Description: For many years, General Electric (GE) was a darling of the stock market, hitting target after target and pursuing solid growth. But now, analysts are sounding alarm bells. There are liquidity concerns about GE, as well as an ongoing investigation of its insurance business. In addition, there may be possible tax issues to deal with. It’s no wonder the stock has reached a low last seen during the financial crisis.
Date: November 30, 2018
1) How does a company go from a place of high esteem to, as the story says, a place where it “can now barely go one full week without a negative headline?”
2) How would these current problems at GE impact an auditor’s decisions around audit risk? (For more information on this topic, consult Wiley’s Auditing: A Practical Approach.)
3) What are some common measures of liquidity, one area of concern at GE. (If you consult chapter 14 of Wiley’s Financial Accounting: Tools for Business Decision-Making, you can see a full suite of liquidity measures all in one location.)