Financial statement analysis and common stock valuation

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity

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

Common-Size Income Statement

Income statement components (revenues and expenses) shown as percentage of total sales.

Common-Size Balance Sheet: Assets
Quarterly Data

Assets components shown as percentage of total assets.

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 Long-term (Investment) Activity Ratios
Quarterly Data

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

• Long-term Activity Ratios (Summary)
• Net Fixed Asset Turnover
• Total Asset Turnover
• Equity Turnover

Enterprise Value (EV)

Enterprise value is total company value (the market value of common equity, debt, and preferred equity) minus the value of cash and short-term investments.

• Current EV
• Historical EV

Analysis of Short-term (Operating) Activity Ratios

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

Analysis of Liquidity Ratios
Quarterly Data

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

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

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)

Common-Size Balance Sheet: Assets

Assets components shown as percentage of total assets.

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 FCFF (EV/FCFF)

Free cash flow to the firm is the cash flow available to the RTX Corp. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to The Firm (FCFF)
• Interest Paid, Net of Tax
• EV to FCFF Ratio, Current
• EV to FCFF Ratio, Historical