Raytheon Co. (NYSE:RTN)

The analyzed financial data reveals several notable trends and adjustments over the five-year period from 2015 to 2019. The comparison between reported figures and goodwill-adjusted figures provides insight into the impact of accounting adjustments on the company’s financial position.

Total Assets

Reported total assets demonstrate a consistent upward trend, increasing from approximately 29,281 million US dollars in 2015 to 34,566 million US dollars by the end of 2019. This represents a gradual expansion in the asset base over the period.

In contrast, adjusted total assets, which exclude goodwill, are significantly lower but also show a steady increase from 14,550 million US dollars to 19,684 million US dollars. The difference between reported and adjusted assets indicates a substantial amount of goodwill included in reported figures, reflecting acquisitions or intangible asset recognition.

Stockholders’ Equity

The reported total stockholders’ equity remains relatively stable, fluctuating slightly from 10,128 million US dollars in 2015 to 12,223 million US dollars in 2019. The equity figure decreased marginally in 2016 and 2017 but recovered and improved in 2018 and 2019, suggesting some volatility yet an overall positive trend in equity value.

However, the adjusted stockholders’ equity, which excludes goodwill, shows negative values throughout the entire period, worsening from -4,603 million US dollars in 2015 to -2,659 million US dollars by 2019. Although the negative figures improve somewhat over the years, they indicate that excluding goodwill adjustments reveals a deficit in shareholders’ equity reported by the company.

Overall Insights

The persistence of negative adjusted equity highlights the significant influence of goodwill on the company’s financial structure. While reported assets and equity suggest growth and value, the adjusted data raises concerns regarding the quality of tangible assets and underlying book value.

The upward trend in both reported and adjusted total assets suggests continued investment and growth in the company's asset base. The improvement in adjusted stockholders’ equity does indicate some recovery, but the sustained negative position warrants close monitoring and further analysis of asset composition and potential impairments.

The analysis of the financial data over the five-year period reveals several noteworthy trends in the company's performance metrics.

Total Asset Turnover

The reported total asset turnover increased gradually from 0.79 in 2015 to a peak of 0.85 in 2018, though it slightly declined to 0.84 in 2019. The adjusted total asset turnover, which takes into account goodwill adjustments, shows a higher base level, starting at 1.6 in 2015 and maintaining relatively stable values around 1.58 to 1.59 between 2016 and 2018. There is a noticeable decline in 2019 to 1.48, indicating a reduction in the efficiency with which adjusted total assets are generating revenue during the last reported year.

Financial Leverage

The reported financial leverage ratio displayed an increasing trend from 2.89 in 2015 to 3.10 in 2017, indicating a growing reliance on debt financing. However, this ratio decreased in subsequent years to 2.78 in 2018 and slightly rose to 2.83 in 2019, suggesting some deleveraging or a more cautious approach towards leveraging after 2017. No data was available for adjusted financial leverage.

Return on Equity (ROE)

The reported ROE showed a generally positive trajectory, starting at 20.48% in 2015 and increasing steadily to 27.35% in 2019. This upward trend suggests improving profitability relative to shareholder equity, with a significant jump noted in 2018. Adjusted ROE data was unavailable for this period.

Return on Assets (ROA)

The reported ROA experienced fluctuations over the period. It started at 7.08% in 2015, increased to 7.36% in 2016, then declined to 6.56% in 2017, before rising sharply to 9.13% in 2018 and 9.67% in 2019. The adjusted ROA values, which factor out goodwill, were consistently higher than reported ROA, indicating better asset profitability when goodwill is excluded. Adjusted ROA showed an initial slight increase from 14.25% in 2015 to 14.49% in 2016, followed by a decline to 12.66% in 2017, then a marked increase to 17.11% in 2018, slightly decreasing to 16.98% in 2019.

Overall, the company demonstrated improving profitability and asset utilization during the five-year period with some volatility in efficiency and leverage measures. The adjustments for goodwill reveal notably higher turnover and return on assets compared to reported figures, emphasizing the impact of goodwill on asset-based performance measurement. The decline in adjusted total asset turnover and slight dip in adjusted ROA in 2019 merit attention for potential underlying causes affecting asset efficiency during that year.

The analysis of the reported and goodwill adjusted financial data over the five-year period reveals distinct trends in asset base growth and asset utilization efficiency.

Total Assets

The reported total assets increased steadily from US$29,281 million in 2015 to US$34,566 million in 2019, reflecting an overall growth of approximately 18%. This consistent rise indicates ongoing asset accumulation or acquisition during the period.

In comparison, the adjusted total assets, which likely exclude goodwill or other intangible assets, also exhibited a progressive increase from US$14,550 million to US$19,684 million in the same timeframe. The upward trajectory here is somewhat sharper, amounting to roughly a 35% increase, suggesting significant organic growth or asset management excluding goodwill adjustments.

Total Asset Turnover

Reported total asset turnover demonstrated a gradual improvement from 0.79 in 2015 to a peak of 0.85 in 2018, before a slight decline to 0.84 in 2019. This trend indicates enhanced efficiency in utilizing the asset base to generate revenue, with a marginal decrease at the end of the period.

Conversely, the adjusted total asset turnover started at a considerably higher level of 1.6 in 2015, maintained relatively stable values through 2018 with minor fluctuations between 1.58 and 1.59, but declined to 1.48 in 2019. The drop in 2019 suggests a reduction in efficiency or slower revenue generation relative to the adjusted asset base in that year.

Overall, while both reported and adjusted total assets show consistent growth, the efficiency in converting assets into sales as measured by total asset turnover differs in pattern. Reported turnover improved mildly over time with a small decrease at the end, whereas adjusted turnover experienced stability followed by a notable decline in the final year. These findings imply that despite asset expansion, there may be challenges in maintaining turnover efficiency when adjusting for goodwill, particularly observable in the last observed period.

The data reveals notable trends regarding the financial position of the company over the five-year period ending in 2019. There is a consistent increase in reported total assets, rising from $29,281 million in 2015 to $34,566 million in 2019. This indicates an overall growth in asset base, suggesting expansion or accumulation of resources.

Adjusted Total Assets

Adjusted total assets, which exclude goodwill, show a similar upward trend, increasing from $14,550 million in 2015 to $19,684 million in 2019. This steady rise suggests that the underlying tangible and identifiable intangible assets are also growing, though at a lower base compared to reported total assets.

Stockholders’ Equity

Reported stockholders’ equity exhibits minor fluctuation but an overall incremental growth, moving from $10,128 million in 2015 to $12,223 million in 2019. This upward trend reflects an increase in net assets attributable to shareholders, which may result from retained earnings or capital contributions.

Adjusted Stockholders’ Equity

Conversely, adjusted stockholders’ equity, which factors out goodwill, remains negative throughout the period, though the negative value lessens from -$4,603 million in 2015 to -$2,659 million in 2019. The reduction in negative adjusted equity indicates an improving but still challenging net asset position when goodwill is excluded.

Financial Leverage

Reported financial leverage ratios fluctuate modestly between 2.78 and 3.1 over the period, suggesting a relatively stable reliance on debt relative to equity. The highest ratio observed is 3.1 in 2017, which then declines to 2.83 by 2019, indicating a slight reduction in leverage.

Adjusted Financial Leverage

Data for adjusted financial leverage is not available, which limits analysis in respect to leverage excluding goodwill.

Overall, the trends suggest the company has been expanding its asset base while maintaining reported equity growth. The significant difference between reported and adjusted equity, particularly the consistently negative adjusted equity, points to a substantial goodwill component impacting the balance sheet. Financial leverage remains relatively stable, indicating a consistent capital structure strategy.

Reported Total Stockholders’ Equity

The reported total stockholders’ equity demonstrated a relatively stable trend from 2015 to 2017, with values ranging slightly below 10,200 million US dollars. However, starting in 2018, a noticeable increase in equity occurred, reaching 11,472 million US dollars, followed by a further rise to 12,223 million US dollars in 2019. This upward movement indicates a strengthening in the company’s equity base over the final two years of the period analyzed.

Adjusted Total Stockholders’ Equity

The adjusted total stockholders’ equity, which accounts for goodwill, showed negative values throughout the five-year period, suggesting that goodwill adjustments significantly reduce the equity base. These adjusted figures trended more negatively from -4,603 million US dollars in 2015 to -4,908 million in 2017. However, there was a notable improvement from 2018 onwards, with the deficit narrowing to -3,392 million and further to -2,659 million in 2019. This improvement indicates a reduction in goodwill impairment or a change in adjustment methodology, lessening the negative impact on equity in later years.

Reported Return on Equity (ROE)

The reported ROE exhibited an overall increasing trend from 2015 to 2019. Starting at 20.48% in 2015, the ROE rose moderately to 21.97% in 2016 before slightly declining to 20.32% in 2017. Afterward, significant gains were observed in 2018 and 2019 with ROE climbing to 25.36% and then to 27.35%, respectively. This suggests improved profitability relative to shareholders’ equity during the latter part of the period, consistent with the increase in reported equity.

Adjusted Return on Equity (ROE)

Data for adjusted ROE was not provided in the reported periods. Therefore, no trend or analysis can be conducted regarding performance metrics adjusted for goodwill.

Total Assets

The reported total assets exhibit a steady upward trend over the five-year period, increasing from 29,281 million US dollars in 2015 to 34,566 million US dollars in 2019. This represents a consistent growth in asset base, with an approximate total increase of 18%. The adjusted total assets, which likely exclude goodwill or intangible assets, also demonstrate a similar upward trajectory, rising from 14,550 million US dollars in 2015 to 19,684 million US dollars in 2019, marking a more pronounced growth percentage-wise. This indicates an expansion in the company's tangible or core assets during the period.

Return on Assets (ROA)

The reported ROA shows variation across the reviewed years, starting at 7.08% in 2015 and generally increasing to 9.67% in 2019, with a minor dip in 2017 to 6.56% before a notable rebound in 2018. This pattern suggests improved profitability relative to the reported asset base, especially in the latter years. The adjusted ROA, which recalculates profitability based on the adjusted asset base, consistently exceeds the reported ROA by a wide margin. It begins at 14.25% in 2015, dips slightly in 2017 to 12.66%, but rebounds significantly in 2018 to 17.11%, and slightly declines to 16.98% in 2019. This higher adjusted ROA implies that when goodwill and similar intangibles are excluded, the company achieves a substantially higher efficiency in generating earnings from its tangible assets.

Comparative Insights

The disparity between reported and adjusted total assets indicates a considerable portion of the company's asset base consists of goodwill or intangible assets. Despite this, the adjusted ROA trend, while generally following the pattern of reported ROA, consistently reflects stronger asset profitability. This suggests that the underlying physical and financial assets are yielding better returns than the reported figures might initially indicate. The growth in both reported and adjusted asset bases combined with improving adjusted ROA points to an overall enhancement in asset utilization and operational efficiency during the period under review.