General Dynamics Corp. (GD)

Goodwill

General Dynamics reviews goodwill for impairment annually or when circumstances indicate that an impairment is more likely than not. Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired. The test for goodwill impairment is a two-step process to first identify potential goodwill impairment for each reporting unit and then, if necessary, measure the amount of the impairment loss. General Dynamics completed the required annual goodwill impairment test as of December 31, 2017. The first step of the goodwill impairment test compares the fair value of each of General Dynamics' reporting units to its carrying value. General Dynamics estimates the fair value of the reporting units based primarily on the discounted projected cash flows of the underlying operations. The estimated fair value of each of General Dynamics' reporting units was well in excess of its respective carrying value as of December 31, 2017.

Source: General Dynamics Corp., Annual Report

General Dynamics Corp., Statement of Financial Position, Goodwill and Intangible Assets

USD $ in millions

Source: Based on data from General Dynamics Corp. Annual Reports

Item	Description	The company
Intangible assets, net carrying amount	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	General Dynamics Corp.'s intangible assets, net carrying amount declined from 2015 to 2016 but then slightly increased from 2016 to 2017.
Goodwill	Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions.	General Dynamics Corp.'s goodwill increased from 2015 to 2016 and from 2016 to 2017.
Intangible assets and goodwill	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	General Dynamics Corp.'s intangible assets and goodwill declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

General Dynamics Corp., adjustments to financial data

USD $ in millions

General Dynamics Corp., adjusted ratios

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	General Dynamics Corp.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders' equity.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	General Dynamics Corp.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017.

2017 Calculations

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	General Dynamics Corp.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017.

2017 Calculations

Ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.

2017 Calculations

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders' equity.

2017 Calculations

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	General Dynamics Corp.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017.