Boeing Co’s Financial Analysis

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Boeing Co is one of the world’s leading aircraft manufacturers and a company listed on the New York Exchange. Considering the vital status of the entity for the industry on a global level, it attracts increased attention from stakeholders and investors. As of April 2022, Boeing stock is traded at the rate of $174.50 per share. Overall, the company has a long history of excellence in the industry, being one of the prominent manufacturers of civil aircraft and military solutions. Today, Boeing helps the shareholders evaluate the performance of the organization by updating annual financial statements, the latest one having been released for the year 2021 (Boeing, 2022). The analysis of this document illustrates the dynamics of the company’s year-to-year returns, liabilities, and other key performance indicators. Table 1 reflects the highlights of the most important and peculiar indicators from the past years.

Table 1. Key Performance Indicators from Boeing’s Consolidated Financial Statement

Indicator 2021 2020
Total Revenues $62,286 $58,158
Total Costs and Expenses $59,269 $63,843
Net Loss $4,290 $11,941
Total Assets $138,552 $152,136
Total Liabilities $153,398 $170,211
Total Equity $14,846 $18,075

These dynamics between the years 2021 and 2020 reflect the process of the company’s recovery from the repercussions of COVID-19. The ratio between revenues and expenses is one of the most interesting figures exhibited in Boeing’s financial statement. Further examination into previous years reveals that the pre-pandemic level of total revenues was $76,559 million in 2019. Then, the performance declined rapidly amid the outbreak of COVID-19 with a fall to $47,142 million in 2020. This change is explained by the nearly complete closure of most civil aviation operations, in which Boeing aircraft account for a large share. With the demand being virtually non-existent, there were fewer requests for new planes, which is reflected in such a major revenue decrease. Yet, the need for maintenance persisted, which is why the pandemic-conditioned decline in costs and expenses is not as significant: $63,843 million versus $72,093 million in 2019. However, in 2021, Boeing has shown indicators of recovery as total revenues resumed growth and surpassed total operational costs.

In this regard, it appears interesting to compare the crucial ratios that reflect the financial health of a company as per public financial data. More specifically, Table 2 shows the debt-to-equity ratio, current ratio, quick ratio, return on equity and net profit margin. The data is compared between the fiscal years 2020 and 2021 on the basis of Boeing’s consolidated financial statement. Furthermore, the significance of each ratio is also discussed in dynamics.

Table 2. Key Ratio Comparison for Boeing’s Performance in 2020-2021 Fiscal Years

Ratio 2021 2020 Note
Debt-to-equity ratio 10.33 9.42 Boeing retains significant liabilities, as it currently has over $10 of them per each $1 of equity. The load increased by 2021, which may be the direct consequence of the previous year’s crisis in aviation.
Current Ratio 1.32 1.40 This ratio reflects a company’s ability to pay short-term debt. It has declined as a result of the pandemic-conditioned crisis, but Boeing still retains a viable position in this regard.
Quick Ratio 0.36 0.46 In terms of its short-term liquidity position, Boeing has performed below par, and the quick ratio continues to decline, as compared to the normal rate of 1
Return on Equity 26.5% 94.3% In the fallout of the pandemic, Boeing’s return on shareholder equity remains significantly low. The downward is understandable in light of the macroeconomic situation, but growth is required to prevent further deterioration.
Net Profit Margin 4.8% -9.77% This ratio shows a positive trend, as Boeing’s operation resumed their profitability. The net profit margin is the primary indicator of whether the business profits from its activity across a given period.

Reference

Boeing. (2022). Financial Reports: The Boeing Company 2021 Annual Report. Web.

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