Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Northrop Grumman Corp., balance sheet: goodwill and intangible assets

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Goodwill	17,516)	17,515)	17,518)	18,708)	18,672)
Gross customer-related and other intangible assets	3,364)	3,361)	3,362)	3,356)	3,356)
Accumulated amortization	(2,980)	(2,783)	(2,579)	(2,316)	(1,984)
Net customer-related and other intangible assets	384)	578)	783)	1,040)	1,372)
Goodwill and other purchased intangible assets	17,900)	18,093)	18,301)	19,748)	20,044)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Northrop Grumman Corp. goodwill decreased from 2020 to 2021 but then slightly increased from 2021 to 2022.
Net customer-related and other intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Northrop Grumman Corp. net customer-related and other intangible assets decreased from 2020 to 2021 and from 2021 to 2022.
Goodwill and other purchased intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Northrop Grumman Corp. goodwill and other purchased intangible assets decreased from 2020 to 2021 and from 2021 to 2022.

Northrop Grumman Corp., adjustments to financial statements

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Adjustment to Total Assets
Total assets (as reported)	43,755)	42,579)	44,469)	41,089)	37,653)
Less: Goodwill	17,516)	17,515)	17,518)	18,708)	18,672)
Total assets (adjusted)	26,239)	25,064)	26,951)	22,381)	18,981)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	15,312)	12,926)	10,579)	8,819)	8,187)
Less: Goodwill	17,516)	17,515)	17,518)	18,708)	18,672)
Shareholders’ equity (adjusted)	(2,204)	(4,589)	(6,939)	(9,889)	(10,485)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Northrop Grumman Corp., Financial Data: Reported vs. Adjusted

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Northrop Grumman Corp., adjusted financial ratios

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Total Asset Turnover
Reported total asset turnover	0.84	0.84	0.83	0.82	0.80
Adjusted total asset turnover	1.39	1.42	1.37	1.51	1.59
Financial Leverage
Reported financial leverage	2.86	3.29	4.20	4.66	4.60
Adjusted financial leverage	—	—	—	—	—
Return on Equity (ROE)
Reported ROE	31.97%	54.19%	30.14%	25.49%	39.44%
Adjusted ROE	—	—	—	—	—
Return on Assets (ROA)
Reported ROA	11.19%	16.45%	7.17%	5.47%	8.58%
Adjusted ROA	18.66%	27.95%	11.83%	10.04%	17.01%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Northrop Grumman Corp. adjusted total asset turnover ratio improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Northrop Grumman Corp. adjusted ROA improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022 not reaching 2020 level.

Northrop Grumman Corp., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Sales	36,602)	35,667)	36,799)	33,841)	30,095)
Total assets	43,755)	42,579)	44,469)	41,089)	37,653)
Activity Ratio
Total asset turnover¹	0.84	0.84	0.83	0.82	0.80
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Sales	36,602)	35,667)	36,799)	33,841)	30,095)
Adjusted total assets	26,239)	25,064)	26,951)	22,381)	18,981)
Activity Ratio
Adjusted total asset turnover²	1.39	1.42	1.37	1.51	1.59

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Total asset turnover = Sales ÷ Total assets
= 36,602 ÷ 43,755 = 0.84

² Adjusted total asset turnover = Sales ÷ Adjusted total assets
= 36,602 ÷ 26,239 = 1.39

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Northrop Grumman Corp. adjusted total asset turnover ratio improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets	43,755)	42,579)	44,469)	41,089)	37,653)
Shareholders’ equity	15,312)	12,926)	10,579)	8,819)	8,187)
Solvency Ratio
Financial leverage¹	2.86	3.29	4.20	4.66	4.60
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	26,239)	25,064)	26,951)	22,381)	18,981)
Adjusted shareholders’ equity	(2,204)	(4,589)	(6,939)	(9,889)	(10,485)
Solvency Ratio
Adjusted financial leverage²	—	—	—	—	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= 43,755 ÷ 15,312 = 2.86

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 26,239 ÷ -2,204 = —

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings	4,896)	7,005)	3,189)	2,248)	3,229)
Shareholders’ equity	15,312)	12,926)	10,579)	8,819)	8,187)
Profitability Ratio
ROE¹	31.97%	54.19%	30.14%	25.49%	39.44%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net earnings	4,896)	7,005)	3,189)	2,248)	3,229)
Adjusted shareholders’ equity	(2,204)	(4,589)	(6,939)	(9,889)	(10,485)
Profitability Ratio
Adjusted ROE²	—	—	—	—	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROE = 100 × Net earnings ÷ Shareholders’ equity
= 100 × 4,896 ÷ 15,312 = 31.97%

² Adjusted ROE = 100 × Net earnings ÷ Adjusted shareholders’ equity
= 100 × 4,896 ÷ -2,204 = —

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings	4,896)	7,005)	3,189)	2,248)	3,229)
Total assets	43,755)	42,579)	44,469)	41,089)	37,653)
Profitability Ratio
ROA¹	11.19%	16.45%	7.17%	5.47%	8.58%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net earnings	4,896)	7,005)	3,189)	2,248)	3,229)
Adjusted total assets	26,239)	25,064)	26,951)	22,381)	18,981)
Profitability Ratio
Adjusted ROA²	18.66%	27.95%	11.83%	10.04%	17.01%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROA = 100 × Net earnings ÷ Total assets
= 100 × 4,896 ÷ 43,755 = 11.19%

² Adjusted ROA = 100 × Net earnings ÷ Adjusted total assets
= 100 × 4,896 ÷ 26,239 = 18.66%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Northrop Grumman Corp. adjusted ROA improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022 not reaching 2020 level.

Northrop Grumman Corp. (NYSE:NOC)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Northrop Grumman Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Northrop Grumman Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)