Bombardier Case: Financial Analysis

1347 Words6 Pages
Bombardier Case - Financial Analysis

**please note that units in this financial analysis are in the $ millions.

1. Describe Bombardier’s current liquidity position (from balance sheet and note on their bank credit facility). Do you think they have sufficient liquidity?

CURRENT RATIO QUICK RATIO
CA = 9863 =1.0502 CA- INVENTORY = 9863 – 3805 = 0.6451 CL 9391 CL 9391

CASH RATIO
CASH = 2917 = 0.310 CL 9391 Current asset(CA) consists the following items: Cash &Cash equivalent, Receivables, Aircraft Financing, and Inventory.
Current Liability(CL) consists the following items: Accounts payable
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5. What is Bombardier’s “free cash flow” amount for FY 2006?

PDF p.47 Free Cash Flow= 532 million
The free cash flow is how much money a company could pay shareholders out of profits without expanding. Bombardier’s free cash flow amount for year 2006 is 532 million dollars. This means that bombardier is able to pay 532million dollars to shareholders without expanding. This is not much considering Bombardier has 1,745 million common shares, and each dividend per share is about 1.34$(average of 3 series of shares), dividend paid is 2349 million. PDF pg73.

6. From the explanation provided in the MD&A, what segment of their business are they attributing the decrease in revenues to?

From the explanation provided in MD&A, the decrease in revenue ($690million) is from decreased mainline revenue in U.K and Germany, lower deliveries of region aircraft, lower volume of pre-owned business aircraft sales, which is partially offset by higher deliveries and improved selling prices of business aircraft.

7. From the Aerospace section of the MD&A, what goals/strategy are they focusing on for the next few years?
From the Aerospace section of MD&A, their goals/ strategy they are focusing on for the next few years are: to improve EBIT(operating income) margin to 8% over the next two to four years, and improved and sustained profitability will be achieved through focusing all employees on three priority and targeted
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