Microsoft Excel LibreOffice Calc

Northrop Grumman Corp. (NYSE:NOC)


Analysis of Operating Leases

Advanced level


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Northrop Grumman Corp., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total undiscounted future operating lease payments 2,080  1,338  892  839 
Discount rate1 3.73% 3.61% 4.19% 4.34%
 
Total present value of future operating lease payments 1,724  1,124  787  747 

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-30), 10-K (filing date: 2016-02-01).

1 Weighted-average interest rate for Northrop Grumman Corp.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.73%
2019 312  2019 312  301 
2020 270  2020 270  251 
2021 221  2021 221  198 
2022 186  2022 186  161 
2023 152  2023 152  127 
2024 and thereafter 939  2024 152  122 
2025 152  118 
2026 152  113 
2027 152  109 
2028 152  105 
2029 152  102 
2030 27  17 
Total: 2,080  2,080  1,724 

Based on: 10-K (filing date: 2019-01-31).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.61%
2018 232  2018 232  224 
2019 195  2019 195  182 
2020 145  2020 145  130 
2021 120  2021 120  104 
2022 87  2022 87  73 
2023 and thereafter 559  2023 87  70 
2024 87  68 
2025 87  66 
2026 87  63 
2027 87  61 
2028 87  59 
2029 37  24 
Total: 1,338  1,338  1,124 

Based on: 10-K (filing date: 2018-01-29).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.19%
2017 257  2017 257  247 
2018 186  2018 186  171 
2019 131  2019 131  116 
2020 92  2020 92  78 
2021 66  2021 66  54 
2022 and thereafter 160  2022 66  52 
2023 66  50 
2024 28  20 
Total: 892  892  787 

Based on: 10-K (filing date: 2017-01-30).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.34%
2016 251  2016 251  241 
2017 201  2017 201  185 
2018 135  2018 135  119 
2019 99  2019 99  84 
2020 61  2020 61  49 
2021 and thereafter 92  2021 61  47 
2022 31  23 
Total: 839  839  747 

Based on: 10-K (filing date: 2016-02-01).


Adjustments to Financial Statements for Operating Leases

Northrop Grumman Corp., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 41,089  37,653  34,917  25,614  24,454 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  1,724  1,124  787  747 
Total assets (adjusted) 41,089  39,377  36,041  26,401  25,201 
Adjustment to Total Debt
Total debt (as reported) 13,879  14,400  15,266  7,070  6,526 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  1,724  1,124  787  747 
Add: Current operating lease liabilities (included in Other current liabilities) 261  —  —  —  — 
Add: Non-current operating lease liabilities 1,308  —  —  —  — 
Total debt (adjusted) 15,448  16,124  16,390  7,857  7,273 

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-30), 10-K (filing date: 2016-02-01).

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

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover1
Reported total asset turnover 0.82 0.80 0.74 0.96 0.96
Adjusted total asset turnover 0.82 0.76 0.72 0.93 0.93
Debt to Equity2
Reported debt to equity 1.57 1.76 2.17 1.34 1.18
Adjusted debt to equity 1.75 1.97 2.33 1.49 1.32
Return on Assets3 (ROA)
Reported ROA 5.47% 8.58% 5.77% 8.59% 8.14%
Adjusted ROA 5.47% 8.20% 5.59% 8.33% 7.90%

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-30), 10-K (filing date: 2016-02-01).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Northrop Grumman Corp.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Northrop Grumman Corp.’s adjusted debt to equity ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Northrop Grumman Corp.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

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


Adjusted Total Asset Turnover

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Sales 33,841  30,095  25,803  24,508  23,526 
Total assets 41,089  37,653  34,917  25,614  24,454 
Activity Ratio
Total asset turnover1 0.82 0.80 0.74 0.96 0.96
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Sales 33,841  30,095  25,803  24,508  23,526 
Adjusted total assets 41,089  39,377  36,041  26,401  25,201 
Activity Ratio
Adjusted total asset turnover2 0.82 0.76 0.72 0.93 0.93

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-30), 10-K (filing date: 2016-02-01).

2019 Calculations

1 Total asset turnover = Sales ÷ Total assets
= 33,841 ÷ 41,089 = 0.82

2 Adjusted total asset turnover = Sales ÷ Adjusted total assets
= 33,841 ÷ 41,089 = 0.82

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Northrop Grumman Corp.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Debt to Equity

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt 13,879  14,400  15,266  7,070  6,526 
Shareholders’ equity 8,819  8,187  7,048  5,259  5,522 
Solvency Ratio
Debt to equity1 1.57 1.76 2.17 1.34 1.18
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 15,448  16,124  16,390  7,857  7,273 
Shareholders’ equity 8,819  8,187  7,048  5,259  5,522 
Solvency Ratio
Adjusted debt to equity2 1.75 1.97 2.33 1.49 1.32

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-30), 10-K (filing date: 2016-02-01).

2019 Calculations

1 Debt to equity = Total debt ÷ Shareholders’ equity
= 13,879 ÷ 8,819 = 1.57

2 Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity
= 15,448 ÷ 8,819 = 1.75

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.’s adjusted debt-to-equity ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings 2,248  3,229  2,015  2,200  1,990 
Total assets 41,089  37,653  34,917  25,614  24,454 
Profitability Ratio
ROA1 5.47% 8.58% 5.77% 8.59% 8.14%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net earnings 2,248  3,229  2,015  2,200  1,990 
Adjusted total assets 41,089  39,377  36,041  26,401  25,201 
Profitability Ratio
Adjusted ROA2 5.47% 8.20% 5.59% 8.33% 7.90%

Based on: 10-K (filing date: 2020-01-30), 10-K (filing date: 2019-01-31), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-30), 10-K (filing date: 2016-02-01).

2019 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 2,248 ÷ 41,089 = 5.47%

2 Adjusted ROA = 100 × Net earnings ÷ Adjusted total assets
= 100 × 2,248 ÷ 41,089 = 5.47%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Northrop Grumman Corp.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.