Good Essay On Financial Statements And Performance Analysis Of Honeywell International Inc

Short Description of Honeywell International Inc and the Relationship

As a multinational conglomerate company in America, Honeywell International Inc. is a Fortune-100 business that manufactures a wide variety of consumer and commercial products, aerospace systems and engineering services for its worldwide customer base ranging from governments and major corporations to private consumers .
The company is publicly traded in New York Stock Exchange (NYSE) and is headquartered in Morristown, New Jersey of the United States. The Honeywell International Inc. serves the worldwide area with the support from a diverse workforce of around 132,000 employees including more than twenty two thousand scientists and engineers.
My relationship to the company is of indirect nature because one of my friends happens to work in the finance departments of that company as a financial and business research analyst.

Financial Status Using Financial Statements

The total operating expenses increased dramatically in 2011 due to which the operating income decreased by $450 million. Amazingly, from 2009 to 2013, the interest expense of the Honeywell is declining which reflects that the company’s management is in practice to reduce the fixed financial burden. It also makes it clear that the financial flexibility of Honeywell is rising in this five year period.
The management is trying to increase the equity stake of shareholders into the public business to create more value for them. It is trying to reduce the financial leverage to reduce the possibility of going bankrupt. Doing so will help the business to easily access capital from debt market with favorable terms. Reduction of debt also points out that the management is continuously making efforts to reduce the interest rate risk of Honeywell.
Reduction of interest expense is considered a cost of doing business and so is not taxable. As the debt is being retired for Honeywell, more earnings are available for taxation which is evident from tax expense and net income for years 2010, 2012 and 2013 .

Cash Available For Next Year

Honeywell International Inc. Compared With Other Three Companies
Honeywell International Inc’s Financial Situations Compared With Other Companies
Of all the companies, Honeywell seems to have slightly more liquidity strength and is operating same against the global standard of 1:1 for quick ratio. It shows that to retire every $1 of short-term obligations of up to one year, Honeywell has $1.01 in its highly liquid assets which could easily be turned to cash without any slight decline in their value. Other three companies are, however, operating below but somehow close to the worldwide benchmark.
Similarly, cash conversion cycle reflects the period in which cash inflows and outflows are managed and the sufficient working capital is arranged to finance day-to-day business operations. Of other companies, Honeywell take almost fifty six business days to turn its inventories to sales, make cash collections from clients and repay its suppliers who provided trade credit. Comparatively, Coca Cola is consuming sixty three business days. Delta Airlines and Apple Inc have negative conversion cycle because they are taking too much time of around 42 and 85 days to repay their vendors which are more than cash generating period.

References

Marz, M. (n.d). The Advantages of Debt Financing & Tax Deductibility. Retrieved February 15, 2015, from The Houston Chronicle: http://smallbusiness.chron.com/advantages-debt-financing-tax-deductibility-67851.html
Surowiecki, J. (2009, November 23). The Debt Economy. Retrieved February 15, 2015, from The New Yorker: http://www.newyorker.com/magazine/2009/11/23/the-debt-economy
WSJ. (2015, February 13). HON Company Profile & Executives - Honeywell. Retrieved February 15, 2015, from The Wall Street Journal: http://quotes.wsj.com/HON/company-people
Yahoo. (2015, February 15). Honeywell International Inc. Retrieved February 15, 2015, from Yahoo Finance: http://finance.yahoo.com/q/ks?s=HON+Key+Statistics