Critically discuss two recent developments in the international environment appear to have impacted on your chosen company’s recent performance and development. Analyse how these two developments are likely to impact on the company in the near future.
international finance, company chosen, Chevron. Write 2500 words assignment. On the annual report of chevron in 2021, 2022, and 2023. Using the examples given to youon the template as a guidance.
Requirements:
Submission Deadline: Week 9 (60%)
You are required to prepare/submit a report discussing the following
Choose a Multinational Enterprise (MNE) listed on an internationally recognised Stock Exchange (including for example, London, Dublin, New York or Paris).
—————————————————————————————————————–
I have divided the report into sub-headings and provided the sort of information required under each sub-heading. I have provided an example using Boeing.
Please note the following instructions
The report is divided into the following subsections.
Introduction
Section A
Section B
Section C
Conclusion
References
Appendix
Do not repeat the questions in red font. They have been provided to help you identify what is expected – the salient points.
Do not copy and paste other people’s work. Paraphrase and reference all definitions, claims and information used.
No fake references – you lose marks for them.
Introduction
Steps
What is the name of the company?
What does the company sell?
What profit did it make in the last 2 years?
What is the purpose of the report?
Example using Boeing Aircraft Manufacturer
What is the name of the company?
The Boeing Company is an American Multinational corporation headquartered in Chicago, Illinios, USA (Boeing, 2019b).
The Boeing Company designs, manufactures and sells planes, satellites, rockets, missiles (Weiss and Ami, 2019). The Boeing Company is one of the world’s largest manufacturer of aerospace and defence equipment (Cameron, 2019). The Company made over $101.billion in revenues in 2018 (Zazulia, 2019) and have been ranked consistently among the top 100 companies in the Fortune Global 500 list (Fortune 500, 2019). In this report, the financial performance of Boeing is analysed. Furthermore, developments affecting the financial performance of Boeing are outlined, including how it manages the risks associated with its sources of finance and dividend policy.
Section A:
Question: Critically discuss two recent developments in the international environment appear to have impacted on your chosen company’s recent performance and development. Analyse how these two developments are likely to impact on the company in the near future. (10 marks)
Steps
What is the development? State it as development one, development two. The development can be one that generated a positive or negative outcome
Describe the development briefly.
What is effect of the development on the financial performance of the company? Discuss the financial impacts – positive and/or negative – It can be increase or decrease of revenues, profit, share price, liabilities, assets etc. These financial impacts have to be in the form of facts and figures supported by credible sources. So, provide citation and reference for these.
Any strategy developed or implemented by the company to mitigate/exploit the impacts of the development?
Example – Using Boeing
What is the development?
Development one: Two Plane Crashes
One event that has affected The Boeing Company’s performance is the faulty Boeing 737 Max aircraft, which caused two crashes that killed over 350 people (Lee, 2019).
Describe the development briefly.
The air crashes were reported widely in the media around the world (Gelles, 2019a). The crashes were caused by a set of faulty features in the cockpit which when reported, were ignored by the Boeing (BBC, 2019b). Though Boeing had claimed the aircraft models were fuel efficient and safe, however, these were not be. Boeing 737 Max was eventually grounded by the Federal Aviation Authority, the airline regulator in the US (Marshall, 2019; BBC, 2019a)
What is effect of the development on the financial performance of the company?
The effect of the crashes on Boeing was swift and intense. The event made airlines to ground their existing fleet of Boeing 737 Max series (Hawkins, 2019). Other airlines cancelled their order for the aircraft (Layne, 2019a), leading to law suits from several aircraft leasing companies like Avia which sought for a refund of $35million from Boeing and $75million in compensatory damages (Slotnick, 2019).
The cancellation of aircraft orders also caused Boeing to lose over $5.6Billion in revenues (MacmIllain, 2019) as inventory piled up (Bogaisky, 2020). On March, Boeing shares tanked and about $25billion was wiped off its market value(Layne, 2019b; Isidore, 2019). Investment banks such as Walton has cut Boeing target share price $95 to $375, citing an increase in “likelihood of a pause on the 737 MAX production system” due to a delay in the jet’s return (Johnson and Ajmera, 2019). At one point, $4.3billion was wiped off the Boeing Company market value (Winck, 2020). The impact of these crashes led to the loss of $636M in 2019 (Boeing first annual loss in 23years)
Any strategy developed or implemented by the company to mitigate the effect of the development?
Boeing CEO has faced a lot of questions regarding the company’s strategy on handling the crisis. First, Boeing identified the faults that caused the crashes by working on the software and make updates(Chua, 2019). Boeing assured airline operators that it would not sell further aircraft until they are certified airworthy by the FAA (Gelles, 2019b). Boeing has fired its CEO and appointed a new one; suspended its share buyback, increased its borrowing to cover the cost of compensation, repairs and suspended further delivery of 737MAX
Development two: Covid19
What is the development?
A second development in the global environment that has affected Boeing’s financial performance is the Covid19 pandemic.
Describe the development briefly.
Covid19 assumed a pandemic level in March 2020, which triggered multiple rounds of travel restrictions and lockdown to curtail its spread around the globe. Countries closed their boundaries and closed their airspace to air travellers. According to the International Civil Aviation Organisation in its report (ICAO, 2021), the result was a 60% fall in international air passenger traffic, 65% fall in the revenue of airline carriers and operators, the introduction of stringent requirements for travellers, and the 79% decline in international tourism.
Since Boeing provides products and services to the aviation industry, its business has been gravely affected.
What are the impacts of the development on the financial performance of the Boeing Company?
The impacts of the pandemic on the financial performance of The Boeing Company are in two fronts (The Boeing Annual Report, 2020. p. 7)
An impact on Boeing operations in the form of suspended operations (like in South Carolina and Philadelphia), and the increase in operating costs due to social distancing requirements. Operating costs increased from 3.9billion in 2019 to 4.8billion in 2020 (p.62)
A material decline in the demand of Boeing products (pp.35-38). As a manufacturer of aircrafts and airplanes, the drop in international travel resulted in a fall in demand for aircrafts leading to a large number of undelivered airplanes. In addition, the wider impact on the global economy which impacts on Boeing supply chain and Boeing customers (airlines). The impact of the fall in demand includes the fall in revenue in 2020 by $18billion, an increase in debt from $27billion in 2019 to $63bllion in 2020, a negative operating cash of $18billion in 2020 (p. 68), an impairment in the value of goodwill and a net loss of $11billion in 2020 ($636m in 2019).
Any strategy developed or implemented by the company to mitigate the effect of the development?
Boeing has declared it would reduce significantly the size of its workforce due to falling demand and a large number of non-delivered aircrafts (p. 68). In addition, The Boeing Company has taken a number of actions to enhance its liquidity – abandon the share buy-back scheme for 2021 (p.68), reduce production rate of commercial aircrafts (p.68), substitute share for cash as contribution to pension plan; and accessing deferring tax payments.
Section B: Dividend Policy and Sources of Finance
Discuss the following key elements of the MNE’s international financial and/or risk management strategy
(and how they appear to have affected the financial performance of your chosen company):
• Sources of finance
• Dividend policy
Steps
Identify and discuss the dividend theory that applies to your company. The theories are dividend relevance theory and dividend irrelevance theory. Moving further there are some theories that come under the two mentioned theories. Check week 4 slides.
Provide dividend history of the company for the last three years and briefly discuss the dividend policy – This should include
dividend paid per share. Interim dividend or final dividend or both? Any special dividend?
Frequency of the dividend payment? Quarterly, biannually?
Is the dividend policy – Constant? Consistent? Irregular? Regular? Progressive etc. Again check week 4 slides.
Note: If you company does not pay dividends, then discuss reason why is this company policy. Make sure to use irrelevance dividend theory in this discussion.
Discuss any influences on decision and capacity to pay dividend due to some development or events
Example using Boeing
Identify and discuss the dividend theory that applies to your company. In your discussion you also need to specify the dividend policy of the company.
The dividend relevance theory applies here. The relevance theory of dividend states that investors prefer dividends to capital gain as a result of the uncertainty of capital gains. By implication, shareholders of Boeing have a high appetite for dividends. To this end, the Bird in Hand theory of dividend (Gordon 1963) applies here. Furthermore, the Boeing company pays dividend to signal to the market about its bright future despite existing challenges; this is reflected in the share price jump that accomplices the announcement of dividend. Therefore, Dividend Signalling theory also applies. The Dividend Signalling theory states that firms increase the value of their dividend payment as a signal to the market about its future prospects.
However, with the significant fall in demand and the resulting negative operating cashflow, Boeing has come under pressure in terms of its capacity to pay dividend. Boeing stopped its share buybacks in March 2019 as Max 737 Max was grounded and decided to suspend its dividend payment (Bogaisky, 2020, The Boeing Company Annual Report, 2020. p. 47)
Provide dividend history of the company for the last three years and briefly discuss it Boeing has paid dividend consistently in the last three years. Record from (Nasdaq, 2019) shows that Boeing pays dividends quarterly, that is 4 times a year. In 2019, Boeing paid $8.22 as dividend for a share ($2.055 x 4 quarters), in 2017 Boeing paid $6.84 ($1.71 x 4 quarters) and in 2016, Boeing paid $5.68 ($1.42 x 4quarters) – see table 1 below. Boeing did not pay dividend in 2020 as the Board suspended the declaration and payment of dividends till further notice (p.47)
Fig 1: Boeing dividend paid between 2017-2019 (Nasdaq, 2019)
Annual dividend per share –(2016-2020) (The Boeing Annual Report, 2020 p. 23)
From the above stated dividend values, it shows Boeing operates a dividend growth policy as the dividend paid has increased over the 3 years considered (2020 excluded). Boeing has a rich dividend history as its fundamentals are strong (Downey, 2019):
Three-year dividend growth rate: +23.4%
Current dividend per share: $2.055
Current yield: 2.41%
.
Any influences on decision and capacity to pay dividend
Prior to the air crashes with its associated impacts and the pandemic, the Boeing company has consistently paid dividends to her shareholders. Dividend payment to shareholders has consistently and gradually increased to the delight of Boeing shareholders with high appetite for dividends. As profitability and cashflow increased, Boeing has continued to pay dividend.
This was consistent with the pattern of decision and policy associated with past CEOs at Boeing who promoted shareholders’ interest via funding share back and steady dividend increases using operating cashflow (Bogaisky, 2020).
As The Boeing Company dividend grew, the share price has grown over the years Zach Equity Research, 2021). This reflects the confidence of investors (Bailey, 2019). Even with the challenges associated with the 737Max aircraft at the end of 2019, there was optimism among the board and management at Boeing that the setback would and should not hamper its ability to continue to pay dividend as its annual report for 2019 has shown (Ben, 2019).
Sources of Finance
Steps
Discuss the company source of finance – Such as Equity and Non-current liabilities. Here you will need to provide discussion on the some of the reason behind the changes in the elements of equity and non-current liabilities over the last periods. This discussion should include the figures related to those elements.
Calculate gearing ratio for last three years. Two years in case if the third-year data is not available in the annual report provided.
Examine the mix of equity and debt
Discuss the capital structure of the company in light of the calculated gearing ratio.
There are two types of capital structure theories, identify and discuss with valid comments which one applies to your chosen company. Justify why the company has chosen to use that capital structure theory.
Traditional view (net income approach/ relevancy theory) – Normally when the gearing ratio is low
M & M view (net operating income/ irrelevancy theory) – Normally when gearing ratio is high.
Discuss
Cash management and financial risks concerned with the capital structure such as high gearing can make capital structure more risk in some situations.
Any other influences on the capital structure of the company
Example of Boeing has been used here
Discuss the company source of finance – Such as Equity and Non-current liabilities. Here you will need to provide discussion on the some of the reason behind the changes in the elements of equity and non-current liabilities over the last periods. This discussion should include the figures related to those elements.
The Boeing Company utilizes equity financing and debt financing as its sources of finance Boeing has a total shareholders’ equity of ($8,300m) and ($18,075m) for 2019 and 2020 respectively. In terms of debt, Boeing has both short term liabilities and long-term liabilities. The total current liabilities were$121,642m in 2020 and $102,229m in 2019 while the long-term liabilities were $87,931m and $44,613 in 2020 respectively (The Boeing Company Annual Report, 2020).
State the component of each
Equity – Negative Equity
As can be seen in the below table (from the Balance sheet), the total equity shares issued is a little above 1billion units. Additional capital is 6745m and $7,745m. Noticeable in the Balance sheet of the Boeing company is the large amount of treasury stock (share buyback) , retained earnings and accumulated other comprehensive loss (The Boeing Company Annual Report, 2020).
Large scale share buy-back over multiple accounting periods accounts for the large value of treasury shares for 2020 and 2019 ($52b for 2020 and 54billion for 2019). The Boeing company has a negative equity value for 2020 and 2019, which is due to the shares buyback. The Boeing company has a robust share repurchase program, which involves a large scale repurchase of its shares. Boeing repurchased 6.9million (worth $2.7billion) and 26.1 million shares (worth $9 billion) in 2019 and 2018 respectively. Share repurchase was suspended in April 2020 (The Boeing Company Annual Report, 2020. p. 47
But comparing the two recent years, Boeing equity is significantly reduced due to decline in the retained earnings and increase in accumulated other comprehensive losses.
Title and reference
Debt
A breakdown of the long-term debt/borrowing (found in the Notes to the Account) is shown below. It consist of Unsecured debt securities, non-recourse debt and notes, capital lease obligations, commercial paper, and other notes. See the table below (The Boeing Company Annual Report, 2020)
Fig 4. A breakdown of debt for Boeing 2020 and 2019 The Boeing Company Annual Report, 2020. p. 105)
Calculate gearing ratio for last three years. Two years in case if the third-year data is not available in the annual report provided.
Examine the mix of equity and debt
Calculating the gearing ratio for Boeing for 2018, 2019, 2020 shows a very high level of debts in Boeing. This poses a financial risk for Boeing.
The gearing ratio shows 127.86% of debt in 2020, 122.85% in 2019 and 98.85% in 2018. It can be seen that Boeing is heavily leveraged as its liabilities constitute over 90% of its capital structure. The debt level has increased gradually over the past three years.
Discuss the capital structure of the company in light of the calculated gearing ratio.
There are two types of capital structure theories, identify and discuss with valid comments which one applies to your chosen company. Justify why the company has chosen to use that capital structure theory.
Traditional view (net income approach/ relevancy theory) – Normally when the gearing ratio is low
M & M view (net operating income/ irrelevancy theory) – Normally when gearing ratio is high.
Discuss
Cash management and financial risks concerned with the capital structure such as high gearing can make capital structure more risk in some situations.
Any other influences on the capital structure of the company
Very high levels of debt in Boeing’s Balance sheet shows the irrelevance theory (MM view) i.e. net operating income theory of Capital Structure. The higher borrowing is due to debt acquired due to covid impacts.
However, with the threat of financial risk increasing for Boeing as a result of heavy debt to equity ratio, it shows that Boeing capital structure is not optimal (FitchRatings, 2020).
Influences => 737Max Grounding, Undelivered Commercial Planes, Dividend Payment
Boeing recorded an outstanding and increased operating cash flow to a record of
$15.3 billion and maintained cash and marketable securities of $8.6 billion, providing strong liquidity for the payment of debt (The Boeing Company Annual Report, 2019). However, accrued liabilities increased from £14b to $22b due to 737 MAX customer concessions and the grounding of 737 MAX (The Boeing Annual Report 2019. p. 84; 2020. p. 46). Furthermore, total debt increased from $3b to $7b as more commercial papers were issued. The increase in debt level was designed to provide Boeing with the capacity to absorb the increasing cost of compensation (about $1.2billion), delays, cancelled contracts, disruptions to suppliers and production systems; arising from the suspension of the 737 Max program (Boeing Annual report, 2019. p. 8; 2020. p. 46). Furthermore, additional net borrowing increase of $29.3billion in 2020 was used to cover dividend payment for dividend declared for the 2019 accounting year (The Boeing Company Annual Report, 2020. p. 47). The net result of this scenario is high debt level and negative operating cashflow.
Cash Management and Liquidity Risks – Negative operating cashflow
In 2020, the negative operating cash flow worsen as the effects of the pandemic (Covid19) with its associated reduction in air travel, and a fall in commercial aircrafts delivery took its toll. Further borrowing has contributed to increasing in the cost of borrowing. However, Boeing acknowledges that interest rate risk is non-material (The Boeing Company Annual Report, 2020. p. 58). Boeing dependence on loans and debt has resulted in the downgrade of its credit rating by credit agencies (Franke 2019; The Boeing Company Annual Report, 2020. p. 48) and further downgrade could close its access to capital markets.
The Boeing company anticipates its negative operating cash flow would continue into 2023. However, its has put in place some mechanism and plans to mitigate the effects of negative liquidity: by reducing the production of new aircraft, making share contributions to the pension plan, reduction in size of workforce to save cash.
Section C: Ratio Analysis
With reference to your chosen Multinational Enterprise (and using the most recent annual report published),analyse the financial performance (in terms of profitability, liquidity, efficiency and investment) of the company in the two most recent consecutive financial periods ( e.g. 2019/2020 or 2021/2020, ) using 8 different accounting ratios (prior year comparative figures will be available in the annual report
Steps
Select the 8 ratios
Define the 8 ratios
Calculate the 8 ratios (don’t copy and paste ratios) either in the appendix or on the body of your report. Show your calculations.
Interpret the ratios
What do the ratio values reveal? – i.e. the significance of the ratios
Any reason for the movement in the ratios across the two years?
Note: Paste an image of the Balance sheet/income statement in the appendix of your report. Do not attach a separate spreadsheet******
I have used Boeing as an example – The calculations are in the appendix
PROFITABILITY RATIOS
ROCE –
This measures (get the definition in a textbook and put a textbook reference after the definition)
PBIT – Profit before interest and tax – This is the profit before interest and tax are deducted.
Explanation
What is the significance of the ratio you have calculated? – LOOK AT THE DEFINITION
ROCE measures the return relative to capital employed. The ROCE fell from –5.44% in 2019 to -19.69% in 2020. Since, ROCE measures returns relative to capital, that means for every £100 of capital invested, Boeing lost £5.44 in 2019 and £19.69 in 2020.
Identify reasons for the movement in the ratio across the two years
First discuss the relationship between the numerator and denominator
A number of reasons account for the deterioration in the value of ROCE. Operating loss of $1,975m was made in 2019. This went further south in 2020 to a loss of $12,767m. Though the value of the capital increased (due to increase in debt), Boeing could not generate or improve on its return in 2020. Therefore it is sufficient to say that Boeing has not been able to effectively utilize its working capital in generating profits.
Second present contextual reasons for the movement
Some contextual issues can be cited for the movement in the ratio. The deep impact of the pandemic on commercial air travel and the grounding of the 737 Mx airplanes (both were involved in crashes) as well as Covid which affected demand for aircraft and aircraft deliveries (The Boeing Annual Report, 2020, p. 27, 35)
Operating Profit Margin
This measures (define and attach a reference)
Explanation
What is the significance of the ratio you have calculated?
Operating margin fell from -2.6% to -22.0% from 2019 to 2020. Boeing made operating loss in both years. Since Operating margin measures the operating profit relative to the revenue, that means for every £100 of sales, Boeing lost £2.6 in 2019 and £22 in 2020. The performance was poorer in 2020.
2. Identify reasons for the movement in the ratio across the two years
First discuss the relationship between the numerator and denominator
A number of reasons account for the decline in the operating margin. Operating loss of $1,975m was made in 2019. This went further south in 2020 to a loss of $12,767m. The main cause of the operating loss in 2020 was the fall in sales. Major contributor to the loss were sales which fell from $76b in 2020 to $58b in 2019. Another was increase in General and administrative expense which were $3909m in 2019 and $4817m in 2020.
Second present contextual reasons for the movement
Covid19 and the fall in the demand for commercial aircrafts and deliveries accounts for the dismal performance in both years (The Boeing Annual Report, 2020, p. 27, 35)
Gross profit margin
This measures …..(put a textbook reference after the definition)
Formula
Gross profit x 100
Revenue
2020
(5685) x 100 = profit margin
58158
= -9.77%
2019
4466 x 100 = profit margin
76559
Explanation
What is the significance of the ratio you have calculated?
Gross profit margin fell from 5.83% to -9.77% from 2019 to 2020. That means Boeing made less profit for every dollar of sales after paying direct cost (production related).
Identify reasons for the movement of the ratios between two years.
First discuss the relationship between the numerator and denominator
The ratio has decreased due to decrease in sales revenue from $76559m in 2019 to $58158m in 2020. This decline is more severe in sale of product component of sales which decreased from $66094m to $47142m. On the other hand cost of services have also increased from $9154m to $9232m over the last two years.
Second present contextual reasons for the movement
The fall in aircraft demand and delivery occasioned by Covid19 and the Max grounding caused by the air crashes underpin the fall in gross profit (The Boeing Annual Report, 2020, p. 30)
EFFICIENCY RATIOS –
Inventory Turnover – define it, reference it
The above is closing inventory which can be found under Assets in the statement of financial position.
Average inventory can also be used instead of it. But for average inventory you must have opening inventory, which is the closing inventory for the year before.
Average inventory = Opening inventory + Closing inventory
2
Explanation –
What is the significance of the ratio you have calculated?
Inventory Turnover days increased from 344 days to 468 days. It took Boeing more days to deliver aircraft in 2020. It indicates a less efficient management of inventories. However, the situation was largely due to external factor which was outside the control of Boeing.
Identify reasons for the movement of the ratio across the two years.
First – discuss the relationship between the numerator and denominator
The increase in inventory and decrease in cost of sales is the cause for the decline in turnover ratio, hence increase in inventory days. This is indicating management intention to keep high level of inventory to support trade. But this increase level of inventory would subsequently increase the inventory holding cost of the company.
Identify reasons for the movement of the ratios between two years.
Boeing admits that there were a large number of undelivered plans in inventory as at December 2020, which accounted for the large value on inventory in 2020.
Covid19 and the fall in the demand for commercial aircrafts and deliveries caused inventory to accumulate (The Boeing Annual Report, 2020, p. 28)
Receivable Turnover Days – define it and reference it
The above is receivables which can be found under Assets in the statement of financial position.
Average receivables can also be used instead of it. But for average receivables you must have opening receivables, which is the receivable amount for the year before.
Average receivable = Opening receivable + Closing receivable
2
Explanation –
What is the significance of the ratio you have calculated?
Receivable turnover days was 59 days in 2019 but increased to 62 days in 2020. Although, this might look like some decrease in efficiency as the customers are taking slightly more time to settle their dues with Boeing.
Identify reasons for the movement in the ratio across the two years
Discuss the relationship between the numerator and denominator
Receivable turnover days was 59 days in 2019 which increased to 62 days in 2020. Although the receivables (Account and unbilled) are decreasing along with the sales. But the rate of decline in receivables is slower than the sales. Which shows company ineffective ability to retrieve cash from customer.
Increase in the receivable days can mainly be due to two reasons:
The customer are having financial difficulties and delaying their payments.
It can be company sales strategy to give more time to the customers to settle their debt, which can potentially bring more sales.
But as in this case Boeing sales are decreasing, therefore more likely case is the customer (airline companies) are facing financial difficulties.
Present contextual reasons for the movement in the ratio across the two years
Boeing admits that there were a large number of unbilled receivables as contract execution takes a long period. While it recognises revenue, it cannot issue involve under the terms of the contract with the customer (The Boeing Annual Report, 2020, p.73)
LIQUIDITY RATIOS
Current Ratio- define and attach a reference
Explanation
What is the significance of the ratio you have calculated?
The current ratio for Boeing is above 1, for year 2020 and 2019, which means Boeing can meet its short term obligation as they fall due.
Identify reasons for the movement of the ratios between two years.
Discuss the relationship between the numerator and denominator
In 2020, current ratio was 1.39. However, there was increase from 1.05 to 1.39 between 2019 and 2020. This was due to increase in current assets such as customer financing and short term investment. Also current liabilities are also decreasing which is also a contributing factor.
Second present contextual reasons for the movement in the ratio across the two years.
Boeing admits that there were a large number of undelivered inventories due Covid19 and travel restrictions (The Boeing Annual Report, 2020, p.73)
Acid Test/Quick Test Ratio – define and attach a reference
Explanation
What is the significance of the ratio you have calculated?
Acid test ratio falls below 1. That means – with the removal of inventory, Boeing is illiquid and might not be able to meet its short obligations as they fall due. Which means still there remains a higher probability that Boeing will not be able to meet short term liabilities in the scenario of quick payments demanded by creditors.
Identify reasons for the movement of the ratio across the two years.
The increase is caused by the an increase in short-term investment made in 2020. Short-term investment increased from $545m in 2019 to $17,838m in 2020.This was used to pay benefits and used as a liquidity vehicle (The Boeing Annual Report, 2020, p.113)
GEARING RATIOS
Interest Coverage Ratio – define and attach a reference
Explanation
What is the significance of the ratio you have calculated?
Boeing had an interest coverage ratio of -2.74 in 2019 and -5.92. The negative values show that Boeing might struggle to pay its interests in loan since it made a loss in 2019 and 12020
The fall in operating profit is largely due to the fall in sales with a lower percentage fall in operating profit
Identify reasons for the movement of the ratio across the two years.
The negative cash position of Boeing means it would delay the payment of its interest on loan as it is uncertain with respect to when commercial flights would return to pre-pandemic levels
Conclusion
Here you can write short summary of the report
References
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