GE: Financial Engineering and Its Limits

For decades, General Electric was considered one of the best-run companies in the world, hitting or beating quarterly earnings estimates almost without fail, year after year, a consistency that is statistically improbable for a sprawling industrial conglomerate facing real market cycles. The engine that made it possible was GE Capital, a massive financial arm that could generate income to fill any gap when an industrial division came in light. Then the 2008 crisis hit, and the balance sheet underneath turned out to be far larger and more fragile than investors understood.

This case sharpens the difference between how much a business earns and how durable those earnings actually are. Reported numbers propped up by timing games and asset sales are borrowed time. Open the app to stress-test your own results: strip out the one-time items, and see what the underlying operating economics really show.