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General Electric Financials Q1 2013

by May 20, 2013

General Electric Financials Q1 2013
Earnings and financial results

The shrinking giant:
Steady and slow decline in sales, margins, and assets

General Electric financials apparently have only one direction: down. Sales are slowly going down; margins as well. Net income is not great either, despite ultra-low effective tax rates. Asset base is shrinking, albeit long term debt stayed the same. Operational cash flow is not spectacular either.
Full details below.


Our an analysis is based on General Electric quarterly and annual reports as filed to SEC EDGAR or reported by General Electric. All data is thoroughly processed by our analysts to assure consistent and comparable figures across many quarters. In case you spot any error or inconsistency, please let us know.
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General Electric – Detailed financial statements analysis

General Electric financials for Q1 2013
Placeholder for chart showing: sales, cost of sales, gross margin.

Click for larger General Electric Gross profit margin from sales , Q1 2013
Sales declined a bit YoY, and significantly QoQ. GE succeeded however a little increase in gross margin YoY.

General Electric financials for Q1 2013
Placeholder for chart showing: sales, cost of sales, operating expenses, operating income.

Click for larger General Electric Operating income from sales , Q1 2013
As sales declined, cost of goods and cost of services also declined. GE somehow kept operating expenses under control, and operating income was higher on YoY basis.

General Electric financials for Q1 2013
Placeholder for chart showing: gross margin, operating expenses, non-operating expenses, income taxes, exceptional expenses, preferred distributions, net income.

Click for larger General Electric Net income overview , Q1 2013
Some tax rate magic, reduced exceptional expenses, and reduced operating expenses, allowed GE to report a better income than sales and gross margins would have suggested. As assets declined, GE ROA improved a lot. A sign that management is very careful about the bottom line, albeit balance sheet debt suggests some earnings massage.

General Electric financials for Q1 2013
Placeholder for chart showing: detailed revenues and costs.

Click for larger General Electric Detailed revenues and costs , Q1 2013
Sales of goods declined YoY while sales of services succeeded to compensate. It may not be long until GE will be known as a finance company instead of an engineering behemoth

General Electric financials for Q1 2013
Placeholder for chart showing: balance sheet: current assets, long term assets, current liabilities, long-term liabilities, equity.

Click for larger General Electric Balance sheet overview , Q1 2013
Total assets slowly declined; the long term assets declined most. The decline was matched by a large decline in current liabilities, while long term liabilities maintained. As a result, long term liabilities increased as a percentage of total assets, which in not a good sign. Note also the large imbalance between current assets and current liabilities – current liabilities are less than half of current assets. There is also a large imbalance between sales, and current assets: those current assets are about 11 (eleven) times the quarterly sales, which is a warning sign. Any comparatively small write-off in assets would translate into a large hit on profits. We see a risk that not all the assets may be real and some write-off be possible, and we are keeping an eye on the issue.

General Electric financials for Q1 2013
Placeholder for chart showing: current assets details: cash, investments, accounts receivable, inventory, deferred tax, others.

Click for larger General Electric Detailed current assets , Q1 2013
It's likely than GE is deleveraging and reducing its financing receivables. Maybe some writeoff could be possible as well for those receivables.

General Electric financials for Q1 2013
Placeholder for chart showing: property plant and equipment, equity, goodwill, intangibles, others.

Click for larger General Electric Detailed long term assets , Q1 2013
The goodwill on the books stayed constant, that makes us worry on the quality of earnings.

General Electric financials for Q1 2013
Placeholder for chart showing: current liabilities: payables, debt, taxes, others.

Click for larger General Electric Detailed current liabilities , Q1 2013
Current liabilities declined a lot, particularly short – term borrowing.

General Electric financials for Q1 2013
Placeholder for chart showing: long term liabilities: debt, taxes, others.

Click for larger General Electric Detailed long term liabilities , Q1 2013
But long term liabilities tend to increase, particularly debt.

General Electric financials for Q1 2013
Placeholder for chart showing: equity components: stock, earnings, others.

Click for larger General Electric Detailed equity components , Q1 2013
Retained earnings increased.

General Electric financials for Q1 2013
Placeholder for chart showing: cash flows overview: net cash flow, operating, financing, investment cash flow.

Click for larger General Electric Cash flows overview , Q1 2013
Overall cash flows are not spectacular. And particularly operating cash flow is almost a disaster, at a minimum at last quarter.

General Electric financials for Q1 2013
Placeholder for chart showing: operating cash flows details: net income, adjustments, accounts payable, accounts receivable, inventory.

Click for larger General Electric Detailed operating cash flows , Q1 2013
Detailed operating cash flows.

General Electric financials for Q1 2013
Placeholder for chart showing: financing cash flows details: debt, stock, dividend.

Click for larger General Electric Detailed financing cash flows , Q1 2013
Financing cash flows details: paying off debt indicates also deleveraging.

General Electric financials for Q1 2013
Placeholder for chart showing: investment cash flows details: property plant and equipment, investments, securities.

Click for larger General Electric Detailed investment cash flows , Q1 2013
GE made some huge equity sales during Q1 2013, a total of 16.7 billions. Note also the constant drag on cash flow by discontinued operations, quarter by quarter, that indicates earnings massaging by re-classifying such losses as "one-off discontinued operations". That is usually normal, except for the case when it repeats each quarter, as in GE case.
Closing remarks on General Electric financials for Q1 2013:
General Electric financials apparently have only one direction: down.
Sales down; margins down. Net income up, but cash flows suggest some creative accounting. Asset base is shrinking, while long term debt maintains. Operational cash flow is at a minimum.

Data sources:

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