General Dynamics Corp. (NYSE:GD)

Return on Assets (ROA)

The Return on Assets showed a consistent downward trend over the five-year period, declining from 9.27% in 2015 to 7.13% in 2019. This indicates a gradual decrease in the efficiency of asset utilization to generate profits.

Financial Leverage

Financial Leverage remained relatively stable initially, ranging from 2.98 to 3.06 between 2015 and 2017, before increasing notably to 3.87 in 2018 and then slightly reducing to 3.6 in 2019. This pattern suggests a growing reliance on debt financing over time, peaking in 2018.

Return on Equity (ROE)

The Return on Equity exhibited fluctuations within the period, starting at 27.61% in 2015, decreasing to 25.47% in 2017, increasing again to 28.51% in 2018, and finally declining to 25.66% in 2019. Despite these variations, the overall ROE remained relatively high, indicating sustained profitability from shareholders' perspectives.

Net Profit Margin

The net profit margin displayed a slight decreasing trend over the analyzed period, starting at 9.42% in 2015 and maintaining near that level in 2016 and 2017. However, it gradually declined to 9.24% in 2018 and further decreased to 8.85% in 2019, indicating a moderate reduction in profitability efficiency relative to sales over the years.

Asset Turnover

The asset turnover ratio showed a consistent downward trend from 0.98 in 2015 to 0.81 in 2019. This decline suggests decreasing efficiency in using the company’s assets to generate revenue, with a notable reduction each year except for a slight stabilization between 2018 and 2019.

Financial Leverage

Financial leverage exhibited a generally increasing trend throughout the period. Starting at 2.98 in 2015, it rose slightly to 2.99 in 2016 and 3.06 in 2017, followed by a more marked increase to 3.87 in 2018. In 2019, leverage decreased somewhat to 3.6 but remained elevated relative to the early years, indicating a higher reliance on debt financing or other liabilities to support assets.

Return on Equity (ROE)

Return on equity showed some variability across the years. It started at a high of 27.61% in 2015 and experienced a gradual decline to 25.47% in 2017. Thereafter, ROE increased to 28.51% in 2018, the highest point in the period, before falling again to 25.66% in 2019. This pattern indicates fluctuations in the company’s ability to generate profits from shareholders’ equity, influenced likely by changes in net income, asset utilization, and leverage.

Overall Analysis

The data reflects a company facing slight declines in operational efficiency and profit margins, indicated by the decreasing net profit margin and asset turnover ratios. The increasing financial leverage suggests greater dependence on debt, which might contribute to the fluctuations observed in ROE. While ROE remained relatively strong, its volatility signals underlying shifts in profitability and capital structure that warrant further examination for sustainable performance.

The financial data indicates several notable trends over the five-year period from 2015 to 2019.

Tax Burden

The tax burden ratio remained relatively stable at approximately 0.72 in 2015 and 2016, with a slight decline in 2017 to 0.71. However, there was a marked increase in 2018 and 2019, reaching 0.82 and 0.83 respectively. This suggests that the company experienced a higher tax expense relative to its pre-tax earnings during the latter years.

Interest Burden

The interest burden ratio showed a gradual decline over the period, moving from 0.98 in 2015 and 2016 down to 0.90 by 2019. This downward trend indicates increased interest expenses relative to EBIT, potentially reflecting higher borrowing costs or increased leverage.

EBIT Margin

The EBIT margin experienced a slight upward trend initially, increasing from 13.35% in 2015 to a peak of 13.54% in 2017. Afterward, it declined to 12.28% in 2018 and further to 11.88% in 2019. This decline highlights diminishing operational profitability over the most recent years.

Asset Turnover

The asset turnover ratio decreased consistently from 0.98 in 2015 to 0.81 in 2019. This pattern indicates a reduction in the efficiency with which the company utilized its assets to generate sales.

Financial Leverage

Financial leverage remained relatively stable around 3.0 in the first three years, but increased sharply to 3.87 in 2018 before slightly decreasing to 3.60 in 2019. The rise in leverage signals a greater reliance on debt financing during this period.

Return on Equity (ROE)

The ROE showed modest fluctuations, starting at 27.61% in 2015, decreasing gradually to 25.47% in 2017, then rebounding to 28.51% in 2018, before falling again to 25.66% in 2019. This variability suggests changes in profitability and capital structure that affected shareholder returns unevenly across the years.

Net Profit Margin

The net profit margin shows a gradual decline over the observed five-year period. It remained stable at approximately 9.42% during 2015 and 2016, then marginally decreased to 9.4% in 2017. This downward trend continued more noticeably through 2018 and 2019, reaching 8.85%. The consistent decrease suggests a slight reduction in profitability relative to sales over time.

Asset Turnover

The asset turnover ratio exhibits a clear declining trend from 2015 to 2018, dropping from 0.98 to 0.8. This decrease indicates a reduced efficiency in using assets to generate revenue. In 2019, the ratio stabilized slightly, increasing marginally to 0.81 but remaining significantly below the 2015 level. Overall, the company’s asset utilization efficiency weakened during these years.

Return on Assets (ROA)

The ROA metric shows a consistent downward trajectory over the period analyzed. Starting at 9.27% in 2015, it progressively decreased each year to reach 7.13% by 2019. This decline reflects diminishing profitability relative to the total assets, aligning with the observed drops in net profit margin and asset turnover.

The financial data reveals several notable trends over the five-year period ending December 31, 2019.

Tax Burden

The tax burden ratio remained relatively stable around 0.72 during 2015 to 2017, then increased significantly to 0.82 in 2018 and slightly further to 0.83 in 2019, indicating a higher proportion of earnings retained after taxes in the later years.

Interest Burden

The interest burden ratio was consistently high from 2015 through 2017 at or near 0.98, but then declined to 0.92 in 2018 and further to 0.90 in 2019, suggesting increasing interest expenses or financial costs reducing pre-interest earnings in the latter years.

EBIT Margin

There was a modest increase in EBIT margin from 13.35% in 2015 to a peak of 13.54% in 2017. However, this margin then declined noticeably to 12.28% in 2018 and further to 11.88% in 2019, indicating reduced operational profitability.

Asset Turnover

Asset turnover ratio demonstrated a downward trend from 0.98 in 2015 to 0.81 in 2019, reflecting decreased efficiency in generating sales from assets over time.

Return on Assets (ROA)

ROA decreased steadily across the period, from 9.27% in 2015 to 7.13% in 2019, corresponding with declines in operational margin and asset turnover, signaling a diminishing overall profitability relative to the asset base.

Overall, the data indicates that while the company maintained stable tax efficiency in the initial years, increasing tax and interest expenses, as well as declining EBIT margins and asset utilization efficiency, contributed to a consistent downward trend in return on assets over the analyzed timeframe.

Tax Burden

The tax burden ratio remained stable at approximately 0.72 during 2015 through 2017, indicating consistent tax expenses relative to earnings. Starting in 2018, there was a noticeable increase to 0.82, followed by a slight rise to 0.83 in 2019. This upward trend suggests a growing proportion of earnings being absorbed by taxes in the later years.

Interest Burden

The interest burden ratio was steady around 0.98 in 2015 to 2017, demonstrating minimal interest expenses impacting earnings before taxes. However, starting in 2018, the ratio declined to 0.92 and further to 0.90 in 2019. This decrease indicates a higher interest expense load or reduced earnings before interest and taxes relative to earnings before taxes in those years.

EBIT Margin

The EBIT margin showed a slight upward trend from 13.35% in 2015 to 13.54% in 2017, reflecting improved operating profitability. This positive momentum reversed in 2018 and 2019, where the margin declined to 12.28% and then to 11.88%, respectively. The decline points to diminishing operating efficiency or increased operational costs relative to revenue towards the end of the period.

Net Profit Margin

Net profit margin maintained relative stability around 9.4% from 2015 to 2017. However, starting in 2018, it experienced a gradual decrease to 9.24% and further down to 8.85% by 2019. This trend indicates a diminishing proportion of net income generated per dollar of revenue, possibly impacted by rising tax and interest burdens as well as declining EBIT margins.