Boeing Working Capital Ratio Summary

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The working capital ratio measures the difference between the total current assets and current liabilities. My analysis of Boeing’s working capital ratio has shown a steady increase from $2.4 million in 2009 to $8.5 million in 2011. This is a positive indicator that the company has the ability to pay it liabilities. Boeing has a massive $374 billion backlog, amounting to five times 2011 sales. Such strong revenue visibility should allow the firm to adjust production rates and ride out economic downturns (Boeing website 2012). The current ratio takes Boeing’s current assets and divides it by their current liabilities. Boeing has seen an increase in their current ratio over the last three years. In 2009, Boeing’s current ratio was 1.07. Essentially…show more content…
The ratio measures the average number of times receivables have been collected within the year, and is calculated by dividing net credit sales (which are net sales less net cash sales) by the average gross accounts receivable over the past year (Principles of Accounting II 2012). Boeing Co.'s receivables turnover improved from 2009 to 2011. In 2009, receivables were collected about 13.4 times per year with an average collection period for receivables being around 27 days. In 2010, receivables were collected about 11.9 times per year with an average collection period for receivables being around 31 days. In 2011, receivables were collected about 12.9 times per year with an average collection period for receivables being around 28 days. In 2011, Boeing’s competitor Lockheed Martin’s receivables were collected about 7.9 times per year with the average collection period for receivables being around 46 days. Boeing’s receivables turnover ratio numbers are good indicators that the company has had better performance in collecting on debts that are owed to them. Conclusively, the liquidity ratios indicate that Boeing is mainly trending in the right direction and that it would be a good idea to loan money to them in the…show more content…
The earnings per share are relatively neutral and holding steady. This indicates that Boeing is consistently performing at a high level and continues to grow and gain market share through the space and security segment as well as the commercial plane segment. “Boeing posted an unexpected 3 percent improvement in second-quarter 2012 net income on strong sales of commercial airplanes, the results surprised Wall Street” (LaTimes 2012). Boeing continues to maintain its reputation among competitors like Lockheed Martin and remains lucrative to investors by operating a very diverse portfolio of not only commercial and defense aircrafts, but also offering aviation support services such as technical support, air traffic management, developing missile defense system, space and intelligence infrastructure and satellite launch vehicles (Boeing Website

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