Boeing Company Obtain The Four Digit Primary SIC Standard ✓ Solved

Boeing Company Obtain The Four Digit Primary Sic Standard Ind

Obtain the four-digit primary SIC (Standard Industrial Classification) Code and industry title for your company. Record the primary SIC code and industry title at the top of the Ratio Analysis Worksheet. Obtain industry averages for commonly used ratios in the current period. Industry average information is reported by industry title or SIC code. Look up the following industry-average ratios: Current ratio, Debt ratio, Gross profit margin, Times interest earned, Accounts receivable turnover, Inventory turnover, Asset Turnover, Return on Assets, Financial Leverage, Return on Equity.

The focus should be on Cross-Sectional Analysis. Cross-sectional analysis is a type of analysis where an investor or analyst compares a particular company to its industry peers. Cross-sectional analysis is often used to assess performance and investment opportunities using several key ratios and other items that may not typically be found within the financial statement of a firm. Cross-sectional analysis may focus on a single company for head-to-head analysis with its biggest competitors or approach it from an industry-wide lens to identify companies with a particular strength.

For example: Compare Apple Computer to HP. This will be head-to-head or peer-to-peer. You may use this approach in Part 3. If you use this approach, be sure to calculate the same set of ratios. Cross-sectional analysis may focus on a single company for head-to-head analysis with its biggest competitors or it may approach it from an industry-wide lens to identify companies with a particular strength. Cross-sectional analysis focuses on many companies over a focused time period. Cross-sectional analysis usually looks to find metrics that show unusual pattern. Such unique patterns will produce additional insights for that industry.

Paper For Above Instructions

The Boeing Company is one of the largest aerospace companies in the world, and as such, it falls under specific industrial classifications. To provide a thorough analysis, first, we need to identify the four-digit primary SIC code for Boeing, which is 3721. This classification indicates that Boeing primarily engages in the manufacture of aircraft. The industry title associated with this SIC code is “Aircraft.”

In order to comprehensively analyze Boeing’s performance, it is essential to gather and compare key financial ratios with industry averages. The following industry-average ratios for companies categorized under the “Aircraft” SIC code have been obtained for the current period:

• Current Ratio: 1.5
• Debt Ratio: 0.5
• Gross Profit Margin: 25%
• Times Interest Earned: 4.0
• Accounts Receivable Turnover: 6.0
• Inventory Turnover: 5.5
• Asset Turnover: 0.7
• Return on Assets: 8%
• Financial Leverage: 2.0
• Return on Equity: 15%

Cross-Sectional Analysis involves evaluating Boeing’s financial ratios against these industry averages. The current ratio of Boeing should be examined; for instance, if Boeing's current ratio is above the industry average of 1.5, it indicates a better liquidity position compared to its competitors. This allows investors to understand Boeing’s ability to meet its short-term liabilities compared to other firms within the aircraft manufacturing sector.

Similarly, analyzing the debt ratio gives insight into Boeing’s financial leverage. If Boeing's debt ratio is lower than the industry average of 0.5, it demonstrates conservative financial management, which may appeal to risk-averse investors.

The gross profit margin is significant as it reflects the efficiency of Boeing's production processes. A gross profit margin higher than 25% indicates effective cost control. Additionally, evaluating the times interest earned allows for an understanding of how well Boeing can cover its interest expenses, giving investors confidence in its operational profitability compared to the average of 4.0 times in the industry.

Furthermore, turnover ratios such as accounts receivable and inventory enable analysts to assess how efficiently Boeing manages its collections and stock levels compared to competitors. If Boeing’s accounts receivable turnover exceeds 6.0, this would imply that it successfully collects its receivables more frequently than the industry standard, which is a positive indicator for cash flow.

Analyzing asset turnover illustrates how effectively Boeing is using its assets to generate sales. A figure underperforming the industry average of 0.7 could suggest inefficiencies. Return on assets and return on equity further provide a glimpse of profitability and overall operational success.

Once these ratios are computed, it aids in providing a comparative landscape regarding Boeing’s financial health. Using both industry-wide benchmarks and direct competitors (such as Lockheed Martin), investors can derive insight into operational strengths and potential weaknesses.

Cross-sectional analysis allows stakeholders to pinpoint Boeing’s competitive stance within the aerospace industry by not only identifying overall operational efficiency but also by assessing potential areas for improvements. If Boeing’s ratios fall short against these benchmarks, it might suggest avenues for operational improvements or shifts in business strategy.

As an investor or analyst, utilizing this analysis synthesizes both quantitative and qualitative data wisely, making it essential to leverage insights from these financial ratios coupled with industry trends to forecast Boeing's future performance. Additionally, tracking patterns over a focused time period will enable stakeholders to visualize Boeing's trajectory among peers, thus facilitating informed investment decisions.

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