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Raytheon Co. (RTN)
Analysis of Investments
Advanced level
Accounting Policy on Investments
Raytheon invests in marketable securities in accordance with the short-term investment policy and cash management strategy. These marketable securities are classified as available-for-sale and are recorded at fair value as short-term investments in Raytheon’s consolidated balance sheets. These investments are deemed Level 2 assets under the fair value hierarchy as their fair value is determined under a market approach using valuation models that utilize observable inputs, including maturity date, issue date, settlements date and current rates. At December 31, 2018, Raytheon had no short-term investments as all short-term investments outstanding at December 31, 2017 matured in the first quarter of 2018. At December 31, 2017, Raytheon had short-term investments of $297 million consisting of highly rated bank certificates of deposit with a minimum long-term debt rating of A or A2 and a minimum short-term debt rating of A-1 or P-1. The amortized cost of these securities closely approximated their fair value. In 2017, Raytheon recorded unrealized losses on short-term investments of less than $1 million, net of tax, in accumulated other comprehensive loss (AOCL). Raytheon did not have any sales of short-term investments in 2018 or 2017. For purposes of computing realized gains and losses on available-for-sale securities, Raytheon determines cost on a specific identification basis.
Source: 10-K (filing date: 2019-02-13).
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Raytheon Co., adjustment to net income attributable to Raytheon Company
US$ in millions
Based on: 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-14), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11).
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Raytheon Co., adjusted profitability ratios
Based on: 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-14), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11).
Profitability ratio | Description | The company |
---|---|---|
Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Raytheon Co.’s adjusted net profit margin ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders’ equity. | Raytheon Co.’s adjusted ROE deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Raytheon Co.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Raytheon Co., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-14), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11).
2018 Calculations
1 Net profit margin = 100 × Net income attributable to Raytheon Company ÷ Net sales
= 100 × ÷
=
2 Adjusted net profit margin = 100 × Adjusted net income attributable to Raytheon Company ÷ Net sales
= 100 × ÷
=
Profitability ratio | Description | The company |
---|---|---|
Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Raytheon Co.’s adjusted net profit margin ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-14), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11).
2018 Calculations
1 ROE = 100 × Net income attributable to Raytheon Company ÷ Total Raytheon Company stockholders’ equity
= 100 × ÷
=
2 Adjusted ROE = 100 × Adjusted net income attributable to Raytheon Company ÷ Total Raytheon Company stockholders’ equity
= 100 × ÷
=
Profitability ratio | Description | The company |
---|---|---|
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders’ equity. | Raytheon Co.’s adjusted ROE deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-14), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11).
2018 Calculations
1 ROA = 100 × Net income attributable to Raytheon Company ÷ Total assets
= 100 × ÷
=
2 Adjusted ROA = 100 × Adjusted net income attributable to Raytheon Company ÷ Total assets
= 100 × ÷
=
Profitability ratio | Description | The company |
---|---|---|
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Raytheon Co.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |