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Sales Growth: Boeing Sales Analysis

Essay by   •  December 1, 2015  •  Case Study  •  626 Words (3 Pages)  •  1,412 Views

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Sales Growth: Boeing sales have increased from 64,306mil in 2010 to 90,70mil in 2014 which represents a 36.5% increase over the last 5 years.

Profitability Ratios:-

  • Boeing’s profit as a percentage of sales in 2014 was 6 % while it was 5.14% in 2010 which represents a slight increase of 0.86% from 2010.
  • The improvement in Profitability resulted from a signification decrease in operating expenses from 11.65% in 2010 to 7.20% in 2015 as percentage of sales. An increase took place in the cost of goods sold as a percentage of sales in the last 5 years.
  • Boeing has a total of $ 99198mil of capital at year-end 2014 and earn before interest but after taxes (EBIAT) $ 9376mil during 2014. Its return on capital was 26.99% in 2014 which represents an increase from the 24.38% earned in 2010.
  • Boeing had $ 8,665 mil   of owner’s equity and earned $ 5446 mil after taxes in 2014. Its return on Equity was 46.27%, which represents deterioration from the 135.15% earned in 2010 but it’s still above the average return on equity ratio of the Aerospace industry 20.72%.
  • Boeing’s return on asset’s ratio was 5.49% in 2014, compared to 4.82% in 2010. The industry return on asset’s ratio was 7.35%.

Activity Ratios:-

  • Total assets turnover for Boeing in 2014 can be calculated by dividing $90762 into $99198, the assets turnover slightly deteriorated from .98 times in 2010 to .95 times in 2014.
  • Boeing had $ 7729 invested in accounts receivable at year-end 2014. Its average collection period was 28 days in 2014 and this represents an improvement from the average collection period of 31 days in 2010.
  • Boeing apparently needed $ -4330   of inventory at year-end 2014 to support its operations during 2014. Its activity during 2014 as measured by the cost of goods sold was $ 76752 mil. It therefore had an inventory turnover of   1.64 times. This represented deterioration 2.13 times in 2010.
  • Boeing had net fixed assets of $ 26696 mil and sales of $ 90762 mil   in 2014. Its fixed asset turnover ratio in 2014 was .95 times, deterioration from .98 times in 2010.

Leverage Ratios:-

  • The total liabilities of Boeing as December 31 were $ 90533 mil or 91.2% of total assets. This represented a decrease from 95.9% as of December 2010.
  • The market value of Boeing’s equity is 115,003mil at 31 December 2014 and its total debt ratio at market was 0.94.

  • Boeing’s earnings before interest and taxes were 7473mil in 2014 and its interest charges were 333mil. Its times interest earned was 22.34 time. This represents an improvement from the 2010 of 9.73 times.
  • Boeing owed its suppliers $10667mil at year-end 2014. This represented 13.89% cost of goods sold and was a decrease from 14.88% at year-end 2010. The company appears to be more promoting in paying its suppliers in 2014 than it was in 2010.
  • The financial riskiness of Boeing decreased between 2010 and 2014.

Liquidity Ratios:-

  • Boeing held $ 67785mil of current assets at year-end 2014 and owed $56717 to creditors due to be paid within one year. Its current ratio was 1.2, an increase   from the ratio of 1.15 at year-end 2010 which is slightly below to the overall Aerospace industry’s current ratio (1.26).
  • The Quick ratio for Boeing at year-end 2014 was 0.37, deterioration from the ratio of 0.45 at the year-end 2010 but it’s still below the average Aerospace  industry’s Quick ratio (0.71).
  • Boeing’s Debt/Equity ratio was 0.94 in 2014, which is above the average Aerospace industry’s Debt/Equity ratio (0.48).
  • Boeing’s Debt to Capital’s ratio was .82 in 2010 and declined to .51 in 2014 but still above the Aerospace industry’s Debt/Capital’s ratio .32 for the year 2014.

 

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