GE 2015 Annual Report Download - page 134

MD&A SUPPLEMENTAL INFORMATION
106 GE 2015 FORM 10-K
RATIO OF ADJUSTED DEBT TO EQUITY AT GE CAPITAL, NET OF LIQUIDITY
December 31 (Dollars in millions) 2015 2014 2013 2012 2011
GE Capital debt $ 180,795 $ 245,992 $ 284,686 $ 316,186 $ 364,266
A
dd debt of businesses held for sale
and discontinued operations 31,075 105,923 86,692 81,256 79,091
A
d
j
usted GE Ca
p
ital debt 211
,
870 351
,
915 371
,
379 397
,
442 443
,
357
Less liquidit
y(
a
)
70,497 55,361 65,492 52,810 69,219
Less cash of businesses held for
sale and discontinued operations 20,395 20,991 9,617 9,308 7,754
$ 120
,
978 $ 275
,
563 $ 296
,
269 $ 335
,
324 $ 366
,
384
GE Capital equit
y
$ 46,227 $ 87,499 $ 82,694 $ 81,889 $ 77,110
Ratio 2.62:1 3.15:1 3.58:1 4.09:1 4.75:1
(a) Liquidity includes cash and equivalents and $10.4 billion of high quality interest bearing deposits at December 31, 2015.
We have provided the GE Capital ratio of debt to equity on a basis that reflects the use of liquidity as a reduction of debt. For purposes
of this ratio, we have also adjusted cash and debt balances to include amounts classified as assets and liabilities of businesses held for
sale and discontinued operations. We believe that this is a useful comparison to a GAAP-based ratio of debt to equity because liquidity
balances may be used to reduce debt. The usefulness of this supplemental measure may be limited, however, as the total amount of
liquidity at any point in time may be different than the amount that could practically be applied to reduce outstanding debt. Despite this
potential limitation, we believe that this measure, considered along with the corresponding GAAP measure, provides investors with
additional information that may be more comparable to other financial institutions and businesses.
CAPITAL ENDING NET INVESTMENT (ENI), EXCLUDING LIQUIDITY
December 31 (In billions) 2015 2014(a)
Financial Services (GE Capital) total assets $ 312.1 $ 494.0
A
d
j
ustment: deferred income taxes 4.6 6.2
GE Ca
p
ital total assets 316.7 500.2
Less assets of discontinued operations 120.9 1.2
Less non-interest bearin
g
liabilities 43.3 60.5
Ca
p
ital ENI 152.4 438.5
Less liquidit
y(
b
)
70.5 75.5
Ca
p
ital ENI, excludin
g
li
q
uidit
y
$ 81.9 $ 363.0
Discontinued operations, excludin
g
liquidit
y
85.0
(
0.1
)
Capital ENI
(
excludin
g
liquidit
y)
includin
g
discontinued operations $ 166.9 362.9
(a) As originally reported.
(b) Liquidity includes cash and equivalents and $10.4 billion of high quality interest bearing deposits at December 31, 2015.
We use ENI to measure the size of our Capital segment. We believe that this measure is a useful indicator of the capital (debt or equity)
required to fund a business as it adjusts for non-interest bearing current liabilities generated in the normal course of business that do
not require a capital outlay. We also believe that by excluding liquidity, we provide a meaningful measure of assets requiring capital to
fund our Capital segment as a substantial amount of liquidity resulted from debt issuances to pre-fund future debt maturities and will not
be used to fund additional assets. Liquidity consists of cash and equivalents and certain high quality interest bearing deposits. As a
general matter, investments included in liquidity are expected to be highly liquid, giving us the ability to readily convert them to cash.
Providing this measure will help investors measure how we are performing against our previously communicated goal to reduce the
size of our financial services business.
106 GE 2015 FORM 10-K