E$3-44.$ Compute and Interpret Solvency Ratios for Business Segments

Selected balance sheet and income statement information from General Electric Company and its two

principal business segments $($Industrial and Financial$)$ for $2015$ follows.

${?}^4$ Includes unallocated corporate operating activities.

fncludes intercompany loans and related interest expense;$\text{'}$ these are deducted $($eliminated$)$ in preparing consolidated

financial statements.

Includes redeemable noncontrolling interests

$4$ncludes noncontrolling interests.

a$.$Compute times interest earned and the liabilities$-$to$-$equity ratio for $2015$ for the two business seg$-$

ments $($Industrial and Financial$)$ and the company as a whole.

$b.$ What is your overall assessment of the company's solvency? Explain. What differences do you ob$-$

serve between the two business segments? Do these differences correspond to your expectations given

each company's business model?

c$.$Discuss the implications of the analysis of consolidated financial statements and the additional insight

that can be gained from a more in$-$depth analysis of primary business segments.