Using the ratio definitions from Exhibit 4.6, calculate the financial ratios for the Boeing Company and determine whether the company is a good investment. Assume an effective tax rate of 20 percent Analyzing Financial Statements. Presented below are selected financial data from the 2018 annual reportof The Boeing Company:P4.27TA 2(amounts in millions)20182017Balance sheetCash and cash equivalents..Marketable securitiesAccounts receivable (net).Inventory..Total current assets..Total assets..Current portion of long-term debtTotal current liabilitiesLong-term debt.Shareholders' equity$ 7,63792713,90462,56787,830117,3592,69081,5908,501410$ 88131,17911,08861,38885,194112,36243574,4688,0211,713Income statementNet sales..Cost of goods soldInterest expense.Net income before taxes.Net income$101,12781,421475$ 94,00576,54236011,60410,46010,1078,458RequiredUsing the ratio definitions from Exhibit 4.6, calculate the financial ratios for The Boeing Company and deter-mine whether the company is a good investment. Assume an effective tax rate of 20 percent. loge BusiPercentage of total assets held as highly lqutRate of return generated on s companysnwNumber of production/sales cydles peteroNumber of sales/collection cycles experencetNumber of days required, on average, to colesales after subtracting all expenses. Oten tPercentage of income generated from sChapter 4I Using Financial Statements for lnvesling ndEXHIBIT 4.6Key Financial RatiosRatioDefinitionExplanationProfitability• Retum on shareholdersequity (ROE)Bate of return generated by a busineCemNet income-Prefened stock dividendsShareholders equityshareholders.EXNet income [interest expense (1- Tax rate)]Total assets• Return on assets (ROA)assets from all sourcesRatProGraFletRetPercentage of net income remaining• Retum on sales (ROS)Net incomeNet salesreferred to as "net profit margin(Net sales-Cost of goods sold)Net sales• Gross profit margin ratiodeducting the cost of goods soldRetReAsset Management• Receivable turnoverAReNet salesfirm.ReAccounts receivable365Receivable collectionperiodoutstanding account receivable(Net sales/Accounts receivable)Cost of goods soldInventory• Inventory tumoverfirm.• Inventory-on-handperiodNumber of days, on average, required to sInventory currently on hand365(Cost of goods sold/Inventory)Amount of sales generated from each doler• Asset turnoverNet salesin assets.Total assetsLiquidity• Cash and marketablesecurities to total assets(Cash+Marketable securities)Total assetsAmount of liquid assets available to pay shonliabilities.• Quick ratio(Cash Marketable securities Accounts receivable)Current liabilitiesAmount of current assets available to seniceliabilities.• Current ratioCurrent assetsCurrent liabilities• Accounts payableCost of goods soldAccounts payableNumber of accocunt payment cycles experiecturnoverfirm.• Days' payable periodNumber of days, on average, required to payoutstancling account payable.365Cost of goods sold/Accounts payableSolvency and CapitalStructure• Financial leverageTotal assetsRelative size of total assets to total sharehoioesequity.Shareholders' equityPercentage of total assets provided by longncreditors.• Long-term debt to total(Long-term debt + Current portion of long-term debt)assetsTotal assets• Long-term debt toshareholders' equity(Long-term debt+Current portion of long-term debt)Shareholders' equityRelative investment of long-term creditos venashareholders in a business.Extent to which current operating income covcurrent debt service charges.• Interest coverage ratioNet income before taxes+Interest expenseInterest expense

Ratio analysis is a technique through which an investor is able to analyze the company's financial…

P4.27 Analyzing Financial Statements. Presented below are selected financial data from the 2018 annual report of The Boeing Company: (amounts in millions) 2018 2017 Balance sheet Cash and cash equivalents. Marketable securities Accounts receivable (net) Inventory.. Total current assets. Total assets. Current portion of long-term debt Total current liabilities Long-term debt. Shareholders' equity. $ 8,813 1,179 11,088 61,388 85,194 112,362 435 74,468 8,021 1,713 $ 7,637 927 13,904 62,567 87,830 117,359 2,690 81,590 8,501 410 ... Income statement Net sales.. Cost of goods sold Interest expense. Net income before taxes. Net income $ 94,005 76,542 360 10,107 8,458 $101,127 81,421 475 11,604 10,460 Required Using the ratio definitions from Exhibit 4.6, calculate the financial ratios for The Boeing Company and deter- Assume an effective tax rate of 20 percent.

P4.27 Analyzing Financial Statements. Presented below are selected financial data from the 2018 annual report of The Boeing Company: (amounts in millions) 2018 2017 Balance sheet Cash and cash equivalents. Marketable securities Accounts receivable (net) Inventory.. Total current assets. Total assets. Current portion of long-term debt Total current liabilities Long-term debt. Shareholders' equity. $ 8,813 1,179 11,088 61,388 85,194 112,362 435 74,468 8,021 1,713 $ 7,637 927 13,904 62,567 87,830 117,359 2,690 81,590 8,501 410 ... Income statement Net sales.. Cost of goods sold Interest expense. Net income before taxes. Net income $ 94,005 76,542 360 10,107 8,458 $101,127 81,421 475 11,604 10,460 Required Using the ratio definitions from Exhibit 4.6, calculate the financial ratios for The Boeing Company and deter- Assume an effective tax rate of 20 percent.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject Finance
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