Financial Ratios Of The Airline Company Jet Blue And What Ratios Mean For That Business Moving Forward

1. What is the purpose of financial statement analysis? The purpose of financial statement analysis is to provide information used by the business, potential creditors and investors.

Financial Statement Analysis is the process of reviewing and analyzing a company’s financial statements to make better decisions. These statement includes the Income statement, Balance sheet, Statement of cash flows and a statement of changes in equity.

The analysis of financial statements is based on the use of ratios or relative values. Financial statements are used to evaluate the condition of a firm and its financial performance. The measurement and evaluation of information presented in the financial statement is known as analysis and interpretation of financial statement, of which is the relationship between financial statements and decision making process.

A financial statement audit involves obtaining and evaluating evidence about an entity 's presentation of its financial position, results of operations, and cash flows for the purpose of expressing an opinion on whether they are presented fairly in conformity with established criteria according to the GAAP (Boynton & Johnson, 2006). Financial statements are released to stockholders, creditors, regulatory agencies, and the general public. Financial audits give lenders information on the company to help with their decision.

The goal of the study is to provide overall financial statement overview of The Boeing Company using the knowledge obtained during the Financial Management course.

The information found in financial statements outlines the financial activities of that company, and can help managers, creditors, and investors make many important decisions.

The airline industry is an extremely competitive industry and is also a highly seasonal industry. Profit can be drastically affected by fluctuations in energy prices or economic downturns (Maverick, 2015). Key financial metrics utilized by analysts in the airline industry include the quick ratio, the return on assets ratio and the debt capitalization ratio, which was already covered earlier (Maverick, 2015).

We are going to assess profitability ratios for 2014 year, including gross profit margins, return on sales, return on total assets, return on stockholder’s equity, and earnings per share. Next we are going to discuss liquidity ratios – current ration, quick ratio. Our analysis will include leverage ratios such as debt-to-equity ratio, interest coverage. Also, we will cover activity ratios including inventory turnover, fixed asset turnover, total assets turnover and accounts receivable turnover. Lastly, we will assess the price/earning ratio, the book value per share ratio, and the cash flow per share ratio.

Another factor we need to look at in our comparison is long-term debt and leverage. Times interest earned, debt to debt + equity ratio, and debt to total assets ratio are the focus of long-term debt and leverage. Times interest earned provides the relationship between the companies’s earning to cover interest payment and also ability to take in more debt. In calculations above, both companies are capable of paying back interest payments and take more debts. However, Boeing has higher ability to take in more debt and pay back interests comparing to Lockheed Martin. By further examine the long-term debt and leverage, debt to debt + equity and debt to total asset ratios must also be assess. These ratios will provide a comparison on the amount

Financial Statement Analysis “Mom, I want to purchase stocks in the Boeing by my money.” My son, a 12-year-old boy, told me a few month ago. His dream job is a pilot, and he has been a big fan of airplanes. The first thing he would like to do in the U. S. was to join the Boeing factory tour, and his most favorite museum is The Flight in Seattle, sponsored by the Boeing. Four years have passed since we have been in Portland, but it seems that his interest has never changed.

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

Financial ratios are "just a convenient way to summarize large quantities of financial data and to compare firms' performance" (Brealey & Myer & Marcus, 2003, p. 450). Financial ratios are very useful tools in order to determine the health of a company, help managers to make decision, and help to compare companies that belong to the same industry in order to know about their performance.

Financial statements are a very useful tool for individuals interested in the organization. Investors use the information to determine if it a wise decision to put their money into the organization. Investors need to determine if the organization has been successful and profitable and will continue to be successful and profitable. Creditors use the financial statements to determine the amount of credit that should be advanced to the organization. Employees generally do not look at the financial statements, but if a new executive was thinking of joining the organization, he or she may want to see the potential of the organization to make sure the investors are becoming a part of a successful organization. Management uses the financial statements on a monthly basis to determine which areas of the organization are profitable and which areas of the organization that needs to be discontinued or restructure to become more profitable.

have explained that the Financial statements provide asummarized view of the financial position and operations of a firm. Therefore, much can belearnt about a firm from a careful examination of its financial statements as invaluabledocuments / performance reports. The analysis of financial statements is, thus, an important aidto financial analysis.

The Purpose of Financial Statements The financial statements of a business are used to provide information about the status of the business, set performance targets and impose restrictions on the managers of the firm as well as provide an easier method for financial planning. The financial statements consist of the Profit and Loss Account, Balance Sheet and the Cash Flow Statement. There are four areas of information, which we can collect from a company's financial statements. They are: Ÿ