Pro-Forma and Business Cycle Research Paper Essay Example for Free

Pro-Forma and Business Cycle Research Paper EssayThis report will compare the pro-forma financial statement of two companies vernacular of America and General electric also-known as GE. It will describe and summarize the comparison of both organizations and their fiscal stability. It will also detail the typical blood line cycle of these two companies.Pro-Forma Financial of General Electric and believe of AmericaGeneral Electric and Bank of America are two companies in the US that are competing to increase their sales, as well as their income in assign to increase profits. Both companies are very strong financially GE is an agglomerates manufacturing with a market capital of $259.56 billion and Bank of America one of the major financial institutions with a market capital of $183.25 billion. Both companies make an swither to improve their bottom figures in each financial year. Bank of America had some merging and restructuring expenses in 2008, but was still showing remark able lettuce. tho in the latest first-quarter 2014 report, a net loss of $276 million was published. In 2014, GE decided to acquire the power and Grid duty of Alstom. GE expects the mountain to be accretive to earnings in the first year. (www.businesswire.com, 2014).Financial Viability and ratio Analysis of General ElectricAccording to the GE third-quarter 2014 annual report, the organization is playing well and has experienced profit growth since 2013 in the following areas operating earnings, revenues, industrial segment profits, industrial segment organic revenue, and growth market orders. In addition, new technologies sparked an increase in equipment orders. Likewise, the organization has a strategy in perpetrate that has created growth in services business. GE will continue to modify operations and focus on the destinys of its consumers. Furthermore, GE is continuing to gain approval to acquire Alstom Power and Grid businesses.This acquisition is expected to takeplace in 2015. The acquisition is expected to increase GEs cost per share and it will help GE obtain its goal of receiving most of its earnings through industrial businesses. (GE Reports Third-Quarter 2014, 2013) A ratio analysis is a quantitative analysis of information contained in a companys financial statements. (Definition of Ratio Analysis, 2014) It is used to evaluate various aspects of a companys operating and financial performance such as its efficiency, liquidity, profitability and solvency (Definition of Ratio Analysis, 2014). This is a spacious tool to calculate how the company is doing over a certain amount of time.GEs efficiency ratio for days inventory, for example, was 54.76, all the same in 2013, it was 77.36. Receivables turnover was another huge improvement from 2004, at 12.21, to 2013 at 6.81(General Electric Co, 2014). GEs short term debt has decreased from 21.02% in 2004 to 13.24% in 2013 however the wide term debt has increased, with 28.41% in 2004, and 36.97% in 2013. The current ratio has also improved with 2.39 in 2004, and 2.53 in 2013, this is a big win for GE (General Electric Co, 2014) This shows that the company is more able to pay debts and short term bargains than when it first began (Current Ratio Definition, 2014).Financial Viability and Ratio Analysis of Bank of AmericaIn order to know the financial health of an organization, it is imperative to know the organizations financial viability. We have looked at the financial viability for Bank of America and find it to be a possible company. We looked at Bank of Americas Return on Investment (ROI) which is calculated by looking at Bank of Americas yearly return compared to the total investment we need for a project. Bank of Americas Revenue was 98,353 million with Net Income at 5,222 million for the year ending 2013. Total liabilities were 1,884,932 million with 2,123,613 million in total assets (Bank of America, 2014). Bank of Americas working capital ratio is 1.126 which shows u s that is able to have enough cash to repay debts. Bank of Americas debt ratio is .8876 which shows that this company can repay long term debt. These few ratios help us see that this business is able to generate enough surpluses in order to meet their recurring payment obligation which also verifies the companys viability (Bank of America, 2014).Business CycleA business cycle is the growth or decline in an deliverance. As of today the economy has grown from the time out in September 2008 that leftfield many people without jobs, the stock market plunges and many companies going bankrupt and closing. Furthermore, the goal of economic policy is to keep the economy in a healthy growth rate that create jobs for people, but slow enough to avoid inflation. Many factors can cause an economy to braid out of control, or settle into depression. The most important, over-riding factor is confidence of investors, consumers, businesses and politicians. The economy grows when there is confidenc e in the future and in policymakers, and does the opposite when confidence drops (Amakeo, 2014). novel banking trends offer subtle indications about the business cycle. The financial crisis in 2008 stemmed from explosive monetary policy during the preceding period (Hofschire, 2014).During the financial crisis in 2008 it left a lot of companies wondering if they will ever get backbone to where they were before the market plunged. Financial institutions, such as Bank of America made it difficult for home buyers to take out loans to purchase properties. Although the housing market dropped, it was harder to qualify for loans because the qualifications were stricter. Furthermore, home owners were in upside loans because they could not afford to pay back the loans. During the financial crisis in 2008 General Electric (GE) was one of the major companies that produced numerous of appliances, such as refrigerators, stoves, microwaves and much more.However, they took a huge financial loss a s their earnings started to decrease as sale prices declined (Smith, 2008). General Electric said profits from its money and commercial finance divisions should total $2 billion in the third quarter, down nearly 20 percent from $2.45 billion in the second quarter (Smith, 2008). General Electric Capital is a large subscriber to the companys global earnings. Furthermore, General Electric had to give up some assets to raise their capital. As of today GE is one of the largest companies, which generate home appliances and they were able to catch up with the financial crisis and regain their financial earnings.ConclusionThis report shows that both GE and Bank of America are seeing steady growth and are easily recovering from the recession. Both GE and Bank of Americaseem to be in the expansion part of the business cycle as sales would project. GE has improved in its current ratio between 2004 and 2013, and Bank of American still needs to improve its current ratio. Both companies have s een an increase in many areas of their financials and plan to continue to increase sales and profits.ReferencesAlstom Board Chooses GE Offer. (2014, June 21). Retrieved November 29, 2014, from www.businesswire.com http//www.businesswire.com/news/home/20140621005026/en/Alstom-Board-Chooses-GE-Offer.VHu2r-8g9es Amadeo, K. (2014). What Is the Business Cycle? Retrieved November 30, 2014, from useconomy.about.com http//useconomy.about.com/od/glossary/g/business_cycle.htm Bank of America. (2014, May). Retrieved November 30, 2014, from www.forbes.com http//www.forbes.com/companies/bank-of-america/ Current Ratio. (2014). Retrieved November 30, 2014, from www.investopedia.com http//www.investopedia.com/terms/c/currentratio.asp GE news. (2014, October 17). Retrieved November 30, 2014, from www.genewsroom.com www.genewsroom.com/press-releases/ge-reports-3q%E2%80%9914-operating-eps-038-6-3q-industrial-profit-9-operating-margins-90 General Electric. (2014, May). Retrieved November 30, 2014, from www.forbes.com http//www.forbes.com/companies/general-electric/ General Electric. (2014, November 28). Retrieved November 30, 2014, from financials.morningstar.com http//financials.morningstar.com/ratios/r.html?t=GE Ratio Analysis. (2014). Retrieved November 30, 2014, from www.investopedia.com http//www.investopedia.com/terms/r/ratioanalysis.asp Schire, D. H. (2014, February 28). March business cycle update. Retrieved November 30, 2014, from www.fidelity.com https//www.fidelity.com/viewpoints/market-and-economic-insights/economy-update-march-14 Smith, A. (2008, October 9). Wall Street crisis hits GE. Retrieved November 30, 2014, from money.cnn.com http//money.cnn.com/2008/10/09/news/companies/ge_earnings/ Walker, A., McEntire, L. (2014). Investor Relations. Retrieved November 29, 2014, from www.bankofamerica.com http//investor.bankofamerica.com/phoenix.zhtml?c=71595p=irol-newsArticleID