Balance Sheet: Liabilities and Stockholders’ Equity

The balance sheet provides creditors, investors, and analysts with information on company resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company assets as well as an indication of cash flows that may come from receivables and inventories.

Liabilities represents obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity.

Northrop Grumman Corp., consolidated balance sheet: liabilities and stockholders’ equity

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Trade accounts payable	2,587)	2,197)	1,806)	2,226)	2,182)
Accrued employee compensation	2,057)	1,993)	1,997)	1,865)	1,676)
Advance payments and billings in excess of costs incurred	3,609)	3,026)	2,517)	2,237)	1,917)
Current portion of long-term debt	1,072)	6)	742)	1,109)	517)
Other current liabilities	2,262)	2,308)	2,260)	1,997)	1,982)
Liabilities of disposal group held for sale	—)	—)	258)	—)	—)
Current liabilities	11,587)	9,530)	9,580)	9,434)	8,274)
Long-term debt, net of current portion	11,805)	12,777)	14,261)	12,770)	13,883)
Pension and other postretirement benefit plan liabilities	1,188)	3,269)	6,498)	6,979)	5,755)
Non-current operating lease liabilities	1,824)	1,590)	1,343)	1,308)	—)
Deferred tax liabilities	132)	490)	—)	—)	108)
Other non-current liabilities	1,907)	1,997)	2,208)	1,779)	1,446)
Non-current liabilities	16,856)	20,123)	24,310)	22,836)	21,192)
Total liabilities	28,443)	29,653)	33,890)	32,270)	29,466)
Preferred stock, $1 par value; no shares issued and outstanding	—)	—)	—)	—)	—)
Common stock, $1 par value	153)	156)	167)	168)	171)
Paid-in capital	—)	—)	58)	—)	—)
Retained earnings	15,312)	12,913)	10,482)	8,748)	8,068)
Accumulated other comprehensive loss	(153)	(143)	(128)	(97)	(52)
Shareholders’ equity	15,312)	12,926)	10,579)	8,819)	8,187)
Total liabilities and shareholders’ equity	43,755)	42,579)	44,469)	41,089)	37,653)

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).

The analysis of the financial data reveals notable trends and shifts across liabilities and shareholders’ equity over the examined period.

Trade Accounts Payable: Trade accounts payable increased overall from $2,182 million in 2018 to $2,587 million in 2022, with a dip to $1,806 million in 2020 before rising again, suggesting fluctuations in short-term obligations to suppliers.
Accrued Employee Compensation: Accrued employee compensation steadily grew from $1,676 million in 2018 to $2,057 million by 2022, indicating rising employee-related liabilities possibly due to hiring, salary increases, or accrued bonuses.
Advance Payments and Billings in Excess of Costs Incurred: This item demonstrated a continuous increase from $1,917 million in 2018 to $3,609 million in 2022, reflecting escalating customer prepayments or billings ahead of revenue recognition, which may impact working capital management.
Current Portion of Long-Term Debt: The current portion of long-term debt experienced volatility, rising sharply from $517 million in 2018 to $1,109 million in 2019, then decreasing to just $6 million in 2021, before climbing again to $1,072 million in 2022, indicating irregular debt maturities within the current liabilities.
Other Current Liabilities: Other current liabilities remained relatively stable between approximately $1,982 million in 2018 and $2,308 million in 2021, with a slight decrease to $2,262 million in 2022.
Liabilities of Disposal Group Held for Sale: This was recorded only in 2020 at $258 million, suggesting a one-time disposal or restructuring activity during that year.
Current Liabilities: Overall current liabilities grew from $8,274 million in 2018 to $11,587 million in 2022, with a peak in 2020 followed by a mild dip in 2021 before increasing again in 2022. The growth trajectory highlights increased short-term financial commitments over the period.
Long-Term Debt, Net of Current Portion: Long-term debt net of current portion fluctuated, beginning at $13,883 million in 2018, declining to $12,770 million in 2019, then modestly rising to $14,261 million in 2020, followed by decreases to $12,777 million in 2021 and $11,805 million in 2022, indicating a reduction in long-term debt obligations over time.
Pension and Other Postretirement Benefit Plan Liabilities: These liabilities declined substantially from $5,755 million in 2018 to $1,188 million in 2022, with a significant drop between 2020 and 2021, possibly reflecting settlement activities, favorable plan experience, or remeasurements.
Non-Current Operating Lease Liabilities: Non-current operating lease liabilities appeared first in 2019 at $1,308 million and increased steadily through 2022 to $1,824 million, reflecting greater lease commitments or recognition standards effect.
Deferred Tax Liabilities: Deferred tax liabilities showed fluctuation and inconsistency, recorded at $108 million in 2018, absent in 2019 and 2020, then reappearing at $490 million in 2021 and decreasing to $132 million in 2022, indicating variable tax timing differences.
Other Non-Current Liabilities: Other non-current liabilities increased from $1,446 million in 2018 to $2,208 million in 2020, then declined slightly to $1,907 million by 2022, suggesting some adjustments or repayments over time.
Non-Current Liabilities: There was a decline in total non-current liabilities from $21,192 million in 2018 to $16,856 million in 2022, mainly driven by reductions in pension liabilities and long-term debt, indicating a strengthening balance sheet position in long-term obligations.
Total Liabilities: Total liabilities increased from $29,466 million in 2018 to a peak of $33,890 million in 2020, then decreased steadily to $28,443 million in 2022. The reduction in liabilities post-2020 suggests efforts to deleverage or improved cash flow management.
Shareholders’ Equity: Shareholders’ equity strengthened consistently from $8,187 million in 2018 to $15,312 million in 2022, supported by increasing retained earnings from $8,068 million to $15,312 million over the same period, which indicates retained profitability and reinvestment of earnings.
Total Liabilities and Shareholders’ Equity: This total grew from $37,653 million in 2018 to $44,469 million in 2020, followed by a mild decline before reaching $43,755 million in 2022, showing overall asset base expansion, with some moderation post-2020.
Other Equity Items: Common stock slightly decreased from $171 million in 2018 to $153 million in 2022, with minimal fluctuations. Accumulated other comprehensive loss gradually increased in magnitude from -$52 million to -$153 million, reflecting ongoing unrealized losses, potentially in foreign currency translation or pension adjustments.

Overall, the financial profile indicates growing short-term liabilities alongside efforts to reduce long-term debt and pension obligations, accompanied by continuous enhancement of shareholders’ equity. The company appears to have managed its liabilities to support ongoing operations while retaining earnings to strengthen equity.

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Northrop Grumman Corp. (NYSE:NOC)

Balance Sheet: Liabilities and Stockholders’ Equity