Finance Policy Recommendation and Pro Forma Budget: Boeing

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Finance Policy Recommendation and Pro Forma Budget: Boeing
Henry Aguirre, Patrick Buckley, Sheri White-Manning, Ted Ortiz, and Becky Wilson
FIN 571
June 5, 2013
Dr. Tom NeSmith

Boeing Working Capital Policy Analysis
Boeing is an aerospace cooperation that has been around since 1916. William E. Boeing, and a former U.S. Navy officer named Conrad Westervelt discovered the cooperation. They started out with a two seated single-engine seaplane called B&W. About a year later, the company was known as the Boeing Airplane Company. During the 1920 through the 1930s, the company sold several types of planes and their patrol bombers to the United States military. Around 1928 Boeing Airplane & Transport Corporation was
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From this statement we can conclude that the increase in current assets appears to be from a continued influx of cash and marketable securities. The same report also states that Boeing, “added $114 billion in new orders, expanding our record company backlog to more than $390 billion – nearly five times current annual revenues” (Boeing, 2012). From this statement we can assume that the large backlog of orders could be the culprit for the continued low working capital turnover rate.
To determine the working capital strategy Boeing, Co. should shift to, it is important to determine which strategy they have been using for the last five years. The decrease from 28.55% to 6.63% in five years seems to resemble an aggressive approach. To know for sure lets determine the amount of financial leverage the firm is using. This can be done using financial leverage ratios. According to Emery, Finnerty, and Stowe, the most commonly used ratios are the debt ratio, debt/equity ratio, and the equity multiplier (2007, p. 64). The debt ratio is simply: TOTAL DEBT/TOTAL ASSETS = DEBT RATIO PERCENTAGE. These ratios are different representations of the same information, and if anyone of them is known the other two can be determined

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