ANNUAL BALANCE SHEET ($ MILLIONS) BOEING CO Dec09 Dec08 Dec07 Dec06 Dec05 ASSETS Cash & Short-Term...

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

A. 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?
B. What do these calculations suggest about Boeing’s financial leverage during this period?

Please Answer question in detailed and as soon as possible. Thank you!

Expert Solution


i)	Interest & Principle Repayment	Dec 09	Dec 08	Dec 07	Dec 06	Dec 05
	Principle payment requirement	707	560	762	1381	1189
B	Interest payment requirement	604	524	608	657	713
C=A+B	Total interest and principle payment requirement	1311	1084	1370	2038	1902
D	Earning Before Interest and Taxes	2,046	3928	5899	4018	2563
E=D-C	Decline in Earning before interest & taxes could be sustained	735	2,844	4,529	1,980	661
F=(E/D)*100	Percentage of decline could be sustained	35.92%	72.40%	76.78%	49.28%	25.79%

	This calculation indicates Solvency of Boeing . The ability of the company to meet its long term
	obligation.This gives sensitivity or percentage of safety , of the company to meet its debt obligations

ii)	Interest, Principle and coomon dividend payment	Dec 09	Dec 08	Dec 07	Dec 06	Dec 05
	Principle payment requirement	707	560	762	1381	1189
	Interest payment requirement	604	524	608	657	713
	Dividend payment(Information not provided)



		Dec 09	Dec 08	Dec 07	Dec 06	Dec 05
B	Net Income during the year	1,312	2672	4074	2215	2555
D	End of year Retained Earnings	10,869	9150	16780	10236	15498
	Information on common dividend payment is not provided

jeff jeffy answered 3 weeks ago

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