Question

General Electric (GE) stock experienced a losing year for 2018. list one example for long term and short term financial decisions and explain how it might help turn around the company's performance.

Answer 1

Long term: GE has many business in a lot of sectors including Healthcare, Technology, Mining, Oil& gas etc.

It might want to look in detail which division is performing poorly, is not aligned with its core operations and can be divested fully or partly (may retain a minority stake). This will help GE gain some cash to be used to decrease leverage or use for further growth, and at the same time, the divested division will be better off with a new partner which may lead to its turnaround. GE might benefit with better margins and hence better profitability.

Similarly, GE may look for bolt on acquisitions in those divisions which are doing good to gain more market or add to its already existing markets

Short Term: GE might look to buy-back shares to support the share prices