Boeing Financial Analysis Essay
Boeing Corporation is a major aerospace and Defense Corporation, founded by William Boeing 1916. Boeings headquarters are located in Chicago, Illinois, USA. Boeing is involved in the production of commercial airliners, military aircraft, munitions, space systems and computer services. Based on revenue Boeing is the largest aircraft manufacturer in the industry-Boeings stock is part of the Dow Jones Industrial Averages and Boeing is the largest exporter in the U. S.
Total revenue changed between 2005 -2006 increased by $6,685,000but also Cost of Goods Sold increased by $4,588,000 in 2006. So the Gross Profit by the end of 2006 increased by $2,097,000 . The main change in operating expenses was non-recurring expense that went from ($520,000,000) to $797,000,000 and also research and development increased by $1,052,000 due to these changes the operating income was lower than in 2005. Boeing co debt decreased by $413,000 at the end of 2006, so due to this the income before tax increased.
Expense from discontinued operations went from ($7000000) to $9000000 , and in 2006 Boeing decreased their net income with no cost of affect of accounting changes that were previously incurred in 2005. Net income decreased by $357000000. Boeing does not hold preferred stock. All net
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Total assets decreased by $8,264,000 and were due to long term investments decreasing during 2006 property plant and equipment decreased. Other assets, on the such as good will and intangible assets increased. Accounts payable decreased by the end of 2006 and on the hand Boeing co. had other current liabilities that increased $5,706,000 due to that total current liabilities increased only $1,513,000. In 2006 Boeing did not have any deferred long term liability charges such as in 2006. Total liabilities’ at the end of 2006 decreased $1,944,000.
In 2006 common stock is the same as in 2005 and retained earning slightly increase.. In 2006 total stockholders equity decreased by $6,320,000 mainly due to the increase in a negative other stock holder equity figure. C) Total cash flow from operating activities at the end of 2006 remained stable, but total cash flow from investing activities in 2006 increased by $3,088,000 mainly due to the change in other cash flows from investing activities that went from $1 ,590,000 to ($1,540,000).
Total cash flows from financing activities decreased by approximately $1bil due to decreasing sale purchase of stock. 4) The price earnings is the relationship between the stock price and the company’s earnings. P/E ratio gives an indication of future of earnings of a company. Boeing price earnings ratio is 17. 35 compared to the industry which is 18. 77 what this means is that the market value of each share would be (17. 35* $1)= $17. 35 the market value of each share f or the industry would be (18. 77*$1)=$18. 77
b) The market/book ratio is the ratio of the current share price to the book value per share. A company with higher market to book ratio is more likely to issue equity, because they have less external financing options but a low market to book ratio means that the company is profitable and will issue more debt. Market to book value is book value which is Total Assets -intangible assets-total liabilities The higher the ratio the company can better manage their short term debt obligations, which doesn’t mean that Boeing has difficulty meeting its current obligations.
Boeing borrowing funds provides financial flexibility; this was the same for 2006. Boeings quick ratio is much lower than the industry’s; increasing debt would not change this but worsen it. Boeings current ratio is 0. 8 which is 80 cents for every dollar of short term liabilities. Boeing may have a short-term asset problem. The problem may be due to high inventory or unproductive use of inventory; this is reflected in its turnover ratios which is considerably lower than the industry.