Write 12 pages thesis on the topic general electric long term financing policy.

Write 12 pages thesis on the topic general electric long term financing policy. The tagline of the company is becoming “bringing good things to life” (“General Electric” n.d.).

Concerning the situation, in this paper, I would like to discuss three sections of General Electric issues. Section 1 is about the company’s long term financing. Section 2 is concerning risk management. and Section 3 is about a synergistic acquisition, which is suitable for General Electric.

In today’s business practices, investors or managements often face a dilemma. At one occasion, they need to develop their business in order to sustain growth but on the other hand they have limited budget to invest. Under such circumstances, a company should consider loan option or use their own money reserves.

Using debt as the chosen financing method becomes common in business nowadays. This is because the profit generated from sales cannot be used for financing future business like buying new machines since a great portion of the profit is used for daily operational expenses.

In case that the companies have a pile of money, it is acceptable that they do not need to worry about raising funds from outside sources, thus keeping the companies with no debt. But if the situation is vice versa, the companies can borrow money from outside sources but there is a limit to the amount of money a firm can borrow. In short, debt is limited.

Moreover, the company’s long-term debt at the end of 2004 was $213.16 billion and total liabilities (i.e., all monies owed) were $623.66 billion. This condition set the company’s debt to equity ratio at the end of 2004 was 1.68.

However, according to Winthrop (2005), a company that has negative working capital does not mean it performs badly since it could be an indication that GE has efficiently turned over inventory. The situation could be GE is having large financial subsidiaries.