Competency

Evaluate financial ratios to differentiate profitability and liquidity across organizations.

Student Success Criteria

View the grading rubric for this deliverable by selecting the "This item is graded with a rubric" link, which is located in the Details & Information pane.

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.

NOTE – Be sure the documents display proper grammar, spelling, punctuation, and sentence structure.

Assessment Requirements/Submission Requirement:

A 2–3-page memo in Microsoft Word.

A – 4 – Mastery

Report clearly and accurately explains different liquidity, profitability, and solvency ratios used to assess the financial health of a corporation.

A – 4 – Mastery

Accurately computes liquidity, profitability, and solvency ratios using Boeing's financial statements.

A – 4 – Mastery

Accurately computes liquidity, profitability, and solvency ratios using Airbus's financial statements

A – 4 – Mastery

Astutely and accurately compares and contrasts the financial ratios.

A – 4 – Mastery

Expertly analyzes, using significant supporting detail, whether you believe Boeing is stable compared to Airbus.