Financial statement analysis and common stock valuation

Analysis of Solvency Ratios

Examines RTX Corp. capital structure in terms of the mix of its financing sources and the ability of the firm to satisfy its longer-term debt and investment obligations.

• Solvency Ratios (Summary)
• Debt to Equity
• Debt to Equity (including Operating Lease Liability)
• Debt to Capital
• Debt to Capital (including Operating Lease Liability)
• Debt to Assets
• Debt to Assets (including Operating Lease Liability)
• Financial Leverage
• Interest Coverage
• Fixed Charge Coverage

Analysis of Reportable Segments

RTX Corp. operates in 3 segments: Collins Aerospace; Pratt & Whitney; and Raytheon.

• Segment Profit Margin
• Segment Return on Assets (Segment ROA)
• Segment Asset Turnover
• Segment Capital Expenditures to Depreciation
• Net sales
• Operating profit (loss)
• Total assets
• Capital expenditures
• Depreciation & amortization

Enterprise Value to EBITDA (EV/EBITDA)

To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital.

• Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
• EV to EBITDA Ratio, Current
• EV to EBITDA Ratio, Historical

Balance Sheet: Assets
Quarterly Data

The assets reports major classes and amounts of resources owned or controlled by RTX Corp..

Analysis of Liquidity Ratios

Measures the adequacy of RTX Corp. cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Analysis of Long-term (Investment) Activity Ratios

Measures how efficiently RTX Corp. generates revenues from its investments in fixed or total assets.

• Long-term Activity Ratios (Summary)
• Net Fixed Asset Turnover
• Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
• Total Asset Turnover
• Equity Turnover

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
Quarterly Data

Liabilities and stockholders’ equity components shown as percentage of total liabilities and stockholders’ equity.

Analysis of Profitability Ratios
Quarterly Data

Measures the income of RTX Corp. relative to its revenues and invested capital.

• Profitability Ratios (Summary)
• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin
• Return on Equity (ROE)
• Return on Assets (ROA)

Income Statement

The income statement (statement of earnings) reports on the performance of RTX Corp., the result of its operating activities.

Analysis of Geographic Areas

RTX Corp. operates in 5 regions: United States; Europe; Asia Pacific; Middle East and North Africa; and Other regions.

• Area Asset Turnover
• External net sales
• Long-lived assets

Analysis of Short-term (Operating) Activity Ratios
Quarterly Data

Evaluates revenues and output generated by the RTX Corp. assets. Operating performance ratios describe the relationship between the RTX Corp. level of operations and the assets needed to sustain operating activities.

• Short-term Activity Ratios (Summary)
• Inventory Turnover
• Receivables Turnover
• Payables Turnover
• Working Capital Turnover
• Average Inventory Processing Period
• Average Receivable Collection Period
• Operating Cycle
• Average Payables Payment Period
• Cash Conversion Cycle

Dividend Discount Model (DDM)

The dividend discount model (DDM) is a technique for estimating the value of a share of RTX Corp. common stock issue as the present value of all future dividends.

• Intrinsic Stock Value (Valuation Summary)
• Required Rate of Return (r)
• Dividend Growth Rate (g)