BOEING COMPANY FINANCIAL PERFORMANCE RAP RESEARCH PROJECT DETAIL__________________________________ __ 11/20/2011 UNIVERSITY NEME STUDENT NAME Contents 1.

INTRODUCTION OF BOEING: 4 1.1 REASONS FOR CHOOSING RAP TOPIC: 4 1.2 PROJECT OBJECTIVES AND RESEARCH QUESTIONS: 6 1.2.1 RESEARCH QUESTIONS: 6 1.3 RESEARCH FRAMEWORK: 7 2. SOURCES OF INFORMATION: 8 2.1 PRIMARY DATA COLLECTION: 8 2.2 SECONDARY DATA COLLECTION 9 2.3 LIMITATIONS OF INFORMATION GATHERING: 10 2.4 RESEARCH APPROACH: 11 2.4.1 RATIO ANALYSIS: 11 2.4.2 SWOT ANALYSIS: 12 2.4.3 PORTERS five forces model 13 3. FINANCIAL RATIO ANALYSIS: (BOEING AND EADS COMPANY) 15 3.1.1 CURRENT RATIO: 15 3.1.2 QUICK RATIO: 16 3.1.3 RECEIVABLES (DEBTORS) COLLECTION PERIOD: 18 3.1.4 AVERAGE AGE OF INVENTORY: 19 3.1.5 ASSET TURNOVER: 21 3.1.6 DEBTS/EQUITY RATIO: 22 3.1.7 GROSS PROFIT MARGIN: 24 3.1.8 NET PROFIT MARGIN: 26 3.1.9 EARNINGS PER SHARE (EPS): 27 3.2 BUSINESS ANALYSIS BOEING COMPANY: 29 3.2.1 SWOT ANALYSIS: 29 3.2.1.1STRENGTHS: 29 3.2.1.2 WEAKNESSES: 30 3.2.1.3 OPPERTUNITIES: 30 3.2.1.4 THREATS: 31 3.2.2 PEST ANALYSIS 32 3.2.2.1 POLITICAL FACTOR: 32 3.2.2.2 ECONOMIC FACTOR: 32 3.2.2.3 SOCIAL FACTOR: 33 3.2.2.4 TECHNOLOGICAL FACTOR: 33 3.2.3 PORTER MODEL: 33 3.3 CONCLUSION AND RECOMMENDATIONS: 34

PART1 PROJECT OBJECTIVES AND OVERALL RESEARCH APPROACH 1. INTRODUCTION OF BOEING: The Boeing Company is an American international aero space and the defence corpo ration. It was founded in 1916 by William E. Boeing in Washington. Boeing develo ped with the passing of the years, combined with McDonnell Douglas in 1997. The Headquarter of Boeing is at Chicago, since 2001. Boeing has several commercial b usiness units, that are Boeing Commercial airplanes (BCA), Boeing Defence, Space s and Security (BDS), Engineering, Operations and Technology, Boeing Capital, an d of Boeing Shared Services Group. Boeing is the worlds leading aircraft manufacturer by deliveries, revenue and by orders and it is the third biggest business of defence in the world based on the defence revenue. Boeing is the first largest exporter by value of United State s. Boeing furnishes products and services to 150 countries and is the one of big gest exporter of United States in sales. The total number of employees of Boeing is more than 165,000 throughout the United States and 70 countries. Boeing is s tructured in two types of businesses: Boeing Defence, Space & Security and Boein g Commercial Airplanes. Supporting these units is Boeing Capital Corporation. 1.1 REASONS FOR CHOOSING RAP TOPIC: The basic purpose of this research project is to measure the financial health a nd business performance of the respective firm by using the financial analysis a nd other business models which would help in understanding the current market ri valry of a firm. It is important to measure the financial health of a company an d also to access the risk of the firm. The main objective to choose this researc h project is to learn the skills how to find the performance of the firm with th e help of the accounting and other business techniques. While considering financ ial and of other available information. Measuring performance of the business is important for the decision making in future. Measuring performance through Ratio analysis seems a fascinating point because u sually it might teach us about finance, accounting procedures and businesses ope rations as well. Whenever the financial Ratio analysis is used, it helps us to c heck the performance of the business either its position in this year is better or not as compare to the last year, and either firm has better liquidity positio n to pay the obligations and the shareholders are happy or not with the company. In addition: financial ratio analysis is a part of finance and business studies courses. Thats why it is important thing to know about. Sometime it is important to analyze the financial ratio analysis in economic cycle as well. This will he lp in understanding the condition of the economy in different phases like Boom a nd recession. As for as the Boeing Company is concerned it is one of the largest airplane man ufactured company .Boeing Company having a huge competition with the EADS (Air B us) in the market and it would be quite better to find the current strategic obj ectives of the Boeing and also the current financial performance while apply the key concepts studied during the class lectures. Indeed this sector in one of th e important sector in the word and rapid changes are going to be made. And there fore it is important to measure the performance of Boeing and also to analyse th e key business operations. 1.2 PROJECT OBJECTIVES AND RESEARCH QUESTIONS: The RAP aims and objectives are to find out the current business objectives of t he Boeing and how these objectives are going to achieve and also to look at the importance of the Boeing Company in the industry. Similarly, the plan objective of this RAP is to measure the three year financial performance of Boeing and com paratively with the performance of the key market competitor. Secondly, this project will also provide the better understanding of the busines

s strategies that are applied by the Boeing Company. And also to find the level of competition, market risk and the strengths of the Boeing Company. At the end, more precisely RAP will help in understanding the industry current p ractices in financial and business market. 1.2.1 RESEARCH QUESTIONS: To achieve the objectives of the research projects a detail list of questions wa s prepared and then to get the answer of these questions, a comprehensive study was made from the research papers, books and the annual financial reports of the Boeing Company. Different research questions followed by the research objectives are discussed b ellow. What is the current financial position of Boeing in the market comparatively to the key competitor? Financial ratio analysis covering the subsection of question like liquidity, gea ring, and profitability and market ratios is applied to look at the current fina ncial position of the Boeing which helped in understanding the financial risk, i nvestment level and the profitability of the firm. This question will also help understanding the financial strength of the key competitor. What would be the market condition of the Boeing Company in term of market stren gth and opportunities and the condition of supplier, customer and the industry i tself? To answer the question discussed above a comprehensive SWOT and Porter Diamond m odel is applied in the context of Boeing Company which will cover all the aspect s of the question. Finally what are the key factors which affect on the performance of the Boeing C ompany in the business market? While getting through this question Pest analysis is applied to cover all the ex ternal factors which affect on the Boeing performance all over the globe. 1.3 RESEARCH FRAMEWORK: This portion provides the understanding of the research methods adopted to answ er the questions. This question is about the financial performance of the busine ss and its competitors and was covered with the help of detailed three year rati o analysis and similarly SWOT and PORTER analysis to measure the market position of the Boeing finally a PEST analysis to seek the factors affecting on the perf ormance of the Boeing Company.

PART 2 INFORMATION GATHERING AND ACCOUNTING OR BUSINESS TECHNIQUES 2. SOURCES OF INFORMATION: For the RAP different types of information are collect to support the RAP object ives and techniques used to achieve the objectives. Usually two different source s of data used in my research project 2.1 PRIMARY DATA COLLECTION: In this research project to get the answer of my questions, I have made formal i nterviews with the professionals about the importance of the financial ratios an d what other techniques that could be used to support the research objectives. F ormal interviews helped be in collecting the basic information about the industr

y and also about the selection of techniques. Asking questions in the interview always tailored the best information which can further b use to implement in the project. The project mentor always shares som e sort of primary information about the topic of my project. And guide be how to collect the primary data from the market. First a list of question is designed then interviews with the people of Air line industry, financial market and other business professions are made. 2.2 SECONDARY DATA COLLECTION Secondary data is always readily available and helped in getting the project res earch objectives because secondary data based on the previously research studied and different tools and techniques are used to define the topic of the research . Without the support of the secondary data it always seems difficult to approac h the roadmap of the research because it prove the guiding platform how to appro ach the research project like previously have done so far. Secondary data can ea sily be attained and it also save the time and cost of the research project. Different sources of secondary data are used in my research project discussed be llow Financial statements and annual reports of the Boeing Company was the used to ac cess the relevant data for the analysis. These reports contain the comprehensive information about the operations and helped in gathering the information. Three years annual reports of the Boeing and EADS Company were collected and after th e proper study and references are given at the end of the report. Class lectures and notes were the key sources of data to clear the concepts befo re the implementation of accounting techniques in the research project. Class le ctures guided me to make the better picture of financial analysis and different types of techniques used in the ratio analysis and what are the benefits of thes e techniques. Class notes also provided an insight of the business management an d the factors affecting on the business and what are the available methods to ac cess the market information. With the help of library, Different books and published articles were studied to see that what have been done in the previous research studies and how can I imp lement it in my research. References of these articles are given in this researc h project, news papers and other general articles also facilitated me to underst and the situation of the market and also the insight of the future market. With the help of online access published research journal gave me better underst anding of the financial analysis and what sort of benefits that firm can get by using this. After the study of literature related to the research objectives and the question it made me possible to use financial and other business analysis t echniques in my research project. Emerald insight, science direct and other onli ne research journal helped me in getting the published material. 2.3 LIMITATIONS OF INFORMATION GATHERING: Basically the information gathered for this research project was purely based on the secondary data except the general interviews made to look at the right dire ction of the research approach. o I was not able to approach personnel of Boeing Company during my project . Meanwhile I tried my level best to get the reference of Boeing employees to sh are the information. o The information is collected from the data which was publically availabl e for the share holders of the company like annual reports and other articles av ailable in news papers. o My research information is limited to the methods adopted to analyze the performance of the firm. Except methods used other business methods were also a vailable but that was not the point of discussion over here. o In the collection of information a formal questionnaire was not used and information was collected based upon the general list of questions discussed ab ove in detail. 2.4 RESEARCH APPROACH: 2.4.1 RATIO ANALYSIS:

Financial ratios are the calculation and the comparison of the proportions that are extracted from the information in the financial states of a business. The d egree and the historic evolution of these ratios can be used to pull the conclus ions on the financial position of a business, its operations and attractiveness as investment. Advantages of the Ratio analysis o To analyze the financial health, operational effectiveness and the persp ectives of future interrelation, various type of financial information is being founded in the financial document. o It used to do the study of past and retrieve the results for present si tuation. By this, inferences are pulled and that are used to project the future. o Ratio analysis is more used in the analysis of the tendencies. o Ratios are measures of effectiveness can be used to oversee effectivenes s and the commercial profitability of an entity. o The analysis of ratios used for inter-business possible comparisons, to know the interdepartmental valuation of the activities. o Used by the bankers and the financial institutions to evaluate the credi tworthiness of the borrowers and customers. 2.4.2 SWOT ANALYSIS: It is an instrument that identifies the weaknesses, strengths, threats opportuni ties of an organization. More precisely, true model of this rate is what an orga nization can do and cannot do as well as opportunities and potential threats. T his method analyzes and hold the news from an environmental analysis and to sepa rate it internally (weaknesses and strengths) and the external questions (threat s and opportunities). Once this finished, the analysis determines what the busin ess can help in the realization of their objectives, and the obstacles must be o vercome or reduce to attain the wished results. Advantages The swot analysis is an important instrument in the formulation of strategy and in selection process. This is a powerful instrument, but that implies a big subj ective constituent. It is the better one when it is used as a guide, not as a tr eatment. The businesses that succeed they add more strength, overcome their weak nesses and protect itself against the external threats and internal weaknesses. They keep equally an eye on their business environment and distinguish it and g ain new opportunities more quickly than their competitors. Swot analysis helps the strategic planning as follows: o This is an information source for the strategic planning. o It constructs the strengths of the organization. o Overturn the weaknesses. o It creates maximum response to business opportunities. o Overcome the threats of the organization. o It helps to recognize basic competences of the business. o It contributes to develop the objectives for the strategic planning. o It helps to get knowledge in advance, and then by using that knowledge i t helps to formulate and correct the business strategies. 2.4.3 PORTERS five forces model The Analyses of Five Forces helps the supplier to oppose an aggressive environme nt. That has similarities with other utensils for environmental inspect, for ex ample the analysis PEST, but it tends to concentrate on the distinctive one, ind ependent, SBU (Strategic Business Units), rather than of a single product or a p roduct series. For example, the Dell analyzes the market for the computers that are used by the businesses. Five forces analysis looks into five domains keys, the threat of new entry, power of the buyers, strength of the suppliers, threat of substitute and the competitive rivalry.

Advantages Porters five forces model has a significant importance for the organization to co nstruct a long term organizational strategy and supporting the competitive edge rather than of simply to put the forces in a list. The successful exercise of the analysis of Porters model is to understand the ide ntification of the sources of competition, the potency and the probability that the existence of competition, and premeditated recommendations for the action th at the corporation must take to develop the barriers to the competition. PART 3 RESULTS, ANALYSIS, CONCLUSIONS AND RECOMMENDATIONS 3. FINANCIAL RATIO ANALYSIS: (BOEING AND EADS COMPANY) 3.1.1 CURRENT RATIO: Current ratio of Boeing has considerably increased in past three years. Current ratio has increased from 0.84 in 2008 to 1.07 in 2009. This is because of high i ncrease in current assets, and these are increased by $ 9.31 billion. Accounts r eceivables are increased by $183 million in 2009 as compared to 2008; this incre ase is mainly due to soft credit sales terms for their customers to facilitate t hem in global financial crisis. Inventory increased by $1.3 billion having total worth of 16.9 billion in 2009. At December 31, 2009, and 2008, the inventory ba lance was $1,685 (net of $120 of advances received under the inventory supply ag reement) and $1,822, of which $1,070 relates to yet unsold launches at December 31, 2009. ULA is continuing to assess the future of the Delta II program. Current ratio of EADS has considerably increased in past three years. Current ra tio has increased from 0.09 in 2008 to 1.00 in 2009. This is because of decrease in current assets, and these are increased by 2.3 billion. Accounts receivables are increased by 34 million in 2009 as compared to 2008; this decrease is mainly due to strict credit sales terms for their customers to facilitate them in glob al financial crisis. Inventory increased by 0.21 billion having total worth of 21 .577 billion in 2009. The continuous decrease in current ratio is mainly due to decrease in current as sets and increase in current liabilities. As of 31 December 2010 and 2009, respec tively, 5,037 million and 5,080 million of retirement plans and similar obligati ons and 3,176 million and 3,057 million of other provisions mature after more th an one year. 3.1.2 QUICK RATIO: Quick ratio of Boeing has increased in 2009 and then decreased in 2010. Quick ra tio has increased from 0.33 in 2008 to 0.55 in 2009. This is because of high inc rease in liquid assets. Accounts receivables are increased by $183 million in 20 09 as compared to 2008; this increase is mainly due to soft credit sales terms f or their customers to facilitate them in global financial crisis. In 2009 curren t liabilities has been increased by $2.11 billion because in 2008 there is finan cial crisis in the economy and firm get more liabilities to finance its operatio ns to run smoothly. Quick ratio of EADS has increased in 2009 and then decreased in 2010. Quick rati o has decreased from 0.07% in 2008 to 0.49 in 2009. This is because of high incr ease in liquid assets. Accounts receivables are increased by 34 million in 2009 a s compared to 2008; this decrease is mainly due to strict credit sales terms for their customers to facilitate them in global financial crisis. Inventory increa sed by 0.21 billion having total worth of 21.577 billion in 2009. The finished goods and parts for resale before write down to net realisable valu e amount to 2,091 million in 2010 (2009: 2,215 million) and work in progress bef ore write down to net realisable value amounts to 14,766 million (2009: 15,136 m illion). Write downs for finished goods and services are recorded when it become s probable that total estimated contract costs will exceed total contract revenu es. In 2010, write downs of inventories in the amount of -249 million (2009: -59 3 million) are recognised in Cost of Sales, whereas reversal of write downs amou

nts to .

81 million (2009:

19 million). The impairment charges in 2009 for work in

3.1.3 RECEIVABLES (DEBTORS) COLLECTION PERIOD: Boeing receivables collecting periods decreasing since 2008 it decreased to 30 d ays in 2009 from 32 days in 2008. It looks from receivable days that Boeing have a very efficient credit control, therefore there is no worry of irrecoverable d ebts. In 2010 Boeings has made extensive investments in research and development, with its unique knowledge of wing technology and new lightweight composites being on e of its stronger manufacturing core competencies. Boeing has begun to build str onger bonds with its suppliers, as they are beginning to research with their sup pliers to integrate and design better aircrafts. With some of their research and development being done outside the company, they are able to design and build b etter aircrafts. EADS receivables collecting periods increasing since 2008 it increased to 46 day s in 2009 from 43 days in 2008 and in 2010 the DSO are 52 days. It looks from re ceivable days that EADS has not a very efficient credit control. Trade receivables are classified as current assets. As of 31 December 2010 and 2 009, respectively, 383 million and 270 million of trade receivables are not expe cted to be collected within one year 3.1.4 AVERAGE AGE OF INVENTORY: Boeing inventory holding period is 93.53 days in 2008 and then it decreased to 9 0.51 days in 2009 but increased to 138.02 days in 2010. This trend shows that in crease in 2010 is very significant. Boeing holding days is very long so it creat es the problem stock getting obsolete. It also increase firms holding cost of mat erial therefore firms cost of products is continuously increasing since 2007 and this is an additional burden on firms profit. Companies professional claims that they increase in the inventory holdings because they get more orders in the 2010 and they want to secure their position by reducing the impact varying price of raw material. Because of the fluctuation in prices of raw material, it may conve rt into a profitable deal into the unprofitable deal. EADS inventory holding period is 195 days in 2008 and then it increased to 202 d ays in 2009 but decreased to 190 days in 2010. This trend shows that increase in 2010 is very significant. EADS holding days is very long so it creates the prob lem stock getting obsolete. It also increase firms holding cost of material there fore firms cost of products is continuously increasing since 2008 and this is an additional burden on firms profit. But when the AAI decreased in 2010 the company work more efficiently, reason behind is that they increase in the inventory hol dings because they get more orders in the 2010. 3.1.5 ASSET TURNOVER: Boeing asset turnover shows that it is very efficient in utilising its asset in 2008. Decreasing trend in asset turnover has shown company is not utilizing its assets more efficiently in 2009 and 2010 as compared to 2008. In 2009 the asset turnover ratio decreased to 1.1% from 1.13% in 2008, but it has fallen badly in 2010 by 0.17% as compared to 2009. One of the reasons behind the decrease in rat io is due to acquiring of new land & building there is increase of $415million a nd having a total worth of $9.54 billions Another reason behind the decrease in ratio is due to acquiring of new equipment and machinery there is increase of $393million and having a total worth of $10.

38 billion. Moreover Boeing made huge investments of $3.2 billion in time deposi ts in 2010; further firm has pledged $57 million money market funds due to this fact firm cannot optimally utilize them and this cause of fall in asset turnover ratio. EADS asset turnover shows that it is very efficient in utilising its asset in 20 08. Decreasing trend in asset turnover has shown company is not utilizing its as sets more efficiently. In 2009 the asset turnover ratio decreased to 0.03% from 0.568% in 2008, but it slightly increased in 2010 by 0.01% as compared to 2009. One of the reasons behind the decrease in ratio is due to acquiring of new land & building there is increase of 5million and having a total worth of 13.4 billion. The Groups security portfolio amounts 8,055 million 2009 as compared to 6952 mill ions in 2008. The security portfolio contains a non-current portion of available -for-sale-securities of 3702 million (in 2008: 2,759 million) and securities des ignated at fair value through profit and loss of 281 million (in 2008: 281 milli on) as well as a current portion of available-for-sale-securities of 3749 millio n (in 2008: 3,461 million) and securities designated at fair value through profi t and loss of 323 million (in 2008: 451 million).

3.1.6 DEBTS/EQUITY RATIO: Boeing debt to equity ratio has increased in 2009. Company have very high level of gearing in 2009. In 2008 it was -29.95 and increased to 20.26 in 2009 this ha s then decreased to 16.37 in 2010. The firms debt to equity ratio is negative i n 2008 because of high repurchase of stocks in 2008 by the company. This high re purchase is mainly due to the financial crisis of 2008 in which company heavily buy back its shares to maintain share prices in the market. This high buyback mak e the firms stock holders equity negative and as a result the ratio is negative. In 2009 the firm reduced its holding of treasury stock and there is decrease in t reasury stock by $1.84 billion this heavy decrease in treasury stock lead to mak e the stock holders equity possitive and as a result the debt to equity ratio is also possitive. EADS debt to equity ratio has increased in 2009. Company have slightly increase of debt in 2009. In 2008 it was 5.84 and increased to 6.54 in 2009 this has then further increased to 8.30 in 2010. On 27 May 2009, the Shareholders General Mee ting of EADS renewed the authorization given to the Board of Directors to issue shares and to grant rights to subscribe for shares which are part of the Companys authorized share capital, provided that such powers will be limited to 1% of th e Companys authorized capital from time to time and to limit or exclude preferent ial subscription rights, in both cases for a period expiring at the Shareholders General Meeting to be held in 2011. As of 31 December 2010, trade liabilities amounting to 118 million ( 77 million a s of 31 December 2009) mature after more than one year. Included in Other liabili ties are 20,608 million (2009: 18,619 million) due within one year and 5,512 mill ion (2009: 3,009 million) maturing after more than five years. 3.1.7 GROSS PROFIT MARGIN: Boeing gross margin has decreased, in 2008 it is 17.75% but slightly decreased i n 2009 to 17.45%.Despite an increase in turnover of 12%, the gross profit margin has fallen by 1.69%. In year 2009 the firms cost of product increased by 14% which is 2% higher than increase in the revenue as a result there is slight decrease in GP margin during the year 2009, Boeing confronted unprecedented market environments. The global recession and record-setting declines in passenger and cargo air traffic drove B

oeing Commercial Airplanes orders down, softened its services revenues and slowe d wide-body airplane production rates. Boeing Defense, Space & Security (formerl y Integrated Defense Systems) was challenged by the changing priorities of the U .S. Department of Defense and other agencies as they addressed their own budget pressures. Due to these circumstances firms revenues are not growing at a high pa ce but it has to bear fixed costs. Despite these stresses, the firm improved its performance in 2010 its GP margin in 2010 is 19.62% which is 12.43% higher than last years GP margin, this increase is mainly due to facts that: Boeing delivered 462 commercial airplanes, includi ng record 737 deliveries for the second year in a row, and won 530 net orders, i ncreasing Boeing Commercial Airplanes contractual backlog to 3,443 airplanes val ued at $256 billion. EADS gross margin has decreased; in 2008 it is 17.00% but rapidly decreased in 2 009 to 10.35%. There is a decrease in turnover of 1.02% in 2009; the gross profi t margin has fallen by 6.7%. In year 2009 the firms cost of product increased by 6.89% moreover the firms sale s has also been decreased. The main reason of decrease in sales or revenue of th e firm is impact of financial crisis. Revenues of 42822 million are decreased by 1% as compared to revenue of 2008 42265 million. In 2010 the Gross Margin increases by 1,785 million to 6,224 million compared to 4,439 million in 2009. This improvement is mainly related to onerous contract c harges incurred on the A400M and A380 programmes in 2009 ( 2.1 billion). Unfavour able foreign exchange rate effects are partly compensated by operational improve ment at Airbus and Astrium. 3.1.8 NET PROFIT MARGIN: Boeing net profit margin has deteriorated badly in 2009. The profit margin is de creased from 4.43% in 2008 to 1.92% in 2009. This is mainly due to the impact of global economic crisis. However it increased by 3.22% in 2010 from 1.92% to 5.1 4%. Another reason for the increase in the net profit margin in 2010 is that com pany has kept its expenses in control. Furthermore Boeing believes that outsourcing these components to suppliers would give the suppliers an ultimate control over manufacturers. The newest trend cam e into the production of new aircraft; an example of the new trend is the 787 Dr eam-liner. About 70 percent of its components of a given airplane are outsourced because the company can save more money and cost when outsourcing outside the c ountry and to generate sales. EADS net profit margin has deteriorated badly in 2009. The profit margin is decr eased from 3.69% in 2008 to -1.75% in 2009. This is mainly due to the impact of global economic crisis. However it increased by 3.00% in 2010 from -1.75% to 1.2 5%. Another reason for the increase in the net profit margin in 2010 is that com pany revenues have been increased rapidly. Research and development expenses in 2009 are 2,825 million and 2,669 million in 2008, primarily reflecting R&D activities at Airbus Commercial. 3.1.9 EARNINGS PER SHARE (EPS): Boeing has $3.75 earnings per share in 2008 then decreased in 2009 by $1.89 per share. In 2010 there is rapid increase in earnings per share and it becomes $4.4 9 per share. This increase is because of the reason that earnings of the firm si gnificantly increased in 2010 earrings were $1312 million and increased to $3307 millions in 2010. This increase in earnings is due to many new contracts of sal e that company has made during 2010. The company is able to obtain these contrac ts because of introduction of innovative products. EADS has 1.95 earnings per share in 2008 then decreased in 2009 by 2.89 per share. In 2010 there is rapid increase in earnings per share and it becomes 0.68 per sh are. This increase is because of the reason that earnings of the firm rapidly in creased in 2010 earrings were 572 million in 2010. This increase in earnings is d

ue to many new contracts of sale that company has made during 2010. There is rap id increase due to high increase in revenues in 2010.

3.2 BUSINESS ANALYSIS BOEING COMPANY: 3.2.1 SWOT ANALYSIS: 3.2.1.1STRENGTHS: I. Large Scale Operations: Boeing is a global market leader in its business, designing, developing, manufac turing, selling and supporting aircrafts, human space flight and launch systems, missile defence and services. It is one of the two major manufacturers that pro duce aircrafts with the capability of taking above 100 passengers. Along with th at it is the second largest defence contractors in United States. Thus it is positive that operating at large scales, Boeing has an edge from its competitors by able to penetrate in the markets in a better way having more reso urces and covering more area claiming a bargaining power as well. It has Army, N avy and Air-force as customers for various services and products as well with a vast variety. II. Strong Federal Government Association: In FY 2009-10, 46% of the Boeings total revenues were generated through Federal G overnments contracts. It shows that the association between Boeing and the Federa l Govt. is strong and has a positive impact on the overall companys position. III. Research & Development: Boeing is having a number of industries as its customers, but it is not somethin g done overnight, Boeing has seriously indulged itself in research and developme nt over the years. It has effectively developed itself in the areas of engineeri ng, operations and technology activities i.e. EO&T, which is an advanced researc h and development organization focused on innovative technologies, improved proc esses and the creation of new products. IV. Largest aerospace firm: Boeing, as already described is highly competitive is still largest aerospace fi rm. 3.2.1.2 WEAKNESSES: I. Legal Proceedings: Lawsuits, legal claims, legal proceedings, disputes, workers management, product liability claims, environmental liabilities, intellectual property disputes etc are the issues related to Boeing. II. Sluggish performance in some of the key segments: As compared to previous years values, Boeing was found to be having a decreased operational outcome by 15% approx. e.g. air-craft segment showed a decrease of 1 .5% of revenues. Extra care is needed as a weak performance on a continual basis will affect the financial position of the company.

3.2.1.3 OPPERTUNITIES: I. Expanding Growth: Boeing has been expanding in the product portfolio with the passage of time and thus has been making its position stronger in the market. Engineering services, Digital receiver technology, hardware and software for federal government and ma ny more acquisitions is just a start and further along the line a more opportuni ties of the sort are yet to be explored. Not only US, outside US there are more and more potential markets (global defence market to be specific) that are yet t o be explored. South America, India, China, Taiwan and so on. II. Commercial Aircraft demand: Commercial aircraft market by 2027 is expected to grow to $ 2.8 trillion. The gl obal fleet of commercial aircraft this year as compared to the current fleet siz e is expected to double. The biggest market is estimated to Asia Pacific region, with 2.8 trillion dollars, more than 35 percent of the market. Latin America, M iddle East and Africa Airlines for delivery between 2006 and 2025 will represent 13% of the total market. The company s leading producer of commercial aircraft and commercial jetliners i s one. The narrow body commercial jet aircraft models 737, 747, 767, 777 wide bo dies. 3.2.1.4 THREATS: I. US budget priorities: A change in the priority of the US budget can directly affect the Boeings growth level eg. A decrease in the budget will lead to a slow production capacity of th e country, decline in projects, even cancellations of projects may occur. II. Global recession: A global recession is one of the biggest threats to the company as it is operati ng in the global perspective and an economic recession will decrease its revenue s to a greater level. Tightening of credits and Labour layoffs may cause high ne gative effect on the operations of Boeing. III. High production cost: No matter how much a company is good at managing, production cost is a critical matter that affects the pricing and ultimately the sales, leading to being a hig h threat for a profit. IV. Competitors: Airbus, BA and a few other names are the competitors that Bowing must have a wat ch out for, as competitors are never to be thought as mild. 3.2.2 PEST ANALYSIS 3.2.2.1 POLITICAL FACTOR: Policy and regulatory decisions by governments can have a dramatic impact on the demand for civil transport aircraft. The high-level political intervention also has an important impact on the sales of aircraft. Different buyers decisions of spending such a huge amount of money a lways rely partly on the political reasons since the support and interference of government could affect the future of buyers. For example: currently China is t he biggest market for Boeing and it is expected to remain so for the next 20 yea rs. 3.2.2.2 ECONOMIC FACTOR: Aircraft manufacturers rely heavily on subsidies. Recently, Boeing and Airbus ar e on the debate of unfair subsidies. Likelihood of increasing fuel costs, congestion and other environmental restrict ions, as well as the prospect of higher security and insurance costs to reflect the risk of terrorism. The fuel cost is increasing in the future. With several airline companies closing down and the global tourism industry in r ecession, aircraft prices are down by around 20 per cent. Airbus had quoted arou nd 15 per cent less than Boeing for the IA contract during the bidding earlier i n the year. 3.2.2.3 SOCIAL FACTOR: Anti-US feeling feelings generated by the events of the past two years had adver sely impacted on Boeing s sales, especially in West Asia, which is a lucrative m arket for the industry.

3.2.2.4 TECHNOLOGICAL FACTOR: The supersonic transport is also an opportunity because an entirely whole new se gment of the market will form. Commercial carriers will buy many of these supers onic aircrafts in order to satisfy the consumers need to reach destinations quick ly and on time The most cost effective technological advancement for the commercial aircraft in dustry is designing planes faster. The increased production time will save costs on labour and enable better resource usage for each plane made. Boeing has util ized this technological advancement by building a new model, the Boeing 777, by using computer technology to build a prototype. 3.2.3 PORTER MODEL: 3.3 CONCLUSION AND RECOMMENDATIONS: No doubt this research project gave a clear understanding of the financial and b usiness position of Boeing Company. Different techniques of ratio analysis are u sed to access the financial health of the Boeing. If we look at the risk positio n of Boeing it seems high from the analysis but Boeing is one of the biggest com pany having investment all over the word, positive asset turn over and profitabi lity, thats why market risk does not matter a lot in this context, it can be seen from the credit rating of the Boeing Company as well. Similarly, the market competition of Boeing then the key Competitor EADS have lo w financial and market performance because Boeing is the leader in the market ha ving 75% market share in air line product worldwide. This research project explained the well thought market analysis of the Boeing C ompany about the market forces which affect on the operation, strength of the co mpany in term of investments, earning and the technology uses it line of product . This study also depicted the competitive rivalry of the Boeing Company more pr ecisely. And also explain the future condition of Boeing in term of threats and opportunities. Boeing Company currently facing a threat of global recession which decreases the market strength of the company it must cut down its cost in future and must tak e extra steps in strategic policies about the technology as for other market com petitors getting over the edge on some brand specification. Other competitors are also improving their product standard therefore Boeing mus t make a better market plans and avoid in the failure of the brand in future. There is a war of manufacturing the high tech air line products in the world the refore its a big challenge for the Boeing to lead the market, it could be happene d just to have better skilled and efficient management for the appropriate plann ing of the future. Boeing faced many challenges in past with the US government, it must resolved al l the issues as US government itself is a major customer of Boeing having billio n of trade agreements yearly.