Additionally, the SEC found that GE failed to explain the source of power business’ more than $1 billion in reported profits in 2016 and 2017. The company also did not inform investors that the increase in its industrial cash collections in 2016 and 2017 was due to a change in its practices to sell longer-term receivables from its Power service multi-year agreements primarily to its subsidiary, GE Capital.
GE misled investors by reporting increased industrial cash flow without disclosing that it was depleting future cash flows by transferring them into the present. The company called that strategy “deferred monetization,” which allowed the company to boost publicly reported industrial cash flows in 2014 by over $1.4 billion and over $500 million in the first three quarters of 2017 at the expense of future years.
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