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Students must submit a document (MS Word file) that provides a narrative analysis of the results of their ratio calculations in their own words, not
Students must submit a document (MS Word file) that provides a narrative analysis of the results of their ratio calculations in their own words, not copied from annual reports. Chose one ratio from each type of rations (asset, liability, liquidity, etc). Narratives should include answers to the questions:
- a comparison of the results of the two fiscal years for the ratios chosen (i.e., increase, decrease, ideas as to why this might have occurred)
- a comparison to the industry average for the ratios chosen (i.e., how the company compares to the industry and what this means for the company)
- What risk is the company facing? Is this true for the entire industry? How can the company mitigate this risk? What is the industry Beta and the company's Beta?
- Recommendations for individuals who may be considering investing in the chosen company
- Given the model of valuation is the company priced fairly? What recommendations would you make to increase the value of the company (be thorough make specific recommendations tied back to the company's stated financial goals).
The company is Boeing Airlines and it is the airline industry. Here are the ratios mentioned:
1) Current Ratio: Current Assets / Current Liabilities | ||
2020 | 2019 | |
Current Assets: 121642 | Current Assets: 102229 | |
Current Liabilities: 87280 | Current Liabilities: 97312 | |
121642/87280 | 102229/97312 | |
1.393698442 | 1.050528198 | |
2)Quick Ratio: (Current Assests - Inventories) / Current Liabilities | ||
2020 | 2019 | |
Current Assets: 121642 | Current Assets: 102229 | |
Inventories: 81715 | Inventories: 76622 | |
Current Liabilities: 87280 | Current Liabilities: 97312 | |
(121642-81715)/87280 | (102229-76622)/97312 | |
0.457458753 | 0.263143292 |
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