Running head: BOEING FINANCIAL STATEMENT ANALYSIS
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Boeing Financial Statement Analysis
Dalia Morales
ACC 205
James Christopher
February 24, 2013
February 2013
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BOEING FINANCIAL STATEMENT ANALYSIS
BOEING FINANCIAL STATEMENT ANALYSIS
Boeing is the world's leading aerospace company and is one of the largest US exporters
in terms of sales. Boeing provides products and services to customers in 150 countries. Boeing
is best recognized for its commercial jetliners and defense, space and security systems. Boeing
is the world's second chief weapons manufacturer and the main contractor for NASA.
The Boeing Company functions in four principal segments: Commercial Jetliners,
Military Aircraft and Missile Systems, Space and Communications and Boeing Capital
Corporation (BCC). The commercial jetliner operations involve the production and
development, and marketing of commercial jet aircraft and providing related support services.
Military Aircraft and Missile System operations primarily involve research, development,
production, modification and support of military aircraft, both land-based and aircraft-carrierbased, as well as helicopters and missiles. Space and Communications operations primarily
involve research, development, production, modification and support of space systems, missile
defense systems, satellites and satellite launching vehicles, rocket engines and information and
battle management systems. BCC is primarily engaged in the financing of commercial and
private aircraft and commercial equipment.
Amongst some of Boeings models that where manufactured where during World War II
when the U.S. Army Air Corps became the U.S. Army Air Forces (USAAF), Boeing produced
the country’s most important heavy bombers to serve the USAAF. They built the B-17, B-29
(1942) and B-25 Mitchell (1942); produced the C-47 and several other crucial military transports
and medium bombers. In 1940, the B-17 Flying Fortress was entered into combat to support the
war. Additional aircraft are the CH-47 Chinook helicopter (1961); and the 777-300 jetliner
(1997) (Boeing Company, 1995-2013).
February 2013
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BOEING FINANCIAL STATEMENT ANALYSIS
The company was founded in 1916 near Seattle, Washington, by William E Boeing, as
the Pacific Aero Products Company. Renamed the following year, the company constructed its
first seaplane and in 1919 set up an airmail service between Seattle and Victoria, Canada (Boeing
Company, 1995-2013).
Boeing bought US aircraft manufacturers McDonnell Douglas in 1997 for $16.3 billion,
to produce the world's largest aerospace company, developed around three-quarters of the
world's commercial airliners. The same year it unveiled its 777-300 jetliner, the world's longest
and largest twin-engine aircraft of its kind. The company had 198,900 employees worldwide in
2001 (Boeing Company, 1995-2013).
Boeing has numerous operations in various states and countries around the world. Their
assets are quite extensive. The asset structure contains more than a few different types of assets
which consist of current assets, property and equipment to customer and commercial financing
and deferred income tax.
From 2002 to 2003 there were some changes in the assets listed on the balance sheet.
Overall the total assets increased by 693 million. The largest increase in any category was in the
cash and cash equivalents portion of the current assets. This category almost doubled escalating
from $2,333 million in 2002 to $4,633 million in 2003. Other categories stayed reasonably
steady.
Boeing 's Current Assets
Cash & cash alike
Accounts receivable
Current portion of customer & commercial financing
Income taxes receivable
Deferred income taxes
Inventories, net of advances, progress billing & reserves
Millions
4,633
4,515
8.57
199
1,716
5,338
% of total assets
8.74%
8.51%
1.62%
0.38%
3.24%
10.07%
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BOEING FINANCIAL STATEMENT ANALYSIS
These combined assets make up 32.54% of Boeings total assets. The residual assets
make up the other 67.45%. The total for the collective assets is $17,258 million. From the 2003
Boeing Annual Report: Cash and cash alike consist of highly liquid instruments, such as
certificates of deposit, time deposits, and other money market instruments, which have maturities
of less than three months. The company combined there cash balances by the bank, and
reclassified any negative balances to a liability account presented as a component of accounts
payables.
Boeing finances aircraft purchases for their customers. They include the financing on the
balance sheet as an asset. Boeing holds the aircrafts, or titles to the aircraft and equipment as
guarantee of payment. This line item in the balance statement signifies 22.8% of the total assets.
This item is second only to all combined current assets with a total value of $12,094 million.
Liquidity Ratios
Current Ratio: 0.94 times
A current ratio of this amount is a concern for Boeing. The company would not be able
to easily dispose of its assets and be able to cover the debt that is due by the next year. However,
this year's ratio is an improvement over the previous 2002 current ratio of 0.85. Boeing's current
ratio has steadily improved since 2001 when it was at a low of 0.79. The 9-11 terrorist event
altered the travel industry severely which in turn affected Boeing. In 2000 Boeing's current ratio
was 0.87. Though the 2003 ratio is not greater than 1.0, it is higher than the ratio in 2000, which
was a good year for Boeing.
Quick Ratio: 0.64 times
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BOEING FINANCIAL STATEMENT ANALYSIS
The quick ratio validates the problem discussed in the current ratio section. Taking out the
inventory makes the picture even lifeless. The quick ratios for 2002 (0.53), 2001 (0.45), and
2000 (0.51) confirms what was shown with the current ratios for those years.
Cash flow liquidity Ratio: 0.46 times
At first glance this doesn’t look well, however, in the following years the ratios were
2002; 0.33, 2001; 0.22 and 2000; 0.37. The ratio in 2001 confirms that it wasn’t a successful
year for Boeing, but 2002 and 2003 have shown an increasing performance.
Profitability Ratios
2003
2002
2001
Gross Profit Margin
12.24%
14.96%
15.65%
Operating Profit Margin
0.89%
6.40%
6.16%
Net Profit Margin
1.42%
0.91%
4.86%
Looking at these profitability ratios we can see that there are some major concerns with
the numbers in 2003. Sales have progressively decreased since 2001. This is mainly due to the
attacks of 9-11. Boeing had several orders canceled or suspended due to these attacks which are
still showing the impact on their income statements. Another hit that Boeing took was a $913
million dollar hit in the goodwill impairment. If that solitary expense had not been in the
statement, the operating profit would have jumped to 2.7%. That is still 1/3 the value of what it
was in 2001 and 2000. With the decrease in sales, the expenses and costs remained the same and
the charge for goodwill impaired it all an unsuccessful year for Boeing in profits.
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BOEING FINANCIAL STATEMENT ANALYSIS
Boeing Balance Sheet for December 31, 2003
Type of Assets
2003
2002
Cash & Cash Equivalent
8.74
4.46
Account Receivable
8.51
9.57
Current Customer & Commercial Finance
1.62
2.46
Income Tax Receivable
0.38
0.00
Deferred Income Tax
3.24
3.90
Inventory, Net Advance, Billing & Reserve
10.07
11.81
Total Current Assets
32.54
32.20
Customer & Commercial finance net
22.80
20.87
Property, Plant & Equip
15.90
16.75
Goodwill
3.61
5.27
Other Acquired Intangibles, net
1.95
2.16
16.11
12.75
Deferred Income Tax
2.34
4.34
Other Assets
4.75
5.67
100%
100%
Accounts payable & other Liability
25.57
26.25
Advance in excess of related costs
6.53
5.97
Income taxes payable
0.52
2.17
Short-term debt & current portion of long term debt
2.16
3.47
Total current Liabilities
34.78
37.85
Accrued retiree health care
10.83
10.38
Prepaid pension expense
Liabilities and Shareholders' Equity
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BOEING FINANCIAL STATEMENT ANALYSIS
Accrued pension plan liability
12.50
11.98
1.46
1.04
24.94
24.05
Shares issued 1,011,870,159
9.54
9.67
Additional paid in capital
5.43
4.09
Deferred lease income
Long term debt
Shareholder equity
Common Shares, Par value $5.00 1.2 Billion Shares authorized
Treasury Shares, at cost 170,383,053 & 171,834,950
Retained Earnings
$ (15.69) $ (16.04)
27.17
27.25
Accumulated other comprehensive income loss
$ (7.82) $ (7.73)
Share value trust shares
$ (3.28) $ (2.53)
Total Shares holder equity
Boeing Income Statement December 31, 2003
2003
Sales & other Operating Revenue
100%
Cost of Product & Services
86.88
Boeing Capital Corp. Interest Expense
0.88
Gross Profits
12.24
15.35
14.70
100%
100%
2002
100%
84.29
0.76
14.96
2001
100%
83.79
0.56
15.65
As the top U.S. exporter, the company supports airlines and U.S. and allied government
customers in 150 countries. Boeing products and tailored services include commercial and
February 2013
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BOEING FINANCIAL STATEMENT ANALYSIS
military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced
information and communication systems, and performance-based logistics and training.
Boeing employs more than 170,000 people across the United States and in 70 countries.
This represents one of the most diverse, talented and innovative workforces anywhere. Boeing
is organized into two business units: Boeing Commercial Airplanes and Boeing Defense, Space &
Security. Supporting these units are Boeing Capital Corporation, a global provider of financing
solutions; the Shared Services Group, which provides a broad range of services to Boeing
worldwide; and Boeing Engineering, Operations and Technology, which helps develop, acquire,
apply and protect innovative technologies and processes.
Boeing Capital Corporation is a global provider of financing solutions. Working closely
with Commercial Airplanes and Defense, Space and Security, Boeing Capital Corporation
arranges, structures and provides financing to facilitate the sale and delivery of Boeing
commercial and military products. With a year end 2012 portfolio valued at approximately
$4.1 billion, Boeing Capital Corporation combines Boeing's financial strength and global reach,
detailed knowledge of Boeing customers and equipment, and the expertise of a seasoned group
of financial professionals bringing together the cutting edge of technology to our industry
(Boeing Company, 1995-2013).
February 2013
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BOEING FINANCIAL STATEMENT ANALYSIS
References
(1995-2013). Retrieved from Boeing Company: http://www.boeing.com
(1999). Retrieved from Boeing Company:
http://www.boeing.com/companyoffices/financial/finreports/annual/99annualreport/
(2000). Retrieved from Boeing Company:
http://www.boeing.com/companyoffices/financial/finreports/annual/00annualreport/
(2001). Retrieved from Boeing Company:
http://www.boeing.com/companyoffices/financial/finreports/annual/01annualreport/
(2002). Retrieved from Boeing Company:
http://www.boeing.com/companyoffices/financial/finreports/annual/02annualreport/
(2003). Retrieved from Boeing Company:
http://www.boeing.com/companyoffices/financial/finreports/annual/03annualreport/
February 2013