Scenario
A presidential election year is on the horizon. Control of the White House may shift political parties. Defense spending could be reduced whenever there is potential for a shift in political parties. You are presently a support analyst for a financial fund administrator with an extensive amount of money invested in the Boeing Corporation, a publicly traded company.
Part of Boeing’s operations is in defense contracting, such as manufacturing military aircraft and helicopters. Contrarily, you have decided that if Boeing is not the best investment, a close competitor Airbus has the potential to be a stronger investment. You must evaluate the current stability of Boeing and Airbus to determine whether to recommend moving money from the Boeing investment to the Airbus investment.
Instructions
Write a 2–3-page memo to your fund administrator that includes the following:
Explains the different liquidity, profitability, and solvency ratios that are used to assess the financial health of a corporation.
Computes the liquidity, profitability, and solvency ratios using the 2018 Boeing Corporation’s financial statements.
Computes the liquidity, profitability, and solvency ratios of Airbus, a passenger plane competitor, using the 2018 financial statements.
Compares and contrasts the financial ratios of Boeing and Airbus.
Analyzes and provide a recommendation, supported by ratio calculations, as to whether you believe Boeing is stable enough compared to the competitor that if defense funding is reduced, the company will continue to prosper.