General Dynamics Corp. (NYSE:GD)

The financial data presents several noteworthy trends in liquidity, leverage, asset efficiency, and profitability over the five-year period ending December 31, 2019.

Asset Turnover

Both reported and adjusted total asset turnover ratios exhibit a declining trend from 2015 through 2018, indicating decreasing efficiency in generating sales from assets. Reported total asset turnover fell from 0.98 to 0.80, while adjusted asset turnover dropped from 0.99 to 0.77. A slight recovery is observed in 2019 with the ratios stabilizing around 0.81.

Current Ratio

The current ratio fluctuates moderately throughout the period. Both reported and adjusted current ratios peak at 1.4 in 2017, suggesting the highest short-term liquidity at that point. Subsequently, the ratios decline, reaching approximately 1.18 in 2019, reflecting a reduction in current assets relative to current liabilities but remaining above 1, which generally indicates acceptable liquidity.

Debt Metrics

Reported and adjusted debt to equity ratios show a notable increase in 2018, with reported debt to equity rising sharply from 0.35 in 2017 to 1.06 and adjusted from 0.43 to 1.09, signifying a substantial increase in leverage. This elevated leverage slightly decreases in 2019 but remains significantly higher than earlier years. Similarly, debt to capital ratios more than double in 2018 compared to prior years, indicating increased reliance on debt financing within the capital structure. This surge suggests a strategic shift or acquisition financing.

Financial Leverage

Financial leverage ratios, both reported and adjusted, trend upward, peaking in 2018 with reported leverage at 3.87 and adjusted at 3.67. Although a moderate decrease occurs in 2019, leverage remains elevated relative to 2015-2017 levels, consistent with the increased debt ratios observed.

Profitability Ratios

Net profit margins remain relatively stable, with reported margins slightly declining over the period from 9.42% in 2015 to 8.85% in 2019. Adjusted net profit margins initially rise sharply, peaking at 12.5% in 2017, before declining to 8.32% in 2019. This pattern suggests variability in profitability adjustments over the years. Return on equity (ROE) experiences a mild overall decline reported at 27.61% in 2015 to 25.66% in 2019, with adjusted ROE peaking in 2017 before falling substantially by 2019. Return on assets (ROA) similarly trends downward, with reported ROA falling from 9.27% to 7.13% and adjusted ROA showing a peak in 2017 followed by a sharp decline.

Overall, the data indicates a period of increasing financial leverage notably in 2018, accompanied by reduced asset utilization efficiency and declining profitability metrics in subsequent years. Liquidity ratios remain stable but exhibit a mild weakening trend toward the end of the period. The large increase in debt-related ratios in 2018 is a critical point that likely influenced the observed decrease in return on assets and equity, as higher leverage can amplify risk and affect profitability. The firm's operational efficiency as measured by asset turnover also declined before stabilizing, possibly reflecting changes in asset base composition or sales performance.

The analysis of the financial data reveals several key trends spanning the five-year period from the end of 2015 through 2019.

Revenue

Revenue showed a generally positive upward trend, starting at $31,469 million in 2015 and increasing slightly to $31,353 million in 2016. It remained relatively stable in 2017 at $30,973 million before experiencing significant growth in 2018 and 2019, reaching $36,193 million and $39,350 million respectively. This pattern reflects a notable acceleration in sales growth during the later years of the period.

Total Assets

Total assets increased steadily throughout the period, from $31,997 million in 2015 to $48,841 million in 2019. The most pronounced increase occurred between 2017 and 2018, with assets rising by over $10 billion, suggesting substantial investments or acquisitions contributing to asset growth.

Reported Total Asset Turnover

The reported total asset turnover ratio experienced a decline from 0.98 in 2015 to 0.8 in 2018, indicating that asset utilization efficiency deteriorated over this time. There was a slight increase to 0.81 in 2019, but the overall trajectory remained downward compared to the starting point. This downward trend suggests that although assets grew, the company generated proportionally less revenue per dollar of assets as the years progressed.

Adjusted Total Assets

Adjusted total assets followed a similar pattern to total assets, starting at $31,668 million in 2015 and increasing to $48,808 million in 2019. The adjusted figures show a slightly higher initial number and a slightly elevated asset base in certain years, reflecting refinements in asset valuation or adjustments for asset quality.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio exhibited a consistent decline from 0.99 in 2015 to a low of 0.77 in 2018, followed by a modest recovery to 0.81 in 2019. This pattern mirrors that of the reported turnover, reinforcing the observation that asset efficiency decreased over the period, especially pronounced in 2018. The recovery in 2019 may indicate the beginning of improved asset management or increased operational efficiency.

In summary, revenue growth was moderate initially but accelerated significantly in the later years. Asset growth was strong and consistent, with a notable jump between 2017 and 2018. However, the asset turnover ratios—both reported and adjusted—declined overall, suggesting that the company's ability to generate revenue from its asset base weakened over the period despite the growth in absolute revenue and asset size. The slight improvement in turnover ratios in 2019 may merit further monitoring to determine if this trend continues.

The data reveals trends in liquidity and working capital components over a five-year period. Current assets generally increased from 14,571 million US dollars in 2015 to 19,780 million US dollars in 2019, indicating growth in short-term resources available. Similarly, current liabilities rose from 12,445 million US dollars to 16,801 million US dollars in the same timeframe, reflecting increased short-term obligations.

The reported current ratio showed some fluctuations. Starting at 1.17 in 2015, it increased to a peak of 1.4 in 2017, suggesting an improving ability to cover current liabilities with current assets. However, the ratio subsequently declined to 1.18 by 2019, signaling a reduction in liquidity relative to the peak year. This change implies that while both assets and liabilities increased, liabilities grew at a faster pace than assets toward the end of the period.

Regarding the adjusted figures, adjusted current assets closely tracked the reported current assets, with identical values except for minor differences in 2015 and 2016. Adjusted current liabilities were lower than reported current liabilities in 2015 and 2016, but they equaled the reported values from 2017 onward. The adjusted current ratio started higher than the reported ratio in 2015 and 2016, at 1.25 and 1.33 respectively, matching the reported value of 1.4 in 2017. After 2017, the adjusted current ratio mirrored the decreasing trend observed in the reported ratio, declining to 1.18 in 2019.

Overall, the data indicates a general increase in both current assets and liabilities over the five years, with peak liquidity occurring in 2017. Subsequent years show a modest decline in the ability to cover current liabilities with current assets. This trend is consistent in both reported and adjusted measures, highlighting a somewhat constrained liquidity environment toward the end of the period under review.

The financial data reveals significant changes in the company's debt and equity structure over the five-year period under review. Total debt shows a moderate increase from 2015 through 2017, followed by a sharp rise in 2018, reaching a peak above 12 billion US dollars, which slightly decreases in 2019. This drastic escalation in debt during 2018 is a notable event within the timeframe.

Shareholders’ equity follows a steady upward trend throughout the five years, consistently increasing each year. Beginning at approximately 10.7 billion US dollars in 2015, equity grows to nearly 13.6 billion US dollars by the end of 2019, indicating continuous strengthening of the company's net assets.

The reported debt to equity ratio remains relatively stable between 0.32 and 0.35 from 2015 to 2017, signaling moderate leverage. However, this ratio more than triples to 1.06 in 2018, reflecting the notable increase in total debt during that year. While there is a reduction in 2019 to 0.88, the leverage remains significantly higher than the initial years.

Adjusted total debt follows a similar pattern as reported total debt, with an initial gradual increase followed by a spike in 2018 to nearly 13.9 billion US dollars, decreasing somewhat in 2019. Adjusted shareholders’ equity also grows steadily each year, from about 10.8 billion US dollars in 2015 to approximately 14.6 billion US dollars in 2019.

The adjusted debt to equity ratio mirrors the trend of the reported ratio, remaining relatively flat from 2015 through 2017, then jumping sharply in 2018 to 1.09, before declining slightly in 2019 to 0.92. This pattern reaffirms the observation of increased leverage starting in 2018.

Overall, the data indicates a significant increase in financial leverage beginning in 2018, marked by a substantial rise in both reported and adjusted debt levels relative to equity. Despite the increase in debt, shareholders’ equity has steadily grown, suggesting that the company has concurrently enhanced its equity base, although the elevated leverage ratios in the final two years imply a shift toward higher reliance on debt financing.

Total debt

The total debt increased steadily from 3,399 million USD in 2015 to 3,982 million USD in 2017, followed by a significant jump to 12,417 million USD in 2018. In 2019, total debt slightly decreased to 11,930 million USD, remaining substantially higher than in previous years.

Total capital

Total capital showed a gradual rise from 14,137 million USD in 2015 to 15,417 million USD in 2017. A distinct and marked increase occurred in 2018 and 2019, reaching 24,149 million USD and 25,507 million USD, respectively, indicating a major expansion in capital base in the latter years.

Reported debt to capital

The ratio of reported debt to capital remained relatively stable at approximately 0.24 to 0.26 from 2015 through 2017. In 2018, this ratio sharply increased to 0.51, nearly doubling, before slightly declining to 0.47 in 2019. This suggests a heavier reliance on debt financing relative to total capital starting in 2018.

Adjusted total debt

Adjusted total debt follows a similar trend to total debt, increasing from 4,345 million USD in 2015 to 5,188 million USD in 2017, then experiencing a notable rise to 13,882 million USD in 2018. It moderately decreased to 13,433 million USD in 2019, indicating elevated debt levels after 2017.

Adjusted total capital

Adjusted total capital increased steadily from 15,177 million USD in 2015 to 17,259 million USD in 2017. The capital base then sharply expanded to 26,633 million USD in 2018 and further to 28,077 million USD in 2019, consistent with trends in total capital.

Adjusted debt to capital

The adjusted debt to capital ratio was stable around 0.29 to 0.30 for the years 2015 through 2017. It rose significantly to 0.52 in 2018 before slightly decreasing to 0.48 in 2019. This pattern parallels the reported debt to capital ratio, indicating a similar increase in leverage after 2017 when considering adjustments.

Total Assets

Total assets showed a steady upward trend over the five-year period. Starting at 31,997 million USD in 2015, the figure increased incrementally each year, reaching 48,841 million USD by the end of 2019. The most significant growth appeared between 2017 and 2018, reflecting a notable expansion in asset base.

Shareholders' Equity

Shareholders' equity also demonstrated consistent growth from 10,738 million USD in 2015 to 13,577 million USD by 2019. The increase was more gradual compared to total assets but maintained a positive trajectory, indicating sustained accumulation of equity.

Reported Financial Leverage

The reported financial leverage ratio rose from 2.98 in 2015 to a peak of 3.87 in 2018 before decreasing slightly to 3.6 in 2019. This pattern suggests an increase in the use of debt financing relative to equity until 2018, followed by a moderate deleveraging in the final year observed.

Adjusted Total Assets

Adjusted total assets followed a similar rising trend as total assets, increasing from 31,668 million USD in 2015 to 48,808 million USD in 2019. The largest year-over-year increase occurred between 2017 and 2018, mirroring the growth seen in total assets and reinforcing the underlying asset growth story.

Adjusted Shareholders' Equity

Adjusted shareholders’ equity increased consistently each year from 10,832 million USD in 2015 to 14,644 million USD in 2019. The steady rise indicates an enhancement in the company's net asset value after considering adjustments, showing financial strengthening over time.

Adjusted Financial Leverage

Adjusted financial leverage started at 2.92 in 2015, decreased slightly to 2.84 in 2016, then rose to 3.67 in 2018 before dropping to 3.33 in 2019. The variation reflects changes in the balance between debt and equity when adjustments to assets and equity are taken into account, with a peak leverage position in 2018 followed by a reduction.

Net earnings

Net earnings demonstrated relative stability from 2015 through 2017, with figures remaining just below 3,000 million US dollars. A noticeable increase occurred in 2018, rising to 3,345 million, followed by a further rise in 2019 to 3,484 million. This indicates a positive earnings growth trajectory in the latter part of the period.

Revenue

Revenue showed a generally steady trend from 2015 to 2017, slightly declining from 31,469 million US dollars to 30,973 million in 2017. From 2018 onwards, revenue increased significantly, reaching 36,193 million in 2018 and further increasing to 39,350 million in 2019, suggesting expansion in sales or operational scale in recent years.

Reported net profit margin

The reported net profit margin remained fairly consistent, hovering around 9.4% from 2015 to 2017. A slight decrease was observed thereafter, with the margin declining to 9.24% in 2018 and further to 8.85% in 2019, indicating a modest erosion in profitability relative to revenue despite increasing earnings and sales.

Adjusted net earnings

Adjusted net earnings showed a more volatile pattern. After an increase from 2,815 million in 2015 to 3,873 million in 2017, adjusted earnings saw a sharp decline to 3,048 million in 2018, with partial recovery to 3,274 million in 2019. This variation suggests that adjustments for non-recurring items or other factors had a significant impact during this period.

Adjusted net profit margin

Adjusted net profit margin mirrored the trend in adjusted earnings, rising from 8.95% in 2015 to a peak of 12.5% in 2017, followed by a substantial decrease to 8.42% in 2018 and a slight fall to 8.32% in 2019. This trend points to a strong profitability adjustment in 2017, with margins declining notably thereafter, potentially reflecting changes in operational efficiency or extraordinary adjustments.

The analysis of the financial data over the five-year period reveals several notable trends in profitability and equity performance.

Net Earnings

Net earnings exhibited slight fluctuation between 2015 and 2017, decreasing marginally from 2965 million USD in 2015 to 2912 million USD in 2017. However, they increased significantly thereafter, reaching 3484 million USD by the end of 2019.

Shareholders’ Equity

Shareholders’ equity demonstrated consistent growth each year, rising steadily from 10738 million USD in 2015 to 13577 million USD in 2019. This indicates ongoing strengthening of the company’s capital base over the period analyzed.

Reported Return on Equity (ROE)

The reported ROE declined gradually from 27.61% in 2015 to 25.47% in 2017, then increased sharply to 28.51% in 2018 before decreasing again to 25.66% in 2019. Despite some volatility, the reported ROE maintained levels above 25%, reflecting relatively strong profitability relative to equity.

Adjusted Net Earnings

Adjusted net earnings showed a different pattern with an increase from 2815 million USD in 2015 to a peak of 3873 million USD in 2017, followed by a notable decline in 2018 to 3048 million USD, and a modest recovery in 2019 to 3274 million USD. This suggests that adjustments, likely for non-recurring or unusual items, significantly influence reported profit trends.

Adjusted Shareholders’ Equity

Adjusted shareholders' equity increased steadily from 10832 million USD in 2015 to 14644 million USD in 2019, mirroring the pattern observed in reported equity but at higher absolute values, which may reflect additional comprehensive income or valuation adjustments.

Adjusted Return on Equity (ROE)

The adjusted ROE trended upwards sharply from 25.99% in 2015 to 32.09% in 2017, suggesting improved profitability on an adjusted basis during this period. However, it then declined markedly to 23.9% in 2018 and further to 22.36% in 2019, indicating that after adjustments, the efficiency of generating returns on equity weakened in the latter years.

In summary, while the company’s net earnings and shareholders' equity showed growth over the period, the ROE metrics indicate fluctuation in profitability efficiency. The divergence between reported and adjusted figures suggests that one-time or non-operational factors have a material impact on the earnings and equity returns performance measurement. The overall upward trend in equity supports the company’s financial solidity, yet the decreasing adjusted ROE towards the end of the period points to potential challenges in sustaining high profitability levels relative to adjusted equity.

The financial data reveals several notable trends over the five-year period from 2015 to 2019. Net earnings demonstrate a relatively stable pattern with a slight dip in 2017 followed by an increase in subsequent years, culminating in the highest reported net earnings in 2019. Total assets show a consistent upward trend, indicating growth in the asset base, particularly between 2017 and 2019, when the increase is more pronounced.

Reported Return on Assets (ROA) declines steadily throughout the period. Despite the rise in net earnings and assets, the diminishing ROA suggests decreasing efficiency in asset utilization to generate net income. This trend may indicate that asset growth is outpacing earnings growth or increased operational challenges affecting profitability relative to assets.

Adjusted net earnings show variability, rising from 2015 through 2017, peaking in 2017, then decreasing substantially in 2018 before a moderate recovery in 2019. Adjusted total assets follow a similar trajectory to total assets, with continual growth, particularly significant jumps in 2018 and 2019.

The adjusted ROA reflects a pattern consistent with adjusted net earnings and adjusted assets. It increases from 2015 to a peak in 2017, suggesting improved adjusted profitability relative to adjusted assets during this time. However, the sharp decline in adjusted ROA in 2018 signals a considerable reduction in adjusted earnings efficiency, followed by a slight increase in 2019, although remaining below earlier levels.

Net Earnings and Adjusted Net Earnings

Net earnings are relatively stable with a modest upward trend, while adjusted net earnings exhibit more volatility, peaking in 2017 and then declining before a partial recovery.

Total Assets and Adjusted Total Assets

Both total and adjusted assets increase steadily with sharper growth in the later years, indicating expansion or increased investment in assets.

Reported ROA and Adjusted ROA

Both reported and adjusted ROA trend downward after peaking in earlier years, which suggests decreasing efficiency in generating returns from assets despite asset growth.

Overall, the data points to growth in asset size coupled with challenges in maintaining or improving asset profitability, particularly from 2017 onwards. The divergence between the upward trend in asset values and the downward trend in ROA highlights potential areas for operational efficiency improvements or strategic reassessment to enhance returns on asset investments.