Analysis of United Technologies Corporation
United Technologies Corporation, UTC, was founded in 1934 as United Aircraft Corporation and has since become a global leader in the aerospace industry. UTC is a multi-faceted and diverse company comprised of both an aerospace division and a building and industrial systems side. The aerospace side is comprised of; of Pratt Whitney, UTC Aerospace Systems and Sikorsky helicopters. The industrial side is comprised of; Otis, Carrier and Kidde. Having such a diverse and global mix of business brings both stability and cross functional talent to every business unit across the globe. With over 200,000 employees worldwide UTC has an uncompromised diverse workforce. The financial data that has been analyzed within will show conclusively how healthy UTC’s business is. The data will show areas that are striving and others that may be lacking. It is imperative that one look to multiple periods to gain a true understanding of the trends that are taking place.
Overall Financial Health of UTC
The financial health of a publicly traded company is used by potential investors looking to add value and profit to his or her portfolio. One may obtain this data from many different sources such as those used in this paper. The Securities and Exchange Commission, SEC, was founded to help protect investors by requiring by law publicly traded companies provide credible and relevant financial data for the public to access. There are also many online sites such as YahooFinance.com that anyone with access to the internet can use to research companies. Access to this financial data is the easy part, interpreting it is another matter. There are numerous ways to compile this data such as the common-size analysis (horizontal and vertical) to follow. Gibson (2013) stated that common-size analysis expresses comparisons in percentages (p. 200). This is important as it makes the data relevant for companies of different sizes. If this was not done in this manner then one may perceive a company’s growth or bottom line numbers inaccurately.
The common-sized analysis that was done for UTC was for the periods from 2011 through the year end of 2013. Tóth, Čierna & Serenčéš (2013) stated that to better understand financial statements and consequently to make rational economic decisions, the users of financial statements must have analytical tools in order to undertake financial statement analysis (p. 83). From the balance sheet analysis one can see that the total assets for UTC from 2011 to 2014 rose 47.42% which is a significant increase but is a far cry from cash and cash equivalents which is down 22.5% during the same period. While this may seem like a warning sign it may not be. During this time frame, UTC made one of the largest aerospace acquisitions in history when they acquired Goodrich in 2012. This was a strategic acquisition as Goodrich made many components UTC needs. This will give UTC complete control over the operations of...