Running Head: BOEING 1 Evaluation of Corporate Performance of Boeing Christopher Trumbull BUS/401 Instructor Thomas Biggers March 2, 2014 1.0 Introduction 1.1 Background of Study The public organizations have a huge list of stakeholders, which comprise shareholders, bondholders, bankers, suppliers, employees, and management. These stakeholders are supposed to monitor the activities of the firm and ensure flexibility in the practices by serving their interests. Therefore, they are seen to depend on the company’s financial statements in order to generate the required information (Boeing, 1995). This paper focuses on the corporate performance of Boeing’s Airlines, which is computed on the basis of analysis of the company’s financial statement. Boeing’s Pro Forma financial statements are being proposed in order to calculate if the firm’s anticipated performance is on the same platform with the targets and also to forecast the upcoming financing needs of the company. The paper continues with the overall financial ratio analysis of Boeing’s Airlines, its Return on Equity (ROE) DuPont analysis, and its Economic Value Added (EVA). The following analysis was done in order to calculate the effect of the company’s financial policies and for decision making on the fact that is it safe to invest in the company’s stock or not (Boeing, 1995). 1.2 Overview of Boeing Boeing Corporation is the world's biggest aerospace company and one of the leading manufacturers of airlines, which include commercial jetliners and defense, space and security systems. Researchers suggest that it is the also the highest U.S. exporter and associates itself to supports airlines and the government along with their customers in more than 150 countries. The Boeing products line comprise of commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. Boeing is believed to possess long traditions of aerospace leadership, which show their creativity and innovation. The company therefore wishes to expand its business through its product line and proposed services, which fulfill emerging customer needs. The wide range of abilities includes designing new, better members of its commercial airplane family; enhancing military platforms, defense systems and also the war fighters by imposing network-enabled solutions thereby designing advanced technology solutions and providing better customer-financing options. 1.3 Business Description Boeing Capital Corporation is a world supplier of financing solutions. With its field of connection between Commercial Airplanes and Defense, Space & Security, Boeing Capital Corporation manage the structures and produces financing to carry on the sale and distribution of Boein ...

1. Running Head: BOEING
1
Evaluation of Corporate Performance of Boeing
Christopher Trumbull
BUS/401
Instructor Thomas Biggers
March 2, 2014
1.0 Introduction
1.1 Background of Study
The public organizations have a huge list of stakeholders, which
comprise shareholders, bondholders, bankers, suppliers,
employees, and management. These stakeholders are supposed
to monitor the activities of the firm and ensure flexibility in the
practices by serving their interests. Therefore, they are seen to
depend on the company’s financial statements in order to
generate the required information (Boeing, 1995).
This paper focuses on the corporate performance of Boeing’s
Airlines, which is computed on the basis of analysis of the
company’s financial statement. Boeing’s Pro Forma financial
statements are being proposed in order to calculate if the firm’s
anticipated performance is on the same platform with the targets

2. and also to forecast the upcoming financing needs of the
company. The paper continues with the overall financial ratio
analysis of Boeing’s Airlines, its Return on Equity (ROE)
DuPont analysis, and its Economic Value Added (EVA). The
following analysis was done in order to calculate the effect of
the company’s financial policies and for decision making on the
fact that is it safe to invest in the company’s stock or not
(Boeing, 1995).
1.2 Overview of Boeing
Boeing Corporation is the world's biggest aerospace company
and one of the leading manufacturers of airlines, which include
commercial jetliners and defense, space and security systems.
Researchers suggest that it is the also the highest U.S. exporter
and associates itself to supports airlines and the government
along with their customers in more than 150 countries. The
Boeing products line comprise of commercial and military
aircraft, satellites, weapons, electronic and defense systems,
launch systems, advanced information and communication
systems, and performance-based logistics and training.
Boeing is believed to possess long traditions of aerospace
leadership, which show their creativity and innovation. The
company therefore wishes to expand its business through its
product line and proposed services, which fulfill emerging
customer needs. The wide range of abilities includes designing
new, better members of its commercial airplane family;
enhancing military platforms, defense systems and also the war
fighters by imposing network-enabled solutions thereby
designing advanced technology solutions and providing better
customer-financing options.
1.3 Business Description
Boeing Capital Corporation is a world supplier of financing
solutions. With its field of connection between Commercial
Airplanes and Defense, Space & Security, Boeing Capital
Corporation manage the structures and produces financing to
carry on the sale and distribution of Boeing commercial and
military products. Its portfolio value computes to be

3. approximately $4.1 billion, Boeing Capital Corporation includes
Boeing's financial strength and world reach, along with huge
knowledge of Boeing customers and equipment and great work
by its group of financial professionals.
1.3.1 Boeing’s Brand
In terms of brand Boeing possesses huge value for its name as
one of the world's largest aerospace companies. It is also ranked
two in making large commercial jets under Airbus and defense
contractor under Lockheed Martin.
1.3.2 Boeing’s Products
The company’s aeroplane models serve its customers by
providing seats starting from 100 to 500, with a long list of
cargo freighters. It is therefore the world's leader in operating
large scale of aircrafts. Boeing Aircraft Trading is indulged in
selling and aircrafts given on lease managed from trade, lease
returns and purchase from the secondary market. The designed
aircraft’s fulfill Boeing's high standards with operators who
possess inabilities to purchase brand-new equipment. Boeing
Commercial Airplanes provide huge varieties of models to
governments and military organizations, which are designed for
special commercial operations (Yahoo Finance, 2014).
2.0 Pro Forma Financial Statements of Boeing’s Corp
Period Ending
Mar 31, 2013
Mar 31, 2014
Mar 31, 2015
Total Revenue
22,785,000
23,815,000
24,893,000
Cost of Revenue
20,388,000
18,450,000
19,756,000
Gross Profit
3,397,000

4. 3,365,000
3,137,000
Research Development
848,000
763,000
705,000
Selling General and Administrative
1,033,000
886,000
926,000
Operating Income or Loss
1,515,000
1,716,000
1,528,000
Total Other Income/Expenses Net
14,000
13,000
31,000
Earnings Before Interest And Taxes
1,530,000
1,729,000
1,537,000

5. Interest Expense
96,000
96,000
99,000
Income Before Tax
1,434,000
1,633,000
1,438,000
Income Tax Expense
201,000
546,000
332,000
Minority Interest
-
-
-
Net Income From Continuing Ops
1,233,000
1,087,000
1,106,000
Discontinued Operations
-

6. 1,000
-
Net Income
1,233,000
1,088,000
1,106,000
Preferred Stock And Other Adjustments
-
-
-
Net Income Applicable To Common Shares
1,233,000
1,088,000
1,106,000
(Values forecasted10% growth in sales)
3.0 Boeing’s Financial Statement Analysis
The company reports have a net earnings per share of $1.61
with an increase by 25.78 % year after year starting from $1.28
with an enhanced from 6.62 % from $1.51as reported in the
previous year. Boeing's Revenue also rose by 6.65 % year after
year, to $23,785 million and showed consecutive advancement
by 7.48 %.
Boeing's net income of $1,233 million showed comprehensive
rise as it increased by 26.07 % from net earnings of $978
million. In parallel its net earnings also grew by 6.48 % from
net income of $1,158.00 million as compared to the previous
year. Inventories were seen to grow by 13.67 % to $42,912
million and the other inventories rose by 4.05 %. The company's
net cash and cash equivalents showed decrement by $-953

7. million as its capital expenditures declined by 48.48%, reaching
a value of $-634 millions matched a year ago. The company
seller dividend of $1.92 per share in the last 52 weeks presented
32.16 % of net earnings per share. During this period the
company managed to earn $ 7.98 cash per share, based on free-
cash flow as 133.67 % of net earnings per share. The book value
also showed rise by 66.33 % sequentially to $19.36 per share,
196.35% of net income per share, which was given to
shareholder value. Its tangible Book value rose to $ 8.82 per
share from $ 1.22 and the company again purchased more than
0.70 million shares at the end of the year (CSI Market.com,
2014)
Market Capitalization (Millions $)
95,635
Shares Outstanding (Millions)
768
Total Debt (Millions $)
9,635
Revenue (TTM) (Millions $)
86,623
Net Income (TTM) (Millions $)
4,585
Cash Flow (TTM) (Millions $)
-1,253
Capital Exp. (TTM) (Millions $)
-2,047
Dividend TTM ($)
1.92 $
Dividend Yield TTM (%)
1.54 %
Employees (TTM) $
174,400
4.0 Boeing’s ROE DuPont Analysis
The Return on equity (ROE) DuPont analysis results is believed
to be the core factors of financial performance, which
determines a company's potential to produce earnings using

8. shareholder capital. For many years ROE has been key
determining factors of the rate at which a company produces
shareholder wealth. Boeing boosts its ROE by increasing
leverage, which significantly manages the safety associated
with investments. Therefore the company focuses on the return
on assets (ROA), which helps determine a company's earning
power apart from its capital structure. The analysis of the
figures suggests that the incurred gap between ROE and ROA is
a warning sign that the company needs to investigate and
manage immediately (Stock Pup, 2011).
5.0 Boeing’s Economic Value Added (EVA)
Economic value added (EVA) in finance basically computes the
net value a company manages to add for a particular period and
it proves similar in concept to the net present value (NPV).
Comparing with NPV, this part calculates the total value added
during the life of the project in terms of present value, whereas
EVA computes net value added for a particular period. Positive
value produced for EVA during a particular period clearly
indicates the management role in increasing company’s total
growth. Similarly a negative value produced for EVA indicates
cost of capital employed being more than the profit incurred by
the company and the significant decrement in the company’s
value for a particular interval (Damodaran, 2002).
The formula for calculating EVA is given as: EVA=NOPAT-
(WACC ×TOC) where NOPAT = net operating profit after tax,
TOC = total operating cost and WACC = weight average cost of
capital. Based on these calculations the company’s was to seen
to add $645 million in stockholder wealth and almost $952
billion in firm value during a particular year and then managed
to show gradual growth in the past few years (Damodaran,
2002).
6.0 Boeing’s Capital Structure

9. A company’s capitalization produces a mixture of permanent
and long-term capital investments, which generally combines
debt and equity. The balance sheet strength for a company
comes from the reasonable and proportional utility of debt and
equity for the purpose to manage its assets. Therefore a capital
structure can be termed as healthy if its figures show low levels
of debt and high levels of equity as the key factors to promote
financial fitness.
So, the Debt-to-equity ratio, also known as solvency ratio
is calculated on the basis of total debt divided by the total
shareholders' equity. After analysis, it was seen that Boeing
Co.'s debt-to-equity ratio showed improvement from 2011 to
2012 and from 2012 to 2013.
The Debt-to-capital ratio, which is the solvency ratio calculated
on the basis of total debt divided by the total debt plus
shareholders' equity. So, computations suggest Boeing Co.'s
debt-to-capital ratio has increased from 2011 to 2012 and from
2012 to 2013. The Interest coverage ratio, which is the solvency
ratio computed as EBIT divided by the interest payments
calculates value for Boeing Co.'s interest coverage ratio and this
value has also increased from 2011 to 2012 and from 2012 to
2013(Stock Analysis of net, 2014).
7.0 Conclusion
Boeing’s Pro Forma financial statements (Income statements
and Balance sheets) for the next two fiscal years have shown
that at 10% growth rate of sales, Boeing is expected to generate
revenues of almost $24 million and $25 million in the upcoming
years. The company’s Pro Forma financial statements also
forecast that Boeing is financially stable, but may require
finance from other organizations for the purpose of expansion.
Boeing’s financial statement analysis results suggest that the
company is liquid on the basis of current and quick ratio. On the
other hand, it’s profitable on the basis of return on equity.
However, the results predict that the company is unable to
manage its assets properly and is under a huge debt related
obligations. The company’s stock has fallen in the first fiscal

10. year, but is undergrowth for the second fiscal year.
Boeing’s return on equity DuPont analysis results show that the
company’s high return on equity (ROE) of 40% in the last fiscal
year due to the debt elements of the company’s capital
structure. Suppose the company wishes to debt free, its last
fiscal year’s return on equity (ROE) value would be somewhere
around 17.66%. The company’s increasing economic value
added (EVA) of $645 billion suggests that Boeing’s Corp was
able to add a total of $1545 billion in the last few years.
8.0 Decision making whether to invest in Boeing’s Stock
As far MAs decision for buying is concerned, analyzing all the
above factors can state it. Basically the strength of a company’s
balance sheet is calculated on the basis of three broad
categories of investment that comes under quality measurements
and comprisesWorking capital adequacy, Asset performance and
Capital structure.Based on the findings, there are two reasons
behind investing in the Boeing’s stock. They can be summarized
as:
i. Future growth looks promising
Approximately half of Boeing's revenue is generated from its
commercial aviation industry, which is a long-term-growth
story. The company promises that by the next 20 years the
demand will hit 34,000 commercial airplanes, which will be an
increment, costing $4.5 trillion. The growth will focus on the
rising market demands, along with mature markets’, which will
replace aircraft fleets. This era of emerging market growth is
gaining popularity and is in the press releases. A customer
recently ordered seventy 737 commercial airplanes which was a
mixture of MAX 8s, MAX 9s, and Boeing's next-generation
737-800. The contract costs around $7 billion and is basically
the largest Boeing order as recorded in Turkish Airlines'
history. As these emerging markets continue to rise, investors
will get great opportunities in the upcoming years.
ii. Juicing margins
Boeing recently presented a 787 program, which is a great
target for producing almost 10 per month by the end of this year

11. by showing rise from two planes per month from 2013.
Therefore the global investors can count on the firm to make
huge profits as it promises to have great returns in the upcoming
years.
References:
Boeing, (1995). Retrieved from:
http://www.boeing.com/boeing/companyoffices/aboutus/brief.pa
ge
Boeing, (2014). Commercial Airplanes. Retrieved from:
http://www.boeing.com/boeing/commercial/products.page
Yahoo Finance, (2014). The Boeing Company (BA). Retrieved
from: http://finance.yahoo.com/q/is?s=ba
CSI Market.com, (2014). BOEING COMPANY. Retrieved from:
http://csimarket.com/stocks/financials_glance.php?code=BA
Stock Pup, (2011). BOEING CO (BA). Retrieved from:
http://www.stockpup.com/companies/BA/
Damodaran, (2002). CORPORATE FINANCE THEORY AND
PRACTICE, 2ND ED. Retrieved from:
http://books.google.co.in/books?id=mVKzOorI2cAC&pg=PA45
7&lpg=PA457&dq=Economic+Value+Added++of+boeing+corpo

12. ration&source=bl&ots=jw4WjsDvGG&sig=AwG_eO4ltH0ZvvR
hXTWEYHlQ4zU&hl=en&sa=X&ei=vg04U4rENI-
IrAeiloDQBg&ved=0CGAQ6AEwCQ#v=onepage&q=Economic
%20Value%20Added%20%20of%20boeing%20corporation&f=f
alse
Stock Analysis on net, (2014). Retrieved from:
http://www.stock-analysis-on.net/NYSE/Company/Boeing-Co
You were recently hired as management director of the new I
Can Business Incorporated (ICBI). You have been asked to
establish policies and systems for the business. The first one
you choose to work on is a financial reporting system.
For this assignment, you must develop a memo that you will
deliver to the board of directors of ICBI. You will describe
what a financial reporting system is and explain how
management of ICBI should use an activity based budget
instead of an operating budget. Be sure to explain the
similarities and the differences of the two. Finally, give
examples of budget guidelines for ICBI. You must answer the
following questions:
· Describe the meaning and the components of a financial
reporting system.
· Write a description of how management should use an activity
based budget instead of an operating budget
· Explain the similarities and differences of the two budgets
· Give an example of budget guidelines that ICBI should follow
in order to successfully plan.
· Identify and describe at least five (5) basic budget guidelines.
· 3 to 4 pages apa format