Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Lockheed Martin Corp. (NYSE:LMT)

Financial Reporting Quality: Aggregate Accruals

Advanced level

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Lockheed Martin Corp., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Operating Assets
Total assets 50,710  47,528  44,876  46,521  47,806 
Less: Cash and cash equivalents 3,160  1,514  772  2,861  1,837 
Operating assets 47,550  46,014  44,104  43,660  45,969 
Operating Liabilities
Total liabilities 44,672  44,357  43,427  47,130  46,200 
Less: Current maturities of long-term debt 500  1,250  1,500  750  — 
Less: Long-term debt, net, excluding current maturities 11,669  11,404  12,604  13,513  14,282 
Operating liabilities 32,503  31,703  29,323  32,867  31,918 
 
Net operating assets1 15,047  14,311  14,781  10,793  14,051 
Balance-sheet-based aggregate accruals2 736  (470) 3,988  (3,258) — 
Financial Ratio
Balance-sheet-based accruals ratio3 5.01% -3.23% 31.19% -26.23%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Boeing Co. 75.78% 44.72% 114.97% 63.07%
Northrop Grumman Corp. 1.08% -2.68% 61.81% 12.46%
Raytheon Technologies Corp. 18.38% 0.61% 46.18% 7.98%
Balance-Sheet-Based Accruals Ratio, Sector
Aerospace & Defense 20.38% 2.23% 49.33% 3.64%
Balance-Sheet-Based Accruals Ratio, Industry
Industrials 4.26% -6.11% 1.08% 10.08%

Based on: 10-K (filing date: 2021-01-28), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 47,55032,503 = 15,047

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 15,04714,311 = 736

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 736 ÷ [(15,047 + 14,311) ÷ 2] = 5.01%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Lockheed Martin Corp. deteriorated earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Lockheed Martin Corp., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net earnings 6,833  6,230  5,046  2,002  5,302 
Less: Net cash provided by operating activities 8,183  7,311  3,138  6,476  5,189 
Less: Net cash used for investing activities (2,010) (1,241) (1,075) (1,147) (985)
Cash-flow-statement-based aggregate accruals 660  160  2,983  (3,327) 1,098 
Financial Ratio
Cash-flow-statement-based accruals ratio1 4.50% 1.10% 23.33% -26.78%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Boeing Co. 172.40% 45.55% -6.67% -264.01%
Northrop Grumman Corp. 0.46% -4.06% 51.59% 2.79%
Raytheon Technologies Corp. -12.62% -0.32% 24.46% 4.03%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Aerospace & Defense 10.45% 1.96% 27.62% -5.79%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Industrials -2.31% -2.60% -2.05% 0.01%

Based on: 10-K (filing date: 2021-01-28), 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 660 ÷ [(15,047 + 14,311) ÷ 2] = 4.50%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Lockheed Martin Corp. deteriorated earnings quality from 2019 to 2020.