Part 3 - Managerial Accounting Instructions
These are the questions:
I’ll upload an Excel File and Word Document with previous information for reference.
The company is: The Boeing Company
The Boeing Company
Week 1 Questions
1. The principal activity business of the company is commercial jetliners, defence, security, and space systems, and a product service provider. The company is the biggest manufacturing exporter. Some of the Boeing products and services are:
· Commercial Aircraft
· Military Aircraft
· Satellites
· Weapons
· Launch system
· Communication system
· Logistics and training
2. Chief Financial Officer (CFO): Brian West
Brian West is a Finance graduate from Siena College and a Business Administration graduate from Columbia Business School
Brian West is a long-time finance and business leader with experience across industries like aerospace, manufacturing, infrastructure, among some of the industries. With long-term strategic planning experience in complex global organizations, Brian West is the ideal candidate for the role of CFO.
The career of the west looks like this
· CFO of Refinitiv
· CFO and Executive Vice President of Operations for Oscar Health Insurance
· CFO & COO of Nielsen
· CFO of GE Aviation and CFO of GE Engine Services (in his 16 years stint at General Electric)
With his corporate experience,e Brian also is the founding board member of a nonprofit organization in Connecticut whose emission is to develop the next generation of female leaders.
3. The ethical issue which Boeing, as a company is facing, is engineering ethics which is on the backdrop of two crashes within two years, one of which was in 2018 and the other one in the year 2019, the jetliner which was into the crash was the same which is 737 MAX the company’s best selling jetliner.
The action of the company already led to big financial losses for the company and now that they have taken full consideration of the engineering fault, around $2.5 billion is something which the company has used to settle and this is only the settlement amount.
Week 2 Questions
1.
(in million)
2020
2021
Decrease (-)/Increase (+)
Revenue
$58158
$62286
$4128
Gross Profit
-$5685
$3017
$8702
EBIT
-$12767
-$2902
$9865
Yes, all the three total increase on a year-to-year basis, this is because 2020 was the worst year for the company and the company rebounded in 2021.
The trend of the company is positive and rising, this is because of the increasing sales and demand which the company is seeing
2.
Region (in million)
2020
2021
United States
$36,979
$39,076
Europe
$7,961
$8,967
Asia
$5,931
$5,845
Middle East
$5,308
$4,653
Canada
$1,302
$969
Oceania
$832
$1,147
Africa
$114
$239
Latin America, the Cari
ean, and othe
$229
$1,376
Total Revenue
$58,656
$62,272
There is not one region which is performing best, because there are a healthy number of regions which is growing for the company at about 10% which means they are performing well, the regions such are:
· United States
· Europe
· Oceania
· Africa
· Latin America, the Cari
ean, and others
3. The products which the company provide are:
Products/Services (in million)
2020
2021
Commercial Airplanes
$16,162
$19,493
Defense, Space & Security
$26,257
$26,540
Global Services
$15,543
$16,328
Boeing Capital
$261
$272
Unallocated items, eliminations, and othe
-$65
-$347
Total Revenue
$58,158
$62,286
Yes, the mix of products complement each other as the company is into airlines and also provide space and communication which is an integral part of running airlines, along with this the global services is one area which looks after the aftermarket services
Week 3 Questions
1. Income Statement
Particulars (in million)
2020
2021
Sales of Products
$47,142
$51,386
Sales of Services
$11,016
$10,900
Total Revenues
$58,158
$62,286
Cost of Products
-$54,568
-$49,954
Cost of Services
-$9,232
-$9,283
Boeing Capital Interest Expense
-$43
-$32
Total Cost and Expenses
-$63,843
-$59,269
Gross Profit
-$5,685
$3,017
Income/(loss) from operating investments, net
$9
$210
General and administrative expense
-$4,817
-$4,157
Research and development expense, net
-$2,476
-$2,249
Gain on dispositions, net
$202
$277
Loss from operations
-$12,767
-$2,902
Other income, net
$447
$551
Interest and debt expense
-$2,156
-$2,682
Loss before income taxes
-$14,476
-$5,033
Income tax benefit
$2,535
$743
Net Loss
-$11,941
-$4,290
Less: Net Loss attributable to noncontrolling interest
-$68
-$88
Net loss attributable to Boeing Shareholde
-$11,873
-$4,202
2.
Particulars (in million)
2020
2021
Costs (Fixed/Variable)
Sales of Products
$47,142
$51,386
Sales of Services
$11,016
$10,900
Total Revenues
$58,158
$62,286
Cost of Products
-$54,568
-$49,954
Variable
Cost of Services
-$9,232
-$9,283
Variable
Boeing Capital Interest Expense
-$43
-$32
Variable
Total Cost and Expenses
-$63,843
-$59,269
Gross Profit
-$5,685
$3,017
Income/(loss) from operating investments, net
$9
$210
General and administrative expense
-$4,817
-$4,157
Fixed
Research and development expense, net
-$2,476
-$2,249
Fixed
Gain on dispositions, net
$202
$277
Fixed
Loss from operations
-$12,767
-$2,902
Other income, net
$447
$551
Interest and debt expense
-$2,156
-$2,682
Fixed
Loss before income taxes
-$14,476
-$5,033
Income tax benefit
$2,535
$743
Variable
Net Loss
-$11,941
-$4,290
Less: Net Loss attributable to noncontrolling interest
-$68
-$88
Net loss attributable to Boeing Shareholde
-$11,873
-$4,202
Variable Cost Per Unit:
(in million)
XXXXXXXXXX,020
XXXXXXXXXX,021
Total Fixed Cost
$4,556
$5,386
Total Variable Cost
$61,308
$58,526
Total Deliveries
XXXXXXXXXX
XXXXXXXXXX
Variable Cost (per unit)
$390
$172
3. Total Cost (2020) = Fixed Cost + (Variable Cost per unit * Total Deliveries)
= $4,566 million + ($390 million * 157)
= $65,864 million
Total Cost (2021) = Fixed Cost + (Variable Cost per unit * Total Deliveries)
= $5,386 million + ($172 million * 340)
= $63,912 million
Week 5 Questions
1. Largest cost/expense for the company is: Cost of Products/Services
The cost is based on the raw materials purchased to manufacture the airlines
Strategies to reduce this:
· Tie up with the lowest cost provide
· Look for credit if you can get it, as this will reduce the working capital which will increase the return on investment
Week 6 Questions
(In the excel sheet)
Week 9 Questions
(In the excel sheet)
Income Statement
Income Statement
Particulars (in million) 2020 2021 Costs (Fixed/Variable)
Sales of Products $47,142 $51,386
Sales of Services $11,016 $10,900
Total Revenues $58,158 $62,286
Cost of Products -$54,568 -$49,954 Variable
Cost of Services -$9,232 -$9,283 Variable
Boeing Capital Interest Expense -$43 -$32 Variable
Total Cost and Expenses -$63,843 -$59,269
Gross Profit -$5,685 $3,017
Income/(loss) from operating investments, net $9 $210
General and administrative expense -$4,817 -$4,157 Fixed
Research and development expense, net -$2,476 -$2,249 Fixed
Gain on dispositions, net $202 $277 Fixed
Loss from operations -$12,767 -$2,902
Other income, net $447 $551
Interest and debt expense -$2,156 -$2,682 Fixed
Loss before income taxes -$14,476 -$5,033
Income tax benefit $2,535 $743 Variable
Net Loss -$11,941 -$4,290
Less: Net Loss att
utable to noncontrolling interest -$68 -$88
Net loss attributable to Boeing Shareholder -$11,873 -$4,202
Fixed/Variable
2,020 2,021
Total Fixed Cost -$4,556 -$5,386
Total Variable Cost -$61,308 -$58,526
Total Deliveries 157 340
Variable Cost (per unit) -$390 -$172
Total Cost -$65,864 -$63,912
Balance Sheet
(in million) 2020 2021
Assets
Cash and cash equivalents $7,752 $8,052
Short-term and other invesmtnets $17,838 $8,192
Accounts receivable $1,955 $2,641
Unbilled receivables $7,995 $8,620
Cu
ent Portion of customer financing $101 $117
Inventories $81,715 $78,823
Other cu
ent Assets $4,286 $2,221
Total Cu
ent Assets $121,642 $108,666
Customer financing $1,936 $1,695
Property, plant and equipment $11,820 $10,918
Goodwill $8,081 $8,068
Acquired intangble assets $2,843 $2,562
Defe
ed income taxes $86 $77
Investments $1,016 $975
Other assets, net of accumulated amorization $4,712 $5,591
Total Assets $152,136 $138,552
Liabilities and equity
Accoutns payable $12,928 $9,261
Accrued liabilities $22,171 $18,455
Advances and progress billings $50,488 $52,980
Short-term debt and cu
ent portfolio of long-term debt $1,693 $1,296
Total Cu
ent Liabilities $87,280 $81,992
Defe
ed income taxes $1,010 $218
Accrued retiree health care $4,137 $3,528
Accrued pension plan liability $14,408 $9,104
Other long-term liabilities $1,486 $1,750
Long-term debt $61,890 $56,806
Total Liabilities $170,211 $153,398
Shareholders equity
Common Stock $5,061 $5,061
Additional paid-in capital $7,787 $9,052
Treasury Stock -$52,641 -$51,861
Retained Earnings $38,610 $34,408
Accumulated other comprehensive loss -$17,133 -$11,659
Total Shareholders deficit -$18,316 -$14,999
Noncontrolling interest $241 $153
Total Equity -$18,075 -$14,846
Total Liabilities and equity $152,136 $138,552
Week 9 Calculation
1)
(in million) 2021 April May June July (All of this are forecasts)
Revenue $62,286.00 $5,450.03 $5,341.02 $5,928.54 $4,742.83
2)
Cost of Goods Sold Percentage 0.95
Monthly Fixed Expense $448.83
Monthly Variable Expense $61.92
Monthly Depreciation $8.17
Income Tax Rate 0.15
Interest Rate 0.05
3)
(in million) April (Forecast) May (Forecast) June (Forecast) July (Forecast)
Sales $5,450.03 $5,341.02 $5,928.54 $4,742.83
Cash Sales $2,180.01 $2,136.41 $2,371.41 $1,897.13
Credit Sales $3,270.02 $3,204.61 $3,557.12 $2,845.70
Collections of Sales
Cash $2,180.01 $2,136.41 $2,371.41 $1,897.13
Credit Sales for April $981.00 $1,308.01 $817.50
Credit Sales for May $961.38 $1,281.85
Credit Sales for June $1,067.14
Accounts Receivable $3,270.02 $5,493.63 $6,781.36 $6,460.57
Uncollectible $163.50 $323.73 $501.59 $643.87
Accounts Receivable, net of uncollectible $3,106.51 $5,169.89 $6,279.77 $5,816.70
Inventory Bought $5,590.55 $6,205.51 $4,964.41 $0.00
Accounts Payable $570.46 $559.05 $620.55 $496.44
4)
Fixed Asset Investment $1,000.00 $0.00 $0.00 $0.00
5)
Cash Budget
Particulars April (Forecast) May (Forecast) June (Forecast) July (Forecast)
Cash Sales $2,180.01 $2,136.41 $2,371.41 $1,897.13
Add: Credit Sales Collection $0.00 $981.00 $2,269.39 $3,166.49
Add: Interest Received on Cash Balance $2.01 $2.01 $2.01 $2.01
Less: Payment for Inventory $4,667.43 $6,155.42 $5,027.02 $620.55
Less: Fixed Asset Investment $1,000.00 $0.00 $0.00 $0.00
Add: Debt Raised $0.00 $3,036.00 $384.20 $0.00
Less: Debt Paid $4,163.99 $0.00 $0.00 $4,445.08
Net Cash Flow -$7,649.40 $0.01 -$0.00 $0.00
Add: Beginning Cash Balance $8,052.00 $402.60 $402.60 $402.60
Net Cash at the end of the month $402.60 $402.60 $402.60 $402.60
Minimum Cash Balance (Required) $402.60 $402.60 $402.60 $402.60