Financial Statement Analysis of Boeing

Are all assets earning the required rate of return?

Use of government incentives and overall performance

Ability to pay current liabilities with cash

Ability to pay current liabilities with current assets.

Percentage of assets quickly accessible.

Ability of equity to cover unsecured debt

Efficiency of working capital usage.

Is the firm borrowing to pay the interest on its debt?

The return on equity is the basic measure of the financial benefit management is earning for the stockholders. Boeing has a return on equity that is higher than the industry requires two out of three years. This is particularly good considering the stockholder perception that Boeing i

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f current liabilities over current assets. Boeing may need to reconsider its short-term debt structure. The ratio of current liabilities to equity begins to shed light on the cause of BoeingÆs working capital crunch. Though still more than twice the industry average, this ratio has decreased substantially between 2003 and 2004. Boeing seems to be trying to reduce liabilities rather than borrow to acquire more assets. Long-term debt is also decreasing. It would be expected that Boeing would have a larger debt to equity ratio for two reasons. First, it is a larger firm. It has the ability, therefore, to negotiate better terms with lenders and therefore has a lower cost of capital. Secondly, Boeing is viewed as a relatively safe company to invest in. It can thus increase its leverage without becoming more risky than its competitors, and earn more for its stockholders. BoeingÆs under-performance in the revenues to total assets ratio again suggests that they may have assets that are not performing to industry standards. It also may be a factor of large investments the company has made for research and development facilities for its military contracts. The revenues to working capital took a huge drop in 2003 as various adju
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