Replies to post #16816 on The Rising Influence of Rising Affluence

[DewDiligence]

Balance-sheet finagling underpins GE’s divestitures:

https://www.wsj.com/articles/ges-plan-rests-on-promises-and-some-sleight-of-hand-1530029998

The key number in GE’s machinations is 2.5—the multiple of debt to earnings before interest, tax, depreciation and amortization it hopes to achieve by 2020, down from 3.5 today. That is achievable but rests on some sleight of hand and wishful thinking.

To offset the drop in the denominator—losing health-care and other units will sap about $1.5 billion in Ebitda—GE will load $18 billion in debt and pre-tax pension liabilities onto the new health unit. It also will raise cash from disposals and the dividend cut.

...the numbers only work if its troubled power unit starts to turn around and if GE succeeds in trimming another $500 million in costs.