subject: Disclosure Analysis for General Electric Part I [print this page] Disclosure Analysis for General Electric Part I
The publically held company selected to use as the basis for this paper is General Electric. As a world leader in global research, General Electric employs 2,500 workers in their four state-of-the-art research facilities located in Niskayuna, New York; Bangalore, India; Shanghai, China; and Munich, Germany. The firm specializes in many of today's leading technologies in sectors that include electric appliances and distribution, energy, oil and gas, aviation, media and entertainment, plus business and consumer finance General Electric's most profitable division. This article analyzes the disclosures contained within the notes to the financial statements related to cash and cash equivalents, inventories, and receivables. In addition, a discussion of the components of General Electrics' cash and cash equivalents will be included.
GE Cash and Cash Equivalents
Cash and cash equivalents do not make up a significant portion of General Electric's (GE) assets. According to GE's 2007 Statement of Financial Position, cash and equivalents made up $15.7 billion of $795.3 billion total assets. This equates to less than two percent of GE's total assets. The cash equivalents disclosure, located in Note 1: Summary of Significant Accounting Policies, states, "Debt securities with original maturities of three months or less are included in cash equivalents unless designated as available-for-sale and classified as investment securities."
GE does not disclose specific components of their cash and cash equivalents. It is assumed that the firm generally classifies Treasury bills, commercial paper, money market funds, and temporary investments as cash and cash equivalents.
GE Inventories
GE's inventories are stated at the lower of cost or current market values. According to Note 1, of the GE 2007 Annual Report, "Cost for a significant portion of GE U.S. inventories is determined on a last-in, first-out (LIFO) basis. Cost of other GE inventories is determined on a first-in, first-out (FIFO) basis. LIFO was used for 56 percent and 49 percent of GE inventories at December 31, 2007 and 2006, respectively."
