Stock Analysis on Net

Northrop Grumman Corp. (NYSE:NOC)

Analysis of Operating Leases

Microsoft Excel

Adjustments to Financial Statements for Operating Leases

Northrop Grumman Corp., adjustments to financial statements

US$ in millions

Microsoft Excel
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
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 1,724
Total assets (adjusted) 43,755 42,579 44,469 41,089 39,377
Adjustment to Total Debt
Total debt (as reported) 12,877 12,783 15,003 13,879 14,400
Add: Operating lease liability (before adoption of FASB Topic 842)2 1,724
Add: Current operating lease liabilities (included in Other current liabilities) 299 284 263 261
Add: Non-current operating lease liabilities 1,824 1,590 1,343 1,308
Total debt (adjusted) 15,000 14,657 16,609 15,448 16,124

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).

1, 2 Equal to total present value of future operating lease payments.


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


Adjusted Financial Ratios for Operating Leases (Summary)

Northrop Grumman Corp., adjusted financial ratios

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Total Asset Turnover1
Reported total asset turnover 0.84 0.84 0.83 0.82 0.80
Adjusted total asset turnover 0.84 0.84 0.83 0.82 0.76
Debt to Equity2
Reported debt to equity 0.84 0.99 1.42 1.57 1.76
Adjusted debt to equity 0.98 1.13 1.57 1.75 1.97
Return on Assets3 (ROA)
Reported ROA 11.19% 16.45% 7.17% 5.47% 8.58%
Adjusted ROA 11.19% 16.45% 7.17% 5.47% 8.20%

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 debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Northrop Grumman Corp. adjusted debt to equity ratio improved from 2020 to 2021 and 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


Adjusted Total Asset Turnover

Microsoft Excel
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 Operating Leases
Selected Financial Data (US$ in millions)
Sales 36,602 35,667 36,799 33,841 30,095
Adjusted total assets 43,755 42,579 44,469 41,089 39,377
Activity Ratio
Adjusted total asset turnover2 0.84 0.84 0.83 0.82 0.76

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 ÷ 43,755 = 0.84

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.

Adjusted Debt to Equity

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Total debt 12,877 12,783 15,003 13,879 14,400
Shareholders’ equity 15,312 12,926 10,579 8,819 8,187
Solvency Ratio
Debt to equity1 0.84 0.99 1.42 1.57 1.76
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 15,000 14,657 16,609 15,448 16,124
Shareholders’ equity 15,312 12,926 10,579 8,819 8,187
Solvency Ratio
Adjusted debt to equity2 0.98 1.13 1.57 1.75 1.97

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 Debt to equity = Total debt ÷ Shareholders’ equity
= 12,877 ÷ 15,312 = 0.84

2 Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity
= 15,000 ÷ 15,312 = 0.98

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Northrop Grumman Corp. adjusted debt-to-equity ratio improved from 2020 to 2021 and from 2021 to 2022.

Adjusted Return on Assets (ROA)

Microsoft Excel
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 Operating Leases
Selected Financial Data (US$ in millions)
Net earnings 4,896 7,005 3,189 2,248 3,229
Adjusted total assets 43,755 42,579 44,469 41,089 39,377
Profitability Ratio
Adjusted ROA2 11.19% 16.45% 7.17% 5.47% 8.20%

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 ÷ 43,755 = 11.19%

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.