Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
General Dynamics Corp., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-07-01), 10-Q (reporting date: 2018-04-01), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-10-01), 10-Q (reporting date: 2017-07-02), 10-Q (reporting date: 2017-04-02), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-10-04), 10-Q (reporting date: 2015-07-05), 10-Q (reporting date: 2015-04-05).
The analysis of the financial ratios over the examined periods reveals notable trends in the company's leverage and capital structure.
- Debt to Equity Ratio
- This ratio started at a stable level around 0.30 in early 2015 and remained relatively flat through 2016, indicating a consistent use of debt relative to equity. Beginning in early 2018, there was a pronounced increase, peaking at approximately 1.19 by mid-2018, suggesting a significant rise in debt financing relative to equity. After this peak, the ratio shows a gradual decline yet remains elevated compared to earlier years, ending near 0.91 in late 2020. This pattern indicates a shift toward higher leverage, followed by some deleveraging, but overall a higher reliance on debt capital than in the mid-2010s.
- Debt to Capital Ratio
- The debt to capital ratio remained steady at about 0.23–0.24 during 2015 and early 2016, mirroring the stable debt-to-equity conditions. From 2017 onward, the ratio increased, notably rising above 0.50 between early 2018 and mid-2019, peaking at 0.58 in mid-2020. This implies that debt comprised a growing portion of the total capital structure during this period. A slight decrease towards the end of 2020 suggests some reduction in debt levels relative to the overall capital employed.
- Debt to Assets Ratio
- This ratio remained relatively low and constant around 0.10–0.12 for several years through 2016, indicating modest debt relative to total assets. Starting in early 2018, there was a notable rise to approximately 0.30 by mid-2018, followed by fluctuations around 0.27 to 0.29 through late 2019. The ratio briefly dropped to 0.24 in early 2020 before climbing again to 0.34 mid-year and settling near 0.27 at the end of the observation period. The overall trend suggests increased leverage on the asset base interspersed with periods of slight asset growth or debt adjustments.
- Financial Leverage
- The financial leverage ratio hovered near 3.0 during 2015 and 2016, indicating moderate use of debt to amplify equity returns. From early 2018, the ratio climbed significantly, reaching a peak around 4.07 in early 2020, showing increased reliance on borrowed funds relative to equity. After this peak, the ratio decreased to approximately 3.4 by late 2020, signaling some deleveraging but still maintaining higher leverage levels than in prior years. This elevated leverage may reflect strategic financing decisions or responses to market conditions during those years.
In summary, the company's financial ratios collectively indicate a trend toward higher leverage starting around early 2018, with increased debt utilization relative to equity, capital, and assets. This shift suggests an expansion in debt financing which reached its height between 2018 and 2020, followed by moderate reductions but still sustained elevated leverage levels compared to earlier periods. Such dynamics may reflect strategic growth initiatives, acquisitions, or changing capital management philosophies during this timeframe.
Debt Ratios
Debt to Equity
General Dynamics Corp., debt to equity calculation (quarterly data)
| Sep 27, 2020 | Jun 28, 2020 | Mar 29, 2020 | Dec 31, 2019 | Sep 29, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jul 1, 2018 | Apr 1, 2018 | Dec 31, 2017 | Oct 1, 2017 | Jul 2, 2017 | Apr 2, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | Dec 31, 2015 | Oct 4, 2015 | Jul 5, 2015 | Apr 5, 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Short-term debt and current portion of long-term debt | 3,394) | 4,121) | 5,047) | 2,920) | 4,661) | 4,960) | 2,097) | 973) | 1,678) | 2,881) | 2,498) | 2) | 903) | 989) | 901) | 900) | 1) | 537) | 501) | 501) | 501) | 2) | 1) | |||||||
| Long-term debt, excluding current portion | 9,978) | 10,470) | 12,951) | 9,010) | 8,989) | 8,975) | 11,451) | 11,444) | 11,403) | 11,397) | 3,981) | 3,980) | 3,979) | 2,989) | 2,988) | 2,988) | 3,885) | 2,899) | 2,899) | 2,898) | 2,912) | 3,411) | 3,410) | |||||||
| Total debt | 13,372) | 14,591) | 17,998) | 11,930) | 13,650) | 13,935) | 13,548) | 12,417) | 13,081) | 14,278) | 6,479) | 3,982) | 4,882) | 3,978) | 3,889) | 3,888) | 3,886) | 3,436) | 3,400) | 3,399) | 3,413) | 3,413) | 3,411) | |||||||
| Shareholders’ equity | 14,716) | 13,890) | 13,200) | 13,577) | 13,513) | 12,877) | 12,234) | 11,732) | 12,755) | 11,994) | 11,774) | 11,435) | 11,564) | 10,952) | 10,583) | 10,976) | 11,317) | 10,995) | 10,582) | 10,738) | 10,734) | 11,276) | 11,520) | |||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||
| Debt to equity1 | 0.91 | 1.05 | 1.36 | 0.88 | 1.01 | 1.08 | 1.11 | 1.06 | 1.03 | 1.19 | 0.55 | 0.35 | 0.42 | 0.36 | 0.37 | 0.35 | 0.34 | 0.31 | 0.32 | 0.32 | 0.32 | 0.30 | 0.30 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 2.55 | 2.81 | 2.61 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 0.57 | 0.58 | 0.59 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 2.39 | 2.43 | 2.41 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 1.23 | 1.22 | 0.91 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 2.56 | 3.38 | 3.68 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 0.48 | 0.49 | 1.18 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-07-01), 10-Q (reporting date: 2018-04-01), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-10-01), 10-Q (reporting date: 2017-07-02), 10-Q (reporting date: 2017-04-02), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-10-04), 10-Q (reporting date: 2015-07-05), 10-Q (reporting date: 2015-04-05).
1 Q3 2020 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= 13,372 ÷ 14,716 = 0.91
2 Click competitor name to see calculations.
The financial data reveals several notable trends in the company’s capital structure and leverage over the analyzed periods.
- Total Debt
- Total debt remained relatively stable from early 2015 through mid-2016, fluctuating slightly around the 3,400 million USD mark. However, starting in late 2016, there was a noticeable increase, especially apparent in early 2018 when the debt nearly doubled, peaking around 14,278 million USD in July 2018. Following this peak, debt levels decreased but remained elevated compared to the earlier years, with values fluctuating between approximately 11,930 and 17,998 million USD through 2020.
- Shareholders' Equity
- Shareholders’ equity showed a gradual decline from 2015 into early 2017, moving from around 11,520 million USD down to about 10,583 million USD. From this point onwards, equity gradually increased, reaching a high of roughly 14,716 million USD by September 2020. Despite minor fluctuations in certain quarters, the trend indicates strengthening equity capital over the later periods.
- Debt to Equity Ratio
- The debt to equity ratio was relatively low and stable from 2015 through mid-2017, generally hovering near 0.3 to 0.4, indicating modest leverage levels. Starting in late 2017, the ratio rose sharply, peaking at 1.19 in July 2018, reflecting a period of increased borrowing relative to equity. After this peak, although the ratio decreased somewhat, it remained significantly above earlier years, fluctuating near or slightly above 1.0 through 2020, signaling a higher leverage position compared to the first part of the period.
Overall, the data suggests that the company undertook considerable debt financing beginning in late 2017 and early 2018, which impacted the leverage ratio markedly. Despite fluctuations, shareholders’ equity showed a recovery and growth trend over the longer term, partially offsetting increases in debt but not to the extent that leverage returned to earlier low levels. This increase in leverage could be indicative of strategic investments or capital allocation decisions during that timeframe.
Debt to Capital
General Dynamics Corp., debt to capital calculation (quarterly data)
| Sep 27, 2020 | Jun 28, 2020 | Mar 29, 2020 | Dec 31, 2019 | Sep 29, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jul 1, 2018 | Apr 1, 2018 | Dec 31, 2017 | Oct 1, 2017 | Jul 2, 2017 | Apr 2, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | Dec 31, 2015 | Oct 4, 2015 | Jul 5, 2015 | Apr 5, 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Short-term debt and current portion of long-term debt | 3,394) | 4,121) | 5,047) | 2,920) | 4,661) | 4,960) | 2,097) | 973) | 1,678) | 2,881) | 2,498) | 2) | 903) | 989) | 901) | 900) | 1) | 537) | 501) | 501) | 501) | 2) | 1) | |||||||
| Long-term debt, excluding current portion | 9,978) | 10,470) | 12,951) | 9,010) | 8,989) | 8,975) | 11,451) | 11,444) | 11,403) | 11,397) | 3,981) | 3,980) | 3,979) | 2,989) | 2,988) | 2,988) | 3,885) | 2,899) | 2,899) | 2,898) | 2,912) | 3,411) | 3,410) | |||||||
| Total debt | 13,372) | 14,591) | 17,998) | 11,930) | 13,650) | 13,935) | 13,548) | 12,417) | 13,081) | 14,278) | 6,479) | 3,982) | 4,882) | 3,978) | 3,889) | 3,888) | 3,886) | 3,436) | 3,400) | 3,399) | 3,413) | 3,413) | 3,411) | |||||||
| Shareholders’ equity | 14,716) | 13,890) | 13,200) | 13,577) | 13,513) | 12,877) | 12,234) | 11,732) | 12,755) | 11,994) | 11,774) | 11,435) | 11,564) | 10,952) | 10,583) | 10,976) | 11,317) | 10,995) | 10,582) | 10,738) | 10,734) | 11,276) | 11,520) | |||||||
| Total capital | 28,088) | 28,481) | 31,198) | 25,507) | 27,163) | 26,812) | 25,782) | 24,149) | 25,836) | 26,272) | 18,253) | 15,417) | 16,446) | 14,930) | 14,472) | 14,864) | 15,203) | 14,431) | 13,982) | 14,137) | 14,147) | 14,689) | 14,931) | |||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||
| Debt to capital1 | 0.48 | 0.51 | 0.58 | 0.47 | 0.50 | 0.52 | 0.53 | 0.51 | 0.51 | 0.54 | 0.35 | 0.26 | 0.30 | 0.27 | 0.27 | 0.26 | 0.26 | 0.24 | 0.24 | 0.24 | 0.24 | 0.23 | 0.23 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 1.24 | 1.23 | 1.33 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 0.72 | 0.74 | 0.72 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 0.36 | 0.37 | 0.37 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 0.70 | 0.71 | 0.71 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 0.55 | 0.55 | 0.48 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 0.72 | 0.77 | 0.79 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 0.32 | 0.33 | 0.54 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-07-01), 10-Q (reporting date: 2018-04-01), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-10-01), 10-Q (reporting date: 2017-07-02), 10-Q (reporting date: 2017-04-02), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-10-04), 10-Q (reporting date: 2015-07-05), 10-Q (reporting date: 2015-04-05).
1 Q3 2020 Calculation
Debt to capital = Total debt ÷ Total capital
= 13,372 ÷ 28,088 = 0.48
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends in the company's capital structure over the analyzed periods. The total debt levels exhibit a general upward trajectory, with some volatility observed towards the latter quarters. Starting from approximately 3,411 million US dollars in early 2015, total debt increased moderately until the end of 2016, after which it rose sharply, reaching peaks of around 14,278 million US dollars by mid-2018 before slightly declining but remaining elevated relative to earlier years. In the most recent quarters, total debt again shows a rising trend, peaking near 17,998 million US dollars before a modest decrease.
Total capital follows a somewhat similar growth pattern but with less pronounced fluctuations compared to total debt. It starts near 14,931 million US dollars in early 2015 and maintains relative stability until roughly 2017. From 2017 onwards, total capital substantially grows, especially during 2018, where it escalates rapidly to exceed 26,000 million US dollars, subsequently maintaining elevated figures with some minor variations around 28,000 to 31,000 million US dollars in the latest quarters.
The debt to capital ratio, which provides insight into the leverage level, reflects the changes in debt and capital balances. This ratio remained stable around 0.23 to 0.26 through 2015 and 2016, indicating a moderate use of debt financing. Entering 2017 and into 2018, the ratio rose significantly, peaking at 0.54 in mid-2018, suggesting a marked increase in reliance on debt within the capital structure. Post-2018, the ratio gradually declined but stayed at elevated levels above 0.45, indicating continued significant leverage.
- Total debt
- Displayed a steady increase with notable spikes in 2018 and 2020, peaking near 18,000 million US dollars, followed by some reduction but remaining at high levels relative to the initial periods.
- Total capital
- Maintained relative stability until 2017, then increased sharply through 2018 and stabilized at a higher plateau, suggesting capital growth likely driven by increased equity or debt financing.
- Debt to capital ratio
- Shifted from a low of around 0.23 to a high of 0.54 in mid-2018, indicating growing financial leverage. Although slightly decreasing in recent quarters, the ratio remains elevated, pointing to a sustained greater proportion of debt in the capital structure.
Overall, the analysis shows that the company has progressively increased its debt and capital base over the years, with debt growing relatively faster at certain points, resulting in heightened leverage. The elevated debt to capital ratio in recent periods indicates a significant reliance on debt financing, which may impact financial risk and flexibility. These trends warrant attention for potential implications on credit profiles and cost of capital management.
Debt to Assets
General Dynamics Corp., debt to assets calculation (quarterly data)
| Sep 27, 2020 | Jun 28, 2020 | Mar 29, 2020 | Dec 31, 2019 | Sep 29, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jul 1, 2018 | Apr 1, 2018 | Dec 31, 2017 | Oct 1, 2017 | Jul 2, 2017 | Apr 2, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | Dec 31, 2015 | Oct 4, 2015 | Jul 5, 2015 | Apr 5, 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Short-term debt and current portion of long-term debt | 3,394) | 4,121) | 5,047) | 2,920) | 4,661) | 4,960) | 2,097) | 973) | 1,678) | 2,881) | 2,498) | 2) | 903) | 989) | 901) | 900) | 1) | 537) | 501) | 501) | 501) | 2) | 1) | |||||||
| Long-term debt, excluding current portion | 9,978) | 10,470) | 12,951) | 9,010) | 8,989) | 8,975) | 11,451) | 11,444) | 11,403) | 11,397) | 3,981) | 3,980) | 3,979) | 2,989) | 2,988) | 2,988) | 3,885) | 2,899) | 2,899) | 2,898) | 2,912) | 3,411) | 3,410) | |||||||
| Total debt | 13,372) | 14,591) | 17,998) | 11,930) | 13,650) | 13,935) | 13,548) | 12,417) | 13,081) | 14,278) | 6,479) | 3,982) | 4,882) | 3,978) | 3,889) | 3,888) | 3,886) | 3,436) | 3,400) | 3,399) | 3,413) | 3,413) | 3,411) | |||||||
| Total assets | 50,258) | 50,222) | 53,710) | 48,841) | 48,788) | 48,074) | 47,466) | 45,408) | 46,963) | 47,152) | 37,219) | 35,046) | 34,914) | 33,793) | 33,211) | 32,872) | 32,668) | 31,769) | 31,702) | 31,997) | 32,980) | 33,654) | 34,385) | |||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||
| Debt to assets1 | 0.27 | 0.29 | 0.34 | 0.24 | 0.28 | 0.29 | 0.29 | 0.27 | 0.28 | 0.30 | 0.17 | 0.11 | 0.14 | 0.12 | 0.12 | 0.12 | 0.12 | 0.11 | 0.11 | 0.11 | 0.10 | 0.10 | 0.10 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 0.38 | 0.38 | 0.27 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 0.50 | 0.50 | 0.49 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 0.26 | 0.27 | 0.27 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 0.31 | 0.32 | 0.32 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 0.35 | 0.35 | 0.28 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 0.25 | 0.26 | 0.26 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 0.20 | 0.20 | 0.33 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-07-01), 10-Q (reporting date: 2018-04-01), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-10-01), 10-Q (reporting date: 2017-07-02), 10-Q (reporting date: 2017-04-02), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-10-04), 10-Q (reporting date: 2015-07-05), 10-Q (reporting date: 2015-04-05).
1 Q3 2020 Calculation
Debt to assets = Total debt ÷ Total assets
= 13,372 ÷ 50,258 = 0.27
2 Click competitor name to see calculations.
- Total Debt
- The total debt remained relatively stable between April 2015 and July 2016, fluctuating slightly around 3,400 million US dollars. Starting from October 2016, a noticeable increase is observed, reaching a peak at 14,278 million US dollars in July 2018. Subsequently, total debt decreased to 12,417 million by December 2018, followed by a moderate rise and fluctuations up to September 2020, where it stands at 13,372 million. The sharp increase between early 2018 and mid-2018 suggests significant financing activity or acquisitions during this period.
- Total Assets
- Total assets show a general upward trend over the period. From approximately 34,385 million US dollars in April 2015, assets steadily grew, with some acceleration from mid-2017 onward. The asset base increases sharply from 37,219 million US dollars in April 2018 to a peak of 53,710 million by June 2020, before a slight decline at the end of the recorded period. This pattern implies expansion and asset accumulation, possibly through capital investments or acquisitions.
- Debt to Assets Ratio
- The ratio of debt to assets initially remains quite low and stable around 0.10 to 0.12 until late 2016, indicating conservative leverage. It spikes significantly in early 2018, reaching as high as 0.34 by June 2020, reflective of the rapid increase in total debt relative to assets during that time frame. This elevated leverage ratio suggests an increase in financial risk or aggressive financing strategies employed by the company in recent years.
- Overall Analysis
- The data reveal a phase of stability in both debt and assets from 2015 to 2016, followed by substantial growth in asset size and debt load from 2017 through 2020. The pronounced rise in total debt, coupled with increasing assets, results in a more leveraged financial position as indicated by the debt to assets ratio. The period from 2018 to mid-2020 is marked by peak leverage and asset accumulation, which may reflect strategic initiatives involving expansion or restructuring funded through debt. The slight decrease in the debt to assets ratio at the end of the period suggests some deleveraging or asset base stabilization.
Financial Leverage
General Dynamics Corp., financial leverage calculation (quarterly data)
| Sep 27, 2020 | Jun 28, 2020 | Mar 29, 2020 | Dec 31, 2019 | Sep 29, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jul 1, 2018 | Apr 1, 2018 | Dec 31, 2017 | Oct 1, 2017 | Jul 2, 2017 | Apr 2, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | Dec 31, 2015 | Oct 4, 2015 | Jul 5, 2015 | Apr 5, 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Total assets | 50,258) | 50,222) | 53,710) | 48,841) | 48,788) | 48,074) | 47,466) | 45,408) | 46,963) | 47,152) | 37,219) | 35,046) | 34,914) | 33,793) | 33,211) | 32,872) | 32,668) | 31,769) | 31,702) | 31,997) | 32,980) | 33,654) | 34,385) | |||||||
| Shareholders’ equity | 14,716) | 13,890) | 13,200) | 13,577) | 13,513) | 12,877) | 12,234) | 11,732) | 12,755) | 11,994) | 11,774) | 11,435) | 11,564) | 10,952) | 10,583) | 10,976) | 11,317) | 10,995) | 10,582) | 10,738) | 10,734) | 11,276) | 11,520) | |||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||
| Financial leverage1 | 3.42 | 3.62 | 4.07 | 3.60 | 3.61 | 3.73 | 3.88 | 3.87 | 3.68 | 3.93 | 3.16 | 3.06 | 3.02 | 3.09 | 3.14 | 2.99 | 2.89 | 2.89 | 3.00 | 2.98 | 3.07 | 2.98 | 2.98 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 5.13 | 5.57 | 5.35 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 2.14 | 2.14 | 2.17 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 7.64 | 7.62 | 7.43 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 3.51 | 3.50 | 3.25 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 10.25 | 13.22 | 14.29 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 2.37 | 2.40 | 3.54 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-07-01), 10-Q (reporting date: 2018-04-01), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-10-01), 10-Q (reporting date: 2017-07-02), 10-Q (reporting date: 2017-04-02), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-10-04), 10-Q (reporting date: 2015-07-05), 10-Q (reporting date: 2015-04-05).
1 Q3 2020 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= 50,258 ÷ 14,716 = 3.42
2 Click competitor name to see calculations.
- Total Assets
- The total assets exhibit a fluctuating but generally upward trend over the examined periods. Starting from 34,385 million USD in April 2015, the value gradually declined until December 2015, reaching a low of 31,997 million USD. Following this, total assets demonstrated consistent growth, with notable increases in 2018, culminating at 47,152 million USD by July 2018. After a slight decrease in the subsequent quarters, the asset base again rose, peaking at 53,710 million USD in March 2020 before marginally declining to around 50,258 million USD by September 2020.
- Shareholders' Equity
- Shareholders' equity shows more variability with a generally moderate upward trajectory. Initial values fell from 11,520 million USD in April 2015 to a low of 10,583 million USD by April 2017, indicating some capital erosion. However, from mid-2017 onward, equity improved steadily, reaching a peak of 13,577 million USD by March 2020. Some short-term decreases are observed, such as a drop from 12,755 million USD in September 2018 to 11,732 million USD in December 2018, but recovery ensued in following quarters.
- Financial Leverage
- The financial leverage ratio fluctuated within a moderate range, indicating changes in the company's capital structure volatility. Initially stable around 2.98 to 3.07 through 2015 and mid-2016, leverage increased to near 3.93 by July 2018, signaling greater use of debt relative to equity. The ratio remained elevated through early 2019, oscillating between 3.6 and just above 4.0 by March 2020. It then decreased slightly towards the end of 2020 to approximately 3.42, suggesting some deleveraging but maintaining a generally higher leverage level compared to earlier years.
- Summary and Insights
- Overall, the company experienced significant growth in total assets and moderate growth in shareholders’ equity over the examined periods, with some intermittent declines. The upward trend in assets indicates expansion or acquisition activity, while shareholders’ equity growth, albeit less consistent, signals retained earnings accumulation or capital injections. The financial leverage ratio's rise, especially from 2017 to early 2020, implies increased reliance on debt financing, which could enhance returns but also raises financial risk. The slight decline in leverage toward late 2020 may reflect efforts to stabilize the capital structure. These patterns suggest a company increasing scale while adjusting its financing strategies in response to changing operational or market conditions.