The Boeing Company Financial Health

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.

The Boeing’s structure consists of two main divisions and two supporting divisions:

- Boeing’s Commercial Airlines (BCA)

- Boeing Defense Space & Security (BDS), which in turn consists of:

o Boeing Military Aircraft

o Network & Space Systems

o Global Services & Support

- Boeing Capital Corporation (BCC)

- Other segments (including own Fire department and other non-profile activities)

The Boeing Company’s Commercial Airliners division took the leading market positions up to 2003.

Financial Ratios Analysis

Liquidity

Boeing’s liquidity ratios increased in 2010 and 2009 in comparison to 2008 values, but current and acid-test ratios are still below the industry average. Reasons:

- the amount of money and short-term investments increased in 2010 and 2009

- accounts payable and other accrued liabilities value decreased in 2010 and 2009

In terms of current and acid-test ratios, Boeing is less liquid than average firm in the aerospace industry. However the current ratio appears to suggest more liquidity than the acid-test ratio. This could be explained by the fact that Boeing carries more inventory relative to current debt than does an average firm.

1 Liquidity

Asset management

Inventory turnover ratio decreased in 2010 in comparison to 2008 and 2009, because the inventories’ value increased in 2010 up to $24317 million. Bearing in mind that the acid test ratio is below the industry norm, Boeing is holding the excessive inventory. It means that funds which could be invested elsewhere are being tied up in inventory. In addition,