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GE Aerospace (LIM:GE) Altman Z-Score : 2.16 (As of Apr. 24, 2024)


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What is GE Aerospace Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Warning Sign:

Altman Z-score of 2.25 is in the grey area. This implies that the company is under some kind of financial stress. If it is below 1.8, the company may face bankruptcy risk.

GE Aerospace has a Altman Z-Score of 2.16, indicating it is in Grey Zones. This implies that GE Aerospace is in some kind of financial stress. If it is below 1.81, the company may face bankrupcy risk.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for GE Aerospace's Altman Z-Score or its related term are showing as below:

LIM:GE' s Altman Z-Score Range Over the Past 10 Years
Min: 0.87   Med: 1.15   Max: 2.25
Current: 2.25

During the past 13 years, GE Aerospace's highest Altman Z-Score was 2.25. The lowest was 0.87. And the median was 1.15.


GE Aerospace Altman Z-Score Historical Data

The historical data trend for GE Aerospace's Altman Z-Score 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.

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GE Aerospace Altman Z-Score Chart

GE Aerospace Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 1.10 1.25 1.15 1.21 1.95

GE Aerospace Quarterly Data
Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24
Altman Z-Score Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.72 1.85 1.92 1.95 -

Competitive Comparison of GE Aerospace's Altman Z-Score

For the Aerospace & Defense subindustry, GE Aerospace's Altman Z-Score, along with its competitors' market caps and Altman Z-Score 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.


GE Aerospace's Altman Z-Score Distribution in the Aerospace & Defense Industry

For the Aerospace & Defense industry and Industrials sector, GE Aerospace's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where GE Aerospace's Altman Z-Score falls into.



GE Aerospace Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

GE Aerospace's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.0519+1.4*0.5372+3.3*0.0408+0.6*1.3117+1.0*0.4241
=2.16

* 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. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Mar. 2024:
Total Assets was $163,942 Mil.
Total Current Assets was $59,591 Mil.
Total Current Liabilities was $51,086 Mil.
Retained Earnings was $88,065 Mil.
Pre-Tax Income was 1866 + 2009 + 300 + 1390 = $5,565 Mil.
Interest Expense was -278 + -296 + -286 + -267 = $-1,127 Mil.
Revenue was 16053 + 19423 + 17346 + 16698 = $69,520 Mil.
Market Cap (Today) was $174,250 Mil.
Total Liabilities was $132,839 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(59591 - 51086)/163942
=0.0519

X2=Retained Earnings/Total Assets
=88065/163942
=0.5372

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(5565 - -1127)/163942
=0.0408

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=174250.437/132839
=1.3117

X5=Revenue/Total Assets
=69520/163942
=0.4241

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

GE Aerospace has a Altman Z-Score of 2.16 indicating it is in Grey Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


GE Aerospace  (LIM:GE) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


GE Aerospace Altman Z-Score Related Terms

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GE Aerospace (LIM:GE) Business Description

Address
5 Necco Street, Boston, MA, USA, 02210
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.