Question

Please review the financial statements of either Starbucks or Boeing. The companies discuss in detail how the international market impacted their returns in their latest 10K.

Answer 1

Financial statement analysis is used to identify the trends and relationships between financial statement items. Both internal management and external users (such as analysts, creditors, and investors) of the financial statements need to evaluate a company's profitability, liquidity, and solvency.

A 10-K is a comprehensive summary report of a company's performance that must be submitted annually to the Securities and Exchange Commission (SEC).

Aerospace giant Boeing has made the most of the multi-trillion-dollar opportunity in the commercial aerospace field, riding its wave of orders for its newer aircraft models and seeing its share price double from late 2012 to early this year. Yet even though the company's stock has fallen back somewhat from its record-high levels earlier this year, Boeing still finds itself in a strong position fundamentally, and its balance sheet is one of the clearest indications that Boeing has a strong foundation on which to build future growth.

Two items on Boeing's balance sheet clearly indicate the huge rise in order flow that the aerospace giant has seen lately. On one hand, when Boeing collects money as part of its order process, it can't treat that cash as revenue until it actually delivers on the order. As a result, Boeing posts unearned revenue on its balance sheet that it later earns on delivery and treats as then-current revenue at that later time. On the other hand, in order to prepare for the production process, Boeing has to build up huge amounts of inventory in parts and partially completed planes. Once delivered, those materials all exit the inventory line.

Boeing's prospects look strong, and its balance sheet gives the aircraft maker some strategic options that many companies lack. If it's prudent with its finances, Boeing has the potential to grow even more important in the overall world economy in the years to come.

The Boeing Company's stock has had a great run in the last five years (up 245%) and it's understandable if investors are starting to wonder whether there are any legs left in it. The answer to that question probably lies in the trajectory of long-term global economic growth and its impact on passenger traffic and the commercial airline industry. However, what's indisputable is that Boeing is positioning itself very well in order to maximize profits in the coming years. Here's how and why the company is in good shape for 2018.

Expanding Boeing Commercial Airplanes (BCA) margin is a key aim for Boeing in the coming years, and the second-quarter earnings presentations saw the company confirming good progress on the matter. There are three things to look at.

First, for the second consecutive quarter Boeing raised full-year BCA margin guidance. In six months, management has gone from margin guidance of above 11% to above 11.5%. It may not seem like much, but if you annualize the second quarter's BCA revenue of $14.48 billion then a move from a margin of 11% to say 11.6% would mean a 5.5% increase in earnings in the segment.

Second, on an underlying basis, Boeing's BCA margin performance is even better. CEO Dennis Muilenburg outlined that the KC-46a Tanker program (aerial refueling aircraft) took a $307 million charge due to higher-than-expected testing and developmental costs. Excluding these costs means underlying BCA margin was 13.5%

Third, CEO Dennis Muilenburg reiterated that BCA was "driving toward" a " mid-teen margin by the end of the decade". Of course, there's the possibility that the 777X research & development costs could overrun as the aircraft is developed for its first delivery in 2020, but in general, Boeing is making excellent progress on BCA margin expansion.