Boeing turnover rate

SIC & Industrial Name – 3721, Boeing Company

The Boeing Company represents one of the largest aerospace companies in the world with an in-depth specialty in jetliners, defense, security, and other space systems, as well as providing after sales support services. Currently, the company has government-based customers from over 150 countries across the world, thus showing the strategic position of the company as a global competitor within the aircraft manufacturing and services industry. However, to have a well-informed overview of the performance of the company from a multifaceted angle, there needs to be an analysis of the company's financial performance, which reflects several elements within the organization such as efficiency and profitability potential. This report aims at providing a thorough analysis of the company’s profitability, efficiency, liquidity and solvency by analyzing the various financial ratios of the company obtained from credible sources such as investors.com and ready ratios so as to gain an overview of the effectiveness of the company’s processes. These ratios will further be compared through a cross-sectional analysis with other related companies operating within the same industry so as to gain a wider view of the company’s performance.

This paper is going to focus on the analysis of the company's performance based on the four aspects, which include profitability, efficiency, liquidity, and solvency using the historical financial performance ratios obtained from the company’s financial statements.

Company's profitability

The company's profitability can be analyzed using various financial metrics that normally create a vivid picture of the company's ability to generate profit, the general revenue and the operating costs, among other liabilities incurred within the course of the production. Some of the profitability ratios involve the Return on assets and the Return on Equity.

Gross Profit Margin

The gross profit margin is mainly used as an indicator of whether the sales made are sufficient enough to cover up for the production costs of those particular goods. The average gross profit margin is usually regarded as being 10% or above as the rule of thumb when analyzing the profit margin, whereas a 20% gross profit margin is considered a good gross profit margin. According to the analysis of The Boeing Company’s gross profit margin, the company’s profitability can be regarded as being low mainly because the company has a gross margin of -9.78, which is below the industry average of 22.71% (About Financial Ratios, 2021). It is worth noting that a 5% margin is usually considered as being generally low. Subsequently, a cross-sectional analysis of the company against its closest competitor, United Technologies Corporation, is an indicator of the weak capacity of the company to turn its assets into profits since the competing company has a gross margin of 28.4%, which is normally regarded as a good profit margin. The effects of a low gross profit margin are overseen in the results of other ratio analysis such as the Return on assets and return on equity.

Return on Assets

Return on Assets (ROA) is usually used as an indicator of how profitable a company is based on the total assets owned by the company and used in the production process. According to the Return on assets of The Boeing Company, the company is not profitable since its ROA was -7.80%, which is lower than the industry competitors such as the United Technologies Corporation, which has a ROA of 4%. It is worth noting that a low ROA is usually an indicator of the low capacity of the company to effectively make use of its assets in attaining more profits (Ready Ratios, 2020). Subsequently, a higher ROA is always better since it is directly related to the profit margins that indicates the effective use of assets to attain more profit for the business.