Lockheed Martin Corp. (NYSE:LMT)

The financial metrics presented demonstrate notable shifts in key performance indicators over the five-year period. Generally, adjusted ratios reveal a more pronounced financial profile than reported figures, particularly concerning leverage and profitability. Several ratios exhibit increasing trends initially, followed by stabilization or decline in later years.

Asset Turnover

Reported total asset turnover remained relatively stable, fluctuating between 1.25 and 1.32. The adjusted total asset turnover showed a similar pattern, beginning at 1.38 in 2021 and decreasing to 1.32 in 2025, indicating a consistent, though modest, efficiency in utilizing assets to generate sales after adjustments are made.

Leverage Ratios

Reported debt to equity increased significantly from 1.07 in 2021 to 3.23 in 2025, suggesting a growing reliance on debt financing. The adjusted debt to equity ratio exhibited a more dramatic increase, rising from 1.51 to 6.05 over the same period, then decreasing slightly to 6.05 in 2025. This indicates that adjustments to the debt calculation substantially increase the perceived level of financial risk. A similar trend is observed in debt to capital, with adjusted figures consistently higher than reported ones and increasing from 0.60 to 0.86. Reported financial leverage increased steadily from 4.64 to 8.90, while adjusted financial leverage showed a more substantial rise, peaking at 18.59 in 2024 before decreasing to 15.11 in 2025. This suggests a considerable amplification of financial leverage when adjustments are considered.

Profitability Ratios

Reported net profit margin decreased from 9.42% in 2021 to 6.69% in 2025, indicating a decline in profitability. The adjusted net profit margin, while also decreasing from 16.78% to 8.39%, remained considerably higher than the reported margin throughout the period. This suggests that adjustments positively impact the perceived profitability. Reported return on equity (ROE) experienced volatility, peaking at 101.24% in 2023 before declining to 74.65% in 2025. Adjusted ROE demonstrated a consistently higher and increasing trend, reaching 182.11% in 2024 and then decreasing to 167.35% in 2025. Similarly, reported return on assets (ROA) decreased from 12.41% to 8.38%, while adjusted ROA showed a decline from 23.15% to 11.08%, but remained higher than the reported ROA.

In summary, the adjusted ratios consistently present a more leveraged and profitable financial picture than the reported ratios. While reported metrics show a general decline in profitability and an increase in debt, the adjusted figures highlight a more substantial increase in leverage, particularly in the middle of the period, coupled with initially higher, but ultimately declining, profitability. The divergence between reported and adjusted ratios suggests that the adjustments made are significantly impacting the assessment of the company’s financial health.

The period between December 31, 2021, and December 31, 2025, demonstrates fluctuating performance in asset turnover metrics. Sales exhibited an initial decrease from 2021 to 2022, followed by a recovery and subsequent growth through 2025. Total assets generally increased over the five-year period, though with a slight decrease between 2022 and 2023. Analysis of both reported and adjusted total asset turnover ratios reveals nuanced trends in operational efficiency.

Sales Trend

Sales decreased from US$67,044 million in 2021 to US$65,984 million in 2022, representing a decline of approximately 1.6%. Subsequently, sales increased to US$67,571 million in 2023, US$71,043 million in 2024, and reached US$75,048 million in 2025. This indicates a positive sales trajectory following the initial dip, with a cumulative increase of 11.9% from 2022 to 2025.

Total Asset Trend

Total assets increased from US$50,873 million in 2021 to US$52,880 million in 2022, and then experienced a slight decrease to US$52,456 million in 2023. Further increases were observed in 2024 (US$55,617 million) and 2025 (US$59,840 million), demonstrating an overall upward trend in asset holdings over the period.

Reported Total Asset Turnover

The reported total asset turnover ratio decreased from 1.32 in 2021 to 1.25 in 2022, reflecting a reduced efficiency in generating sales from assets. The ratio partially recovered to 1.29 in 2023, but remained relatively stable at 1.28 in 2024 before decreasing again to 1.25 in 2025. This suggests a generally stable, but slightly declining, efficiency in utilizing total assets to generate revenue.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio, calculated using adjusted total assets, exhibited a different pattern. It began at 1.38 in 2021, decreased to 1.34 in 2022, and then increased to 1.36 in both 2023 and 2024. A slight decrease to 1.32 was observed in 2025. The adjusted ratio consistently remained above the reported ratio throughout the period. The difference between the reported and adjusted ratios suggests that the adjustments to total assets positively influence the perceived efficiency of asset utilization.

The consistent difference between the reported and adjusted total asset turnover ratios indicates that the adjustments made to total assets have a material impact on the calculated efficiency metric. While the reported ratio shows a slight decline in efficiency, the adjusted ratio demonstrates more stability and generally higher values, suggesting that the adjustments reflect a more accurate representation of asset utilization. The overall trend suggests a moderate level of operational efficiency, with potential for improvement as indicated by the fluctuations in both reported and adjusted ratios.

The reported debt to equity ratio demonstrates an increasing trend over the observed period. Beginning at 1.07 in 2021, it rose to 3.23 by 2025. However, the adjusted debt to equity ratio reveals a more pronounced and volatile increase. This suggests that adjustments to the reported figures significantly impact the assessment of the company’s leverage.

Adjusted Debt to Equity Ratio – Overall Trend

The adjusted debt to equity ratio exhibits a substantial upward trajectory from 2021 to 2024. Starting at 1.51 in 2021, it increased to 7.65 in 2024, representing a more than fivefold increase. A slight decrease is then observed in 2025, with the ratio falling to 6.05. This indicates a period of rapidly increasing financial leverage followed by a modest stabilization.

The difference between the reported and adjusted ratios widens over time. In 2021, the adjusted ratio was 0.44 higher than the reported ratio. By 2024, this difference had grown to 4.45. This expansion suggests that the adjustments being made are becoming increasingly material to the overall assessment of the company’s financial risk.

Debt and Equity Components

Total debt consistently increased throughout the period, rising from US$11,676 million in 2021 to US$21,700 million in 2025. Stockholders’ equity, conversely, experienced a decline from 2021 to 2024, falling from US$10,959 million to US$6,333 million, before a slight recovery to US$6,721 million in 2025. This divergence between debt and equity is a primary driver of the increasing debt to equity ratios.

Adjustments to Debt and Equity

The adjustments to total debt were consistently positive, increasing the reported debt figure. Adjustments to stockholders’ equity were consistently negative, reducing the reported equity figure. The magnitude of these adjustments increased over the period, contributing to the widening gap between the reported and adjusted ratios. The adjustments appear to be having a greater impact on equity than on debt.

The substantial increase in the adjusted debt to equity ratio, coupled with the declining equity base, warrants further investigation into the nature of the adjustments being made and their underlying causes. The stabilization in 2025, while modest, may indicate a potential turning point, but continued monitoring is necessary to confirm this trend.

The information presents a five-year trend of debt and capital figures, culminating in adjusted debt-to-capital ratios. Total debt exhibits a consistent upward trajectory, increasing from US$11,676 million in 2021 to US$21,700 million in 2025. Total capital demonstrates a more moderate increase over the same period, rising from US$22,635 million to US$28,421 million. Consequently, the reported debt-to-capital ratio increases steadily from 0.52 in 2021 to 0.76 in both 2024 and 2025.

Adjusted Debt-to-Capital Ratio Trend

The adjusted debt-to-capital ratio reveals a more pronounced increase than the reported ratio. Starting at 0.60 in 2021, it climbs to 0.88 in 2024 before slightly decreasing to 0.86 in 2025. This suggests that adjustments to the debt and capital figures result in a higher leverage profile than initially indicated by the reported values.

The difference between the reported and adjusted ratios indicates that the adjustments are increasing both debt and decreasing capital. The adjusted total debt consistently exceeds the reported total debt, while the adjusted total capital is consistently lower than the reported total capital. This suggests the adjustments involve reclassifications or modifications that increase the measured debt burden and reduce the measured capital base.

Magnitude of Adjustments

The difference between reported and adjusted debt widens over time, increasing from US$1,400 million in 2021 to US$1,139 million in 2025. Similarly, the difference between reported and adjusted capital also increases, moving from US$882 million in 2021 to US$1,886 million in 2025. This indicates that the impact of the adjustments is becoming more substantial in later years.

The consistent rise in the adjusted debt-to-capital ratio, particularly the peak at 0.88 in 2024, warrants further investigation into the nature of the adjustments. While the ratio stabilizes slightly in 2025, the overall trend suggests increasing financial leverage when considering the adjusted figures. The increasing magnitude of the adjustments themselves also merits scrutiny.

An examination of the financial information reveals a notable shift in adjusted financial leverage over the five-year period. While total assets generally increased, stockholders’ equity experienced a decline, contributing to the observed changes in leverage. Reported financial leverage also increased, but at a slower pace than the adjusted figures.

Adjusted Financial Leverage – Overall Trend

Adjusted financial leverage demonstrates a consistent upward trend from 2021 to 2024, increasing from 5.60 to 18.59. A slight decrease is then observed in 2025, with the ratio settling at 15.11. This indicates a growing reliance on debt financing relative to adjusted equity over much of the period.

Adjusted Total Assets

Adjusted total assets exhibited a steady increase throughout the period, rising from US$48,583 million in 2021 to US$56,865 million in 2025. This growth suggests expansion of the company’s asset base.

Adjusted Stockholders’ Equity

In contrast to assets, adjusted stockholders’ equity decreased significantly from 2021 to 2024, falling from US$8,677 million to US$2,800 million. A modest recovery is seen in 2025, with equity reaching US$3,764 million. This decline in equity is a primary driver of the increasing adjusted financial leverage.

Reported vs. Adjusted Leverage

Reported financial leverage also increased over the period, moving from 4.64 in 2021 to 8.90 in 2025. However, the magnitude of the increase is less pronounced than that of the adjusted financial leverage. This difference suggests that the adjustments made to total assets and stockholders’ equity have a substantial impact on the leverage calculation, indicating the importance of considering these adjustments when assessing the company’s financial risk.

The substantial increase in adjusted financial leverage, coupled with the decline in adjusted stockholders’ equity, warrants further investigation into the underlying causes. Potential factors could include share repurchases, dividend payments, or losses impacting retained earnings. The slight decrease in adjusted financial leverage in 2025 may indicate a stabilization of the equity position or a slower rate of asset growth.

The adjusted net profit margin exhibited considerable fluctuation over the five-year period. Initial values were notably higher than subsequent years, followed by a declining trend and a modest recovery in the final year presented.

Adjusted Net Profit Margin - Overall Trend

The adjusted net profit margin began at 16.78% in 2021, representing the highest value within the observed timeframe. A consistent decline followed, reaching 7.18% in 2024. A slight increase to 8.39% was then recorded in 2025, though it did not return to the initial level.

Adjusted Net Profit Margin - 2021-2022

A substantial decrease in the adjusted net profit margin occurred between 2021 and 2022, falling from 16.78% to 12.06%. This represents a decline of 4.72 percentage points. This change coincided with a decrease in adjusted net earnings from US$11,247 million to US$7,958 million.

Adjusted Net Profit Margin - 2022-2023

The decline continued from 2022 to 2023, with the adjusted net profit margin decreasing further to 8.35%. This represents a decrease of 3.71 percentage points. Adjusted net earnings also decreased significantly, from US$7,958 million to US$5,642 million.

Adjusted Net Profit Margin - 2023-2024

The adjusted net profit margin experienced a further decrease between 2023 and 2024, dropping to 7.18%. This represents a decrease of 1.17 percentage points. Adjusted net earnings decreased from US$5,642 million to US$5,099 million.

Adjusted Net Profit Margin - 2024-2025

A modest recovery in the adjusted net profit margin was observed between 2024 and 2025, increasing to 8.39%. This represents an increase of 1.21 percentage points. Adjusted net earnings increased from US$5,099 million to US$6,299 million.

The fluctuations in the adjusted net profit margin appear to be correlated with changes in adjusted net earnings, suggesting that profitability, as measured by this metric, is sensitive to underlying earnings adjustments. The recovery in 2025, while positive, did not fully offset the declines experienced in the preceding years.

The period between 2021 and 2025 demonstrates significant fluctuations in both adjusted net earnings and adjusted stockholders’ equity, resulting in substantial volatility in the adjusted return on equity. While reported ROE also varies, the adjusted ROE exhibits a more pronounced pattern of change.

Adjusted Return on Equity (ROE)

Adjusted ROE experienced a considerable increase from 129.62% in 2021 to 143.98% in 2022. This upward trend continued into 2023, reaching 144.96%, before escalating dramatically to 182.11% in 2024. A subsequent decrease was observed in 2025, with adjusted ROE settling at 167.35%.

Adjusted Net Earnings

Adjusted net earnings began at US$11,247 million in 2021, then decreased to US$7,958 million in 2022. A further decline occurred in 2023, falling to US$5,642 million, followed by a slight decrease to US$5,099 million in 2024. An increase is noted in 2025, with adjusted net earnings rising to US$6,299 million.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity showed a consistent downward trend from 2021 to 2024. Starting at US$8,677 million in 2021, it decreased to US$5,527 million in 2022, then to US$3,892 million in 2023, and further to US$2,800 million in 2024. A modest increase was observed in 2025, with adjusted stockholders’ equity reaching US$3,764 million.

The substantial increase in adjusted ROE in 2024, despite a concurrent decrease in adjusted net earnings, is primarily attributable to the significant reduction in adjusted stockholders’ equity. The partial recovery of adjusted stockholders’ equity in 2025 contributed to a decrease in adjusted ROE, although it remained at a high level. The divergence between the trends in adjusted net earnings and adjusted ROE suggests that changes in the equity base have a considerable influence on the adjusted ROE calculation.

The adjusted return on assets (ROA) exhibited considerable fluctuation over the five-year period. Initially high, the metric demonstrated a declining trend before stabilizing and showing a modest increase in the final year examined. A detailed examination of the components and the resulting ratio reveals key insights into the company’s performance.

Adjusted ROA Trend

The adjusted ROA began at 23.15% in 2021, representing a strong level of profitability relative to its asset base. A significant decrease was observed in 2022, falling to 16.20%. This downward trend continued into 2023, with the adjusted ROA reaching 11.40%. A slight recovery occurred in 2024, increasing to 9.79%, followed by a further increase to 11.08% in 2025. While the 2025 value represents an improvement over the prior two years, it remains below the initial level recorded in 2021.

Relationship to Adjusted Net Earnings

The adjusted ROA’s trajectory closely mirrors the changes in adjusted net earnings. Adjusted net earnings decreased from US$11,247 million in 2021 to US$5,642 million in 2023, coinciding with the most substantial decline in the adjusted ROA. The modest increases in adjusted net earnings in 2024 and 2025 (to US$5,099 million and US$6,299 million respectively) correlate with the subsequent stabilization and slight improvement in the adjusted ROA.

Relationship to Adjusted Total Assets

Adjusted total assets generally increased throughout the period, rising from US$48,583 million in 2021 to US$56,865 million in 2025. This consistent growth in the asset base, coupled with the fluctuations in adjusted net earnings, contributed to the observed changes in the adjusted ROA. The initial decline in adjusted ROA, despite relatively stable assets between 2021 and 2023, was primarily driven by the decrease in adjusted net earnings. The later increases in adjusted ROA, while assets continued to grow, suggest improved efficiency in utilizing those assets to generate earnings.

In summary, the adjusted ROA demonstrates a complex pattern influenced by both profitability and asset management. The initial high value was followed by a period of decline, potentially indicating challenges in maintaining earnings levels relative to the growing asset base. The recent stabilization and modest increase suggest a potential turning point, but further monitoring is warranted to confirm a sustained improvement in asset utilization and profitability.