Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in Earnings Before Interest and Taxes (EBIT).
General Electric Co's Degree of Financial Leverage for the quarter that ended in Sep. 2023 was 0.63. The higher Degree of Financial Leverage, the more volatile earnings will be.
The industry rank for General Electric Co's Degree of Financial Leverage or its related term are showing as below:
GE's Degree of Financial Leverage is ranked better than 75.08% of 2857
companies
in the Industrial Products industry
Industry Median: 1.00
vs GE: 0.63
General Electric Co Degree of Financial Leverage Historical Data
The historical data trend for General Electric Co's Degree of Financial Leverage can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
General Electric Co Annual Data
Trend
Dec13
Dec14
Dec15
Dec16
Dec17
Dec18
Dec19
Dec20
Dec21
Dec22
Degree of Financial Leverage
1.37
0.64
-0.65
2.02
0.36
General Electric Co Quarterly Data
Dec18
Mar19
Jun19
Sep19
Dec19
Mar20
Jun20
Sep20
Dec20
Mar21
Jun21
Sep21
Dec21
Mar22
Jun22
Sep22
Dec22
Mar23
Jun23
Sep23
Degree of Financial Leverage
-2.68
0.36
0.63
0.60
0.63
Competitive Comparison
For the Specialty Industrial Machinery subindustry, General Electric Co's Degree of Financial Leverage, along with its competitors' market caps and Degree of Financial Leverage data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
General Electric Co Degree of Financial Leverage Distribution
For the Industrial Products industry and Industrials sector, General Electric Co's Degree of Financial Leverage distribution charts can be found below:
* The bar in red indicates where General Electric Co's Degree of Financial Leverage falls into.
General Electric Co Degree of Financial Leverage Calculation
General Electric Co's Degree of Financial Leverage for the quarter that ended in Sep. 2023 is calculated as:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
** TTM data of EPS and EBIT was used to calculate Degree of Financial Leverage.
*** Please be aware that the Degree of Financial Leverage calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
General Electric Co (NYSE:GE) Degree of Financial Leverage Explanation
Degree of Financial Leverage (DFL) is a leverage ratio that measures the sensitivity of a company’s Earnings per Share (EPS) to fluctuations in its operating income, also referred to as Earnings Before Interest and Taxes (EBIT), resulting from adjustments in its capital structure. DFL is an essential tool for companies to assess the appropriate level of debt or financial leverage in their capital structure. When EBIT remains relatively stable, it results in stable earnings and earnings per share. In such cases, the company may consider taking on substantial debt. However, for companies operating in industries with significant fluctuations in EBIT, it is advisable to keep debt at a manageable level.
The higher Degree of Financial Leverage, the more volatile earnings will be. Because interest is a fixed expense, leverage can amplify earnings and EPS. This is beneficial when EBIT is growing, but it can become problematic in tough economic conditions when EBIT is under pressure.
Be Aware
The use of financial leverage varies across different industries and business sectors, and the application of Degree of Financial Leverage (DFL) should be adjusted accordingly.
General Electric Co Degree of Financial Leverage Related Terms
Thank you for viewing the detailed overview of General Electric Co's Degree of Financial Leverage provided by GuruFocus.com. Please click on the following links to see related term pages.
General Electric Co (NYSE:GE) Business Description
GE was formed through the combination of two companies in 1892, including one with historical ties to American inventor Thomas Edison. Today, GE is a global leader in air travel and in the energy transition. The company is known for its differentiated technology and its massive industrial installed base of equipment sprawled throughout the world. That installed base most notably includes aerospace engines, gas and steam turbines, and onshore and offshore wind turbines. GE earns most of its profits on the service revenue of that equipment, which is generally higher-margin. The company is led by Danaher alumnus Larry Culp, who is leading a multiyear turnaround of the conglomerate based on lean principles.
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