Financial Performance of BAE Systems Plc Research Paper

Financial Performance of BAE Systems Plc - Research Paper Example In addition, historical figures are also reviewed to assess the change and strength of the current results. This paper will review and summarize the financial performance of one of the world's renowned manufacturer of defense systems BAE Systems Plc by making use of financial ratio analysis. To better evaluate the financial performance of BAE, its financial ratios are compared with another competitor within the same industry. Cobham Plc was chosen to be compared with BAE. Finally, outlook in the future of BAE will forecasted based on available information. The threats of terrorism have significantly boost defense systems spending especially for countries like United States. After the September 11 tragedy which shocked the global business environment becomes a grim reminder for nations to improve their defense systems. BAE Systems Plc (BAE) traces its origin to the 7.7 billion merger of Marconi Electronic Systems which is the defense electronics and naval shipbuilding subsidiary of the General Electric Company Plc and British Aerospace which specializes in the manufacture of aircraft, ammunition, and naval systems. Out of these prestigious business organizations, its establishment in 1999 equipped with a unique competitive advantage which enables it to position itself as the third largest global defence company and sixth largest US defense company employing 97, 500 highly skilled people. Financial ratio analysis is ... rigin to the 7.7 billion merger of Marconi Electronic Systems which is the defense electronics and naval shipbuilding subsidiary of the General Electric Company Plc and British Aerospace which specializes in the manufacture of aircraft, ammunition, and naval systems. Out of these prestigious business organizations, its establishment in 1999 equipped with a unique competitive advantage which enables it to position itself as the third largest global defence company and sixth largest US defense company employing 97, 500 highly skilled people. 2. Financial Ratio Analysis Financial ratio analysis is an essential tool to assess the financial health of a business entity. It enables a financial analyst to highlight specific measures and compare it with the performance of similar business enterprises within the same industry. This tool is currently utilized by business managers, investors, creditors, suppliers, and other decision makers in order to determine the financial performance and well being of a business organisation. Financial ratios are grouped into four broad categories, each showing a different aspect of a company's financial performance. These are profitability ratios, financial leverage ratios, liquidity/solvency ratios, and efficiency ratios. In order to get a deeper insight of BAE's financial performance, its computed financial ratios will be benchmarked with its competitor's Cobham Plc. The rationale of choosing these two business organizations is simple. It should be noted that both of them are regarded as important players in the global defense industry. Being in the same line of business and the same industry, it is right to assume that BAE and Cobham Plc both face the same challenges and opportunities in the sector under consideration. This assumption