

Long Term Investments

 

Property Plant and Equipment

 

Goodwill

 

Intangible Assets

 

Accumulated Amortization

 

Other Assets

 

Deferred Long Term Asset Charges

 

Total Assets

 

Liabilities

 

Current Liabilities

 

Accounts Payable

 

Short/Current Long Term Debt

 

Other Current Liabilities

 

Total Current Liabilities

 

Long Term Debt

 

Other Liabilities

 

Deferred Long Term Liability Charges

 

Minority Interest

 

Negative Goodwill

 

Total Liabilities

 

Stockholders' Equity

 

Misc Stocks Options Warrants

 

Redeemable Preferred Stock

 

Preferred Stock

 

Common Stock

 

Retained Earnings

 

Treasury Stock

 

Capital Surplus

 

Other Stockholder Equity

 

Total Stockholder Equity

 

Net Tangible Assets

 

Cash Flow 9 170,827,000

 

56,913,000

 

65,526,000

 

16,744,000

 

179,578,000

 

3,105,000

 

492,692,000 166,162,000

 

50,896,000

 

53,207,000

 

13,182,000

 

365,325,000

 

6,183,000

 

654,954,000 422,303,000

 

68,877,000

 

77,648,000

 

14,310,000

 

73,147,000

 

275,000

 

656,560,000 72,110,000

 

52,975,000

 

23,597,000

 

148,682,000

 

145,301,000

 

95,598,000

 

1,864,000

 

391,446,000 69,159,000

 

74,828,000

 

14,323,000

 

158,310,000

 

186,596,000

 

173,117,000

 

8,674,000

 

526,697,000 31,816,000

 

108,014,000

 

66,742,000

 

206,572,000

 

221,665,000

 

91,540,000

 

6,217,000

 

525,994,000 2,972,000

 

6,000

 

702,000

 

140,020,000

 

(63,539,000)

 

21,084,000

 

98,274,000

 

16,004,000 98,000

 

702,000

 

155,333,000

 

(42,593,000)

 

14,716,000

 

128,159,000

 

61,770,000 702,000

 

149,051,000

 

(42,561,000)

 

23,374,000

 

130,566,000

 

38,608,000 General Electric

 

Period Ending 10 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 General Electric Net Income

 

(6,126,000)

 

Operating Activities, Cash Flows Provided By or Used In

 

Depreciation

 

4,847,000

 

Adjustments To Net Income

 

7,546,000

 

Changes In Accounts Receivables

 

(52,000)

 

Changes In Liabilities

 

(1,537,000)

 

Changes In Inventories

 

(314,000)

 

Changes In Other Operating Activities

 

7,160,000

 

Total Cash Flow From Operating Activities

 

19,891,000

 

Investing Activities, Cash Flows Provided By or Used In

 

Capital Expenditures

 

(7,309,000)

 

Investments

 

1,043,000

 

Other Cash flows from Investing Activities

 

65,753,000

 

Total Cash Flows From Investing Activities

 

59,488,000

 

Financing Activities, Cash Flows Provided By or Used In

 

Dividends Paid

 

(9,295,000)

 

Sale Purchase of Stock

 

(1,099,000)

 

Net Borrowings

 

(57,546,000)

 

Other Cash Flows from Financing Activities

 

(8,112,000)

 

Total Cash Flows From Financing Activities

 

(76,054,000)

 

Effect Of Exchange Rate Changes

 

(3,464,000)

 

Change In Cash and Cash Equivalents

 

(138,000) 11 15,233,000 13,057,000 4,953,000

 

5,202,000

 

(6,849,000) (9,313,000)

 

(1,913,000)

 

(485,000)

 

50,000

 

2,334,000

 

(872,000) (1,368,000)

 

5,318,000

 

4,672,000

 

27,709,000

 

28,510,000

 

(7,134,000) (6,754,000)

 

1,260,000

 

18,850,000

 

841,000

 

17,021,000

 

(5,034,000) 29,117,000

 

(8,852,000) (7,821,000)

 

(1,218,000) (8,288,000)

 

(30,190,000) (29,316,000)

 

23,304,000

 

(150,000)

 

(16,956,000) (45,575,000)

 

(3,492,000)

 

(795,000)

 

2,224,000

 

11,258,000 General Electric 12 References

 

Financial Statements. (2016). Ge.com. Retrieved 5 May 2016, from http://www.ge.com/investorrelations/investor-services/personal-investing/financial-statements

 

GE - General Electric Company Profile - CNNMoney.com. (2016). Money.cnn.com. Retrieved 5

 

May 2016, from http://money.cnn.com/quote/profile/profile.html?symb=GE

 


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This is exactly what the professor ask for 

Pro-Forma Financial Statements (I/S, B/S and St.zip

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