General Dynamics Corp., adjustment to net earnings

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net earnings (as reported)	3,484)	3,345)	2,912)	2,955)	2,965)
Add: Unrealized gains (losses) on marketable securities	—)	—)	5)	(6)	(2)
Net earnings (adjusted)	3,484)	3,345)	2,917)	2,949)	2,963)

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General Dynamics Corp., adjusted profitability ratios

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net Profit Margin
Reported net profit margin	8.85%	9.24%	9.40%	9.42%	9.42%
Adjusted net profit margin	8.85%	9.24%	9.42%	9.41%	9.42%
Return on Equity (ROE)
Reported ROE	25.66%	28.51%	25.47%	26.92%	27.61%
Adjusted ROE	25.66%	28.51%	25.51%	26.87%	27.59%
Return on Assets (ROA)
Reported ROA	7.13%	7.37%	8.31%	8.99%	9.27%
Adjusted ROA	7.13%	7.37%	8.32%	8.97%	9.26%

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	General Dynamics Corp. adjusted net profit margin ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by shareholders’ equity.	General Dynamics Corp. adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by total assets.	General Dynamics Corp. adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings	3,484)	3,345)	2,912)	2,955)	2,965)
Revenue	39,350)	36,193)	30,973)	31,353)	31,469)
Profitability Ratio
Net profit margin¹	8.85%	9.24%	9.40%	9.42%	9.42%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net earnings	3,484)	3,345)	2,917)	2,949)	2,963)
Revenue	39,350)	36,193)	30,973)	31,353)	31,469)
Profitability Ratio
Adjusted net profit margin²	8.85%	9.24%	9.42%	9.41%	9.42%

2019 Calculations

¹ Net profit margin = 100 × Net earnings ÷ Revenue
= 100 × 3,484 ÷ 39,350 = 8.85%

² Adjusted net profit margin = 100 × Adjusted net earnings ÷ Revenue
= 100 × 3,484 ÷ 39,350 = 8.85%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	General Dynamics Corp. adjusted net profit margin ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings	3,484)	3,345)	2,912)	2,955)	2,965)
Shareholders’ equity	13,577)	11,732)	11,435)	10,976)	10,738)
Profitability Ratio
ROE¹	25.66%	28.51%	25.47%	26.92%	27.61%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net earnings	3,484)	3,345)	2,917)	2,949)	2,963)
Shareholders’ equity	13,577)	11,732)	11,435)	10,976)	10,738)
Profitability Ratio
Adjusted ROE²	25.66%	28.51%	25.51%	26.87%	27.59%

2019 Calculations

¹ ROE = 100 × Net earnings ÷ Shareholders’ equity
= 100 × 3,484 ÷ 13,577 = 25.66%

² Adjusted ROE = 100 × Adjusted net earnings ÷ Shareholders’ equity
= 100 × 3,484 ÷ 13,577 = 25.66%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by shareholders’ equity.	General Dynamics Corp. adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings	3,484)	3,345)	2,912)	2,955)	2,965)
Total assets	48,841)	45,408)	35,046)	32,872)	31,997)
Profitability Ratio
ROA¹	7.13%	7.37%	8.31%	8.99%	9.27%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net earnings	3,484)	3,345)	2,917)	2,949)	2,963)
Total assets	48,841)	45,408)	35,046)	32,872)	31,997)
Profitability Ratio
Adjusted ROA²	7.13%	7.37%	8.32%	8.97%	9.26%

2019 Calculations

¹ ROA = 100 × Net earnings ÷ Total assets
= 100 × 3,484 ÷ 48,841 = 7.13%

² Adjusted ROA = 100 × Adjusted net earnings ÷ Total assets
= 100 × 3,484 ÷ 48,841 = 7.13%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by total assets.	General Dynamics Corp. adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.

General Dynamics Corp. (NYSE:GD)

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