Boeing Bond Analysis

3021 Words Apr 8th, 2013 13 Pages
Boeing
Bond Analysis

Presented to
Dr. -----

Prepared by
Filipe Ferro

October 9, 2012

Table of Contents
Boeing Company 3
Bond Issue 3
Unsystematic Risk 4
Principal Repayment 4
Debt to Invested Capital 4
Debt to Equity 4
Current & Quick Ratios 5
Interest Repayment 5
Times Interest Earned 5
Credit Position 6
Competitor Analysis 6
General Dynamics 6
Northrop Grumman 7
Systematic Risk 7
Market Responsiveness 7
Duration 8
Modified Duration 9
Accuracy of Rating 9
Interest Rate Expectations 9
Summary 10
Appendix 11
Descriptive Statistics 11
Regression Analysis 11
Duration & Modified Duration 12
References 13

Boeing Company Boeing is a manufacturer of aircrafts and national defense
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If bankruptcy occurs, debentures will be the last of debt holders to get paid. Although it is not exactly good to have this somewhat high ratio, knowing that Boeing has a brand new and appealing aircraft reassures that positive future cash flows will cover this financial leverage. S&P’s NetAdvantage highlights the potential sales to emerging airlines from China and airlines with old worn out planes in the U.S. and Europe. S&P’s industry survey states “China, India, the Middle East, Eastern Europe, and Latin America, will drive growth in global air travel and demand for new aircraft.”4 The market for aircraft purchases looks like it will grow in the coming years, thus Boeing will have greater opportunities for sales.
Current & Quick Ratios The current assets to current liabilities ratio was 1.22 for the 4th quarter of 2011, which means every $1 in current liabilities is covered by $1.22 in current assets. Boeing has enough current assets to pay off all its current liabilities if it needed to do so. The current ratio has been 0.9 for 2007, 0.8 for 2008, 1.1 for 2009, and 1.1 for 2010. The current ratio has been on an upward trend since 2008 which would imply added financial security in forecasts. But the current ratio assumes that a company’s current assets are highly

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