Industry Averages and Financial Ratios Paper
Joseph S. Quesenberry, Mitzy Carothers
FIN 370
June 15, 2015
Rodney Nelsestuen
Industry Averages and Financial Ratios Paper
Comparing Boeing to the “Transportation by Air” industry really showed how much of a fraction Boeing is in the industry. Based on the three areas of ratios, a variety of results became known. In the area of the current ratio, the ratios for the industry in 2012 and 2013 were the closest to Boeings numbers for the same year.
Based on the findings, it can be seen that Boeing did not have as much of a profit margin, a return on assets, or a return on net worth. This could mean that the company as a whole just did not obtain as many contracts needed to sustain the company as much as the industry as a whole did in the same years. The area of most concern seemed to be the current liabilities to inventory ratio. The industry as a whole had ratios of 332.7 in 2012 and 329.4 in 2013, while Boeing showed 1.2 in 2012 and 0.8 in 2013. This tells us that Boeing’s inventory level to their liability costs is much lower than the industry.
In the area of collection period, Boeing seemed to collect more than the industry as a whole. This could be because the company is not just an airline; it builds the planes, which leads to higher costs for contracts. However, the assets to sales ratio was lower than the industry overall.
Within the efficiency ratios, Boeing showed very low ratios compared to the transportation by air industry. The profitability ratios were also surprisingly less than the industry. Given that Boeing makes millions in their contracts, it is apparent that they do not make nearly as much as the industry as a whole.
Overall, the general feeling is that Boeing is a small fraction compared to the industry of transportation by air. Many of the ratios were much lower than the industry equivalent in that same year; especially those surrounding sales and returns. These areas showed...