General Electric restates earnings for 2016 and 2017

General Electric, the worst performing Dow component last year, just dropped another bombshell indicating that the worst is yet not over for the company. Chances for a rebound are currently looking bleak as the struggling industrial firm said it plans to restate the earnings for 2016 and 2017, according to a regulatory filing made on Friday.

In its 10-K form, GE stated that it will restate its earnings for the past two years, thereby adopting the new accounting standard to recognize revenue from long-term contracts.

In its 10-K form, GE stated that it will restate its earnings for the past two years.

For years, industry leaders have been carefully monitoring the developments of the new revenue reporting standard.  Developed by both the Financial Accounting Standard Board and the International Accounting Standard Board, the new rule was introduced in the May 2014. An update to this rule would bite almost 13 cents a share from GE’s 2016 earnings and 16 cents a share from its 2017 earnings.  Adjusted operating EPS falls by 9% in 2016 and 15% in 2017, based on the new standard.

This new rule will leave a probably dent on the GE’s performance as the company makes hefty amount on service contracts. Last month, the Boston-based giant was under the SEC scanner to investigate how GE recognized its revenue from long-term service contracts for its projects.

GE has witnessed a series of disasters last year, not to forget the dividend cut announced last November.

The only relief for the company is that this new rule will not have any negative impact on the company’s cash flow that has been a major concern over the past few quarters. The company has witnessed a series of disasters last year, not to forget the dividend cut announced last November.

GE had recently ousted its longtime CEO Jeff Immelt, who was replaced by John Flannery. Flannery plans to report its earnings based on this new rule, from the first quarter of this year.