Introduction
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 main question of the study is how financially well the company is at the moment and what investment expectation it generates on the market nowdays.
The Boeing Company background
The company was originally founded by William Boeing on July 15, 1916, as "The Pacific Aero Products Company". Two years later it was renamed into “The Boeing Company”, on May 9, 1917. Since that date the company grew and acquired a lot of its competitors, including the McDonnell Douglas in 1997.
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The Boeing’s structure consists of two main divisions and two
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Reasons:
- In comparison to 2008, sales in 2010 increased by $3381 million.
- In comparison to 2008, CGS in 2010 increased only by $1513 million.
Boeing’s 2010 Gross Profit Margin ratio is comparable with the industry norm of 19,7%.
ROA ratio indicates the efficiency with which management has used its available resources to generate income. In 2009 there was a decrease in ROA value, but ROA in 2010 matches the industry average. That means that assets in 2010 were used efficiently.
ROS ratio indicates the profitability generated from revenue and hence is an important measure of operating performance. In 2010 return on sales reached the highest value of 5,14%. This indicates that the earning power of the business improved in 2010, but it’s still below the earning capacity of an average firm in the industry. Reasons for increase:
- In comparison to 2008, operational income in 2010 increased by $983 million. - In comparison to 2008, sales in 2010 increased by $3381 million.
The decline in ROA, ROS, Gross Profit Margin and OIRI in 2009 was caused by the decline in Net Income from $2676 to $1312. In 2009 the company to write off $2.7 billion because it considers the first three Dreamliners built unsellable and suitable only for flight tests. These expenses could be found in income Statement as R&D expenses. R&D increased in 2009 by $2738 million in comparison to 2008 and resulted in significant
RETURN ON ASSETS (ROA) Formula Description: You determine return on assets by dividing net profit by your total asset base. What Does Return On Assets Tell You?
The Boeing Company designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. It operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital. The Commercial Airplanes segment develops, produces, and markets commercial jet aircraft for various passenger and cargo requirements; and provides related support services to the commercial airline industry. This segment also offers aviation services support, aircraft modifications, spare parts, training, maintenance documents, and technical advice to commercial and government customers. The Boeing Military Aircraft segment researches, develops, produces, and modifies manned and unmanned military aircraft, and weapons systems for global strike, vertical lift, and autonomous systems, as well as mobility, surveillance, and engagement. The Network & Space Systems segment researches, develops, produces, and modifies strategic defense and intelligence systems, satellite systems, and space exploration products.
* Return on Sales (ROS) – ROS is the percentage of each dollar of sales that is left as a profit. For example if a company has $100 in revenue and $20 in profit, at the end of the period they have a ROS of 20%. ROS is best used when compared to other companies within the same industry. This is because different industries can have different levels of ROS depending on the competitiveness level. Competiveness can drive prices down overall in the industry, which will drive down ROS for all companies. A high ROS can indicate premium pricing in the industry or great efficiency where as a low ROS can be an indicator of financial trouble such as a company slashing prices just to garner
Given the net sales in 2011 is still higher than 2010, we can assume the problem is most likely with its operating cost management. On the other hand, HH’s assets turnover rate dropping 0.30 from 2010 suggests an inefficiency of generating more sales with its increased assets in 2011.
ROA is considered the best overall indicator of the efficiency of assets used in a company. Home Depot and Lowe’s ROA ratio both moved down due to the downturn in the industry but Home Depot was able to improve 2010.
The Return on Assets ratio is a basic measure of the efficiency with which TCI allocates and manages its resources (assets) to generate earnings. With a 20% projected increase in sales, for 1996, we calculated TCI’s ROA to be 12.95%, and 12.11% for 1997. Although this isn’t an extremely high ROA, TCI will be allocating its resources very wisely with the expansion of its central warehouse. If MidBank lends them the cash they need to complete this project, their central warehouse will be able to hold more tires for their increasing sales, which will then convert into profit. A true test of TCI’s ROA will be after 1998, when the warehouse is complete, so you can see just how well they can convert an investment into profit.
Net profit of about $0.04 is made on each dollar of sales. They need to lower their costs, so
I have researched the company’s financial reports. There will be a financial analysis of the company comparing its present to past two years’ performance and to the performance of its major competitors.
Review of Financial Research Report: This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment. The report is due in Week 10, in needs to be at least 5 pages, and it needs to cover the following topics:
| For every $1 in assets, the company generates 10.8 cents net income-in accounting terms, which gives us a return of 10.8% and is considered highly effective in such business
During this period, the Return on Assets increased from 5.7% in 2012 to 34.6% in 2013. This implies the number of cents earned on each dollar of assets increased from 2012 to 2013. This shows that the business has become more profitable. Equally, the Return on Equity also increased from 12.0% in 2012 to 46.5% in 2013. This similarly implies that the company in 2013 was more efficient in generating income from new investment. This, also can be attributed to the sale of the Digital Business Brand which enabled the company appraise its strategic plan.
THE BOEING COMPANY: STRATEGIC AUDIT I. CURRENT SITUATION A. Current Performance Boeing performance has been outstanding for the past few years. Their Return on investment rose from three percent to 6 percent from 1998 to 1999, but it did drop to five percent in 2000. In 1996 Airbus claimed 42% of the market share, while Boeing had 64%. Boeing is looking at falling below the 50% mark. Boeing's profits have been doing quite well. They have risen drastically in the past few years, which can be seen in the profitability ratios. Boeing is doing fine when it comes to profitability, even though they have dropped slightly since 1999.
Boeing Company has been and is still at the forefront of the aviation industry. The late 1990s were a time of trial and transition where the company encountered and overcame a number of
The Boeing Corporation is one of the largest manufacturers in the world. Rivaled only by European giant Airbus in the aerospace industry, Boeing is a leader in research, design and manufacture of commercial jet airliners, for commercial, industrial and military customers. Despite enjoying immense success in its market and dominating an industry that solely recognizes engineering excellence, it is crucial for Boeing to ensure continued growth through consistent strategy formulation and execution to avoid falling behind in market share to close and coming rivals.
* As a percentage-return measure, ROA is comparable to cost-of-capital and market rate of return measures.