comparative analysis of Airbus and Boeing 2012
5.0 A comparative analysis of Airbus and Boeing
5.1 Airbus Group
1. ROCE = 100
Year 2012 | Year 2011 |
= 15% | = 12.8% |
Return on Capital Employed (ROCE) allows a firm to identify the percentage of profit derived from the capital that was used to run the business. Therefore, ROCE can be used to assess the profitability of the business in a given year. Studies of the Airbus Group’s annual report and financial statements therein, have revealed that the company has investments in associates, mainly in Dassault Aviation (46.32% in December 2012).
Associates are companies in which a firm has less than 50% shares in and are therefore not under the control of that firm. Nonetheless, that firm which in this case is Airbus receives income from its Associates. However, this income from associates need to be deduced from Airbus’ operating profit as it is not generated using the Airbus Group’s capital employed. Subsequently, investments in associates are deducted from capital employed.
2. Profitability (Gross Profit Margin) = 100
Year 2012 | Year 2011 |
= 14% | = 13.9% |
Gross profit margin represents the percentage of each dollar of Airbus’ revenue that is available after accounting for the cost of goods sold. The values for year 2011 as well as 2012 show a consistent GP margin with a slight improvement in 2012 which suggests that profitability has increased by a very small margin. Revenues were higher in 2012 due to increases in sales of commercial aircrafts, particularly the A330 which received 80 gross orders in that year.
Although it is accepted that higher GP margins are favorable for a business, it is important to compare the values with that of other companies within the industry to identify norms. This comparison will be made with the Boeing company in preceding sections of this report.
3. Current Ratio (Liquidity) = 100
Year 2012 | Year 2011 |
= 0.93 : 1 | = 0.91 : 1 |
This liquidity ratio demonstrates a company’s ability
5.1 Airbus Group
1. ROCE = 100
Year 2012 | Year 2011 |
= 15% | = 12.8% |
Return on Capital Employed (ROCE) allows a firm to identify the percentage of profit derived from the capital that was used to run the business. Therefore, ROCE can be used to assess the profitability of the business in a given year. Studies of the Airbus Group’s annual report and financial statements therein, have revealed that the company has investments in associates, mainly in Dassault Aviation (46.32% in December 2012).
Associates are companies in which a firm has less than 50% shares in and are therefore not under the control of that firm. Nonetheless, that firm which in this case is Airbus receives income from its Associates. However, this income from associates need to be deduced from Airbus’ operating profit as it is not generated using the Airbus Group’s capital employed. Subsequently, investments in associates are deducted from capital employed.
2. Profitability (Gross Profit Margin) = 100
Year 2012 | Year 2011 |
= 14% | = 13.9% |
Gross profit margin represents the percentage of each dollar of Airbus’ revenue that is available after accounting for the cost of goods sold. The values for year 2011 as well as 2012 show a consistent GP margin with a slight improvement in 2012 which suggests that profitability has increased by a very small margin. Revenues were higher in 2012 due to increases in sales of commercial aircrafts, particularly the A330 which received 80 gross orders in that year.
Although it is accepted that higher GP margins are favorable for a business, it is important to compare the values with that of other companies within the industry to identify norms. This comparison will be made with the Boeing company in preceding sections of this report.
3. Current Ratio (Liquidity) = 100
Year 2012 | Year 2011 |
= 0.93 : 1 | = 0.91 : 1 |
This liquidity ratio demonstrates a company’s ability