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Chapter 2 Problem 14 a. For the years 2005 2009, calculate Boeings i. Total liabilities-to-equity ratio ii. Times interest earned ratio iii. Times burden covered
Chapter 2 Problem 14 | |||||||||||||
a. For the years 2005 2009, calculate Boeings | |||||||||||||
i. Total liabilities-to-equity ratio | |||||||||||||
ii. Times interest earned ratio | |||||||||||||
iii. Times burden covered ratio | |||||||||||||
b. What percentage decline in earnings before interest and taxes could Boeing have sustained in these years before failing to cover | |||||||||||||
i. Interest and principal repayment requirements, | |||||||||||||
ii. Interest, principal and common dividend payments? | |||||||||||||
c. What do these calculations suggest about Boeings financial leverage during this period? | |||||||||||||
ANNUAL BALANCE SHEET | |||||||||||||
($ MILLIONS) | |||||||||||||
BOEING CO | |||||||||||||
Dec09 | Dec08 | Dec07 | Dec06 | Dec05 | |||||||||
ASSETS | |||||||||||||
Cash & Short-Term Investments | 11,223 | 3,279 | 9,308 | 6,386 | 5,966 | ||||||||
Net Receivables | 6,153 | 6,027 | 6,068 | 5,655 | 5,613 | ||||||||
Inventories | 16,933 | 15,612 | 9,563 | 8,105 | 7,940 | ||||||||
Other Current Assets | 966 | 1,046 | 2,341 | 2,837 | 2,449 | ||||||||
------------------ | ------------------ | ------------------ | ------------------ | -------------- | |||||||||
Total Current Assets | 35,275 | 25,964 | 27,280 | 22,983 | 21,968 | ||||||||
Gross Plant, Property & Equipment | 21,579 | 21,042 | 20,180 | 19,310 | 19,692 | ||||||||
Accumulated Depreciation | 12,795 | 12,280 | 11,915 | 11,635 | 11,272 | ||||||||
------------------ | ------------------ | ------------------ | ------------------ | -------------- | |||||||||
Net Plant, Property & Equipment | 8,784 | 8,762 | 8,265 | 7,675 | 8,420 | ||||||||
Investments at Equity | 974 | 942 | 1,085 | 964 | 84 | ||||||||
Other Investments | 5,522 | 6,243 | 9,803 | 11,641 | 12,407 | ||||||||
Intangibles | 7,196 | 6,332 | 5,174 | 4,745 | 2,799 | ||||||||
Deferred Charges | - | - | - | - | 13,251 | ||||||||
Other Assets | 4,302 | 5,536 | 7,379 | 3,786 | 1,129 | ||||||||
------------------ | ------------------ | ------------------ | ------------------ | -------------- | |||||||||
TOTAL ASSETS | 62,053 | 53,779 | 58,986 | 51,794 | 60,058 | ||||||||
LIABILITIES | |||||||||||||
Long Term Debt Due In One Year | 707 | 560 | 762 | 1,381 | 1,189 | ||||||||
Accounts Payable | 7,096 | 5,871 | 5,714 | 5,643 | 5,124 | ||||||||
Taxes Payable | 182 | 41 | 253 | 670 | 556 | ||||||||
Accrued Expenses | 12,822 | 6,169 | 6,637 | 6,106 | 6,590 | ||||||||
Other Current Liabilities | 12,076 | 18,284 | 18,172 | 15,901 | 14,729 | ||||||||
------------------ | ------------------ | ------------------ | ------------------ | -------------- | |||||||||
Total Current Liabilities | 32,883 | 30,925 | 31,538 | 29,701 | 28,188 | ||||||||
Long Term Debt | 12,217 | 6,952 | 7,455 | 8,157 | 9,538 | ||||||||
Deferred Taxes | - | - | 1,190 | - | 2,067 | ||||||||
Minority Interest | 97 | ||||||||||||
Other Liabilities | 14,728 | 17,196 | 9,799 | 9,197 | 9,206 | ||||||||
------------------ | ------------------ | ------------------ | ------------------ | -------------- | |||||||||
TOTAL LIABILITIES | 59,925 | 55,073 | 49,982 | 47,055 | 48,999 | ||||||||
EQUITY | |||||||||||||
Common Stock | 5,061 | 5,061 | 5,061 | 5,061 | 5,061 | ||||||||
Capital Surplus | 3,724 | 3,456 | 4,757 | 4,655 | 4,371 | ||||||||
Retained Earnings | 10,869 | 9,150 | 16,780 | 10,236 | 15,498 | ||||||||
Less: Treasury Stock | 17,526 | 18,961 | 17,594 | 15,213 | 13,871 | ||||||||
------------------ | ------------------ | ------------------ | ------------------ | -------------- | |||||||||
TOTAL EQUITY | 2,128 | (1,294) | 9,004 | 4,739 | 11,059 | ||||||||
------------------ | ------------------ | ------------------ | ------------------ | -------------- | |||||||||
TOTAL LIABILITIES & EQUITY | 62,053 | 53,779 | 58,986 | 51,794 | 60,058 | ||||||||
Common Shares Outstanding | 726.291 | 698.138 | 736.681 | 757.836 | 760.577 | ||||||||
ANNUAL INCOME STATEMENT | |||||||||||||
Dec09 | Dec08 | Dec07 | Dec06 | Dec05 | |||||||||
Sales | 68,281 | 60,909 | 66,387 | 61,530 | 54,845 | ||||||||
Cost of Goods Sold | 55,092 | 48,950 | 51,977 | 48,926 | 44,757 | ||||||||
------------------- | ------------------ | ------------------ | ------------------ | --------------- | |||||||||
Gross Profit | 13,189 | 11,959 | 14,410 | 12,604 | 10,088 | ||||||||
Selling, General, & Administrative Exp. | 9,870 | 6,852 | 7,381 | 7,428 | 6,433 | ||||||||
------------------- | ------------------ | ------------------ | ------------------ | --------------- | |||||||||
Operating Income Before Deprec. | 3,319 | 5,107 | 7,029 | 5,176 | 3,655 | ||||||||
Depreciation,Depletion,&Amortization | 1,273 | 1,179 | 1,130 | 1,158 | 1,092 | ||||||||
------------------- | ------------------ | ------------------ | ------------------ | --------------- | |||||||||
Operating Profit | 2,046 | 3,928 | 5,899 | 4,018 | 2,563 | ||||||||
Interest Expense | 604 | 524 | 608 | 657 | 713 | ||||||||
Non-Operating Income/Expense | 289 | 591 | 827 | 709 | 391 | ||||||||
Special Items | (876) | 578 | |||||||||||
------------------- | ------------------ | ------------------ | ------------------ | --------------- | |||||||||
Pretax Income | 1,731 | 3,995 | 6,118 | 3,194 | 2,819 | ||||||||
Total Income Taxes | 396 | 1,341 | 2,060 | 988 | 257 | ||||||||
------------------- | ------------------ | ------------------ | ------------------ | --------------- | |||||||||
Income Before Extraordinary | |||||||||||||
Items & Discontinued Operations | 1,335 | 2,654 | 4,058 | 2,206 | 2,562 | ||||||||
Discontinued Operations | (23) | 18 | 16 | 9 | (7) | ||||||||
------------------- | ------------------ | ------------------ | ------------------ | --------------- | |||||||||
Adjusted Net Income | 1,312 | 2,672 | 4,074 | 2,215 | 2,555 | ||||||||
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