Name: Northrop Grumman Corp. (NYSE:NOC) | Liabilities and Stockholders’ Equity
Creator: Stock Analysis on Net

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.

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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 financial structure exhibits a strategic shift toward a more equity-heavy capital base and a reduction in long-term obligations. While total liabilities peaked in 2020 at 33,890 million US$, they trended downward to 28,443 million US$ by the end of 2022. Simultaneously, shareholders' equity demonstrated consistent and robust growth, nearly doubling over the five-year period.

Current Liabilities Trends: Current liabilities increased from 8,274 million US$ in 2018 to 11,587 million US$ in 2022. This growth was primarily driven by a steady rise in advance payments and billings in excess of costs incurred, which grew from 1,917 million US$ to 3,609 million US$. This indicates a significant increase in contract-based prepayments. Trade accounts payable also showed an upward trend, peaking in 2022 at 2,587 million US$.
Non-Current Liabilities Reduction: Non-current liabilities decreased from 21,192 million US$ in 2018 to 16,856 million US$ in 2022. The most substantial driver of this decline was the reduction in pension and other postretirement benefit plan liabilities, which fell sharply from 5,755 million US$ in 2018 to 1,188 million US$ in 2022. Long-term debt also experienced a moderate decrease, ending the period at 11,805 million US$ compared to 13,883 million US$ at the start.
Shareholders' Equity Expansion: Shareholders' equity grew consistently from 8,187 million US$ in 2018 to 15,312 million US$ in 2022. This expansion is almost entirely attributable to the growth in retained earnings, which rose from 8,068 million US$ to 15,312 million US$. This suggests strong internal capital generation and a policy of retaining profits to strengthen the balance sheet.
Overall Solvency and Leverage: The overall leverage profile improved significantly between 2018 and 2022. The ratio of total liabilities to shareholders' equity declined as the company simultaneously reduced its long-term debt and pension obligations while aggressively increasing its equity base. This trajectory indicates an enhanced solvency position and a reduced reliance on external borrowing.

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