Financial measures for General Electric

Financial measures for General Electric - good jobTo : The Board of Directors, GENERAL ELECTRIC COMPANYSubject : NEW FINANCIAL AND STATISTICAL MEASURES TO MONITORTHE SUCCESS OF GENERAL ELECTRIC COMPANYAfter Mr. Weltch announced my new assignment, I pondered how I could go about guaranteeing the best possible result: a creditable and well organized work that is going to help you, the Board of Directors, plan for the future of the company in a better way. Before starting my analysis, I must specify that my target is not to abolish the traditionally used financial and statistical measures but to develop new ones to be used as guidance for the corporations future development.Our Chairman recently wrote that "the hottest trend in business in 1995 and the one that hit closest to home is the rush toward breaking up multi-business companies and spinning off their components, under the theory that their size and diversity inhibited their competitiveness ...English: Sneinton Cliffs The result of clay quarry...breaking up is the ri ght answer for some big companies ... for us it is the wrong answer."1For us the new trend is the entrance into the service industry.The question must then be: is this the right answer?GE is expecting to increase its revenue by the year 2000 to $120 billion compared with $58 billion in 1990. In other words, if the forecast proves to be correct, it will obtain an average annual rate of growth of 7.5%. This high rate is mainly attributed to the expansion of the services sector of the company, which is estimated to increase by an average annual rate of 13% compared with a corresponding one of 2.1% for manufacturing. Today nearly 60% of GEs profits comes from services up from 16.4% in 1980.2This is our new direction and therefore my target...