Stock Analysis on Net

Raytheon Co. (NYSE:RTN)

This company has been moved to the archive! The financial data has not been updated since February 12, 2020.

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Raytheon Co., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Operating Assets
Total assets 34,566 31,864 30,860 30,052 29,281
Less: Cash and cash equivalents 4,292 3,608 3,103 3,303 2,328
Less: Short-term investments 297 100 872
Operating assets 30,274 28,256 27,460 26,649 26,081
Operating Liabilities
Total liabilities 22,311 19,981 20,385 19,537 18,596
Less: Commercial paper and current portion of long-term debt 1,499 300 300
Less: Long-term debt, excluding current portion 3,261 4,755 4,750 5,335 5,330
Operating liabilities 17,551 14,926 15,335 14,202 13,266
 
Net operating assets1 12,723 13,330 12,125 12,447 12,815
Balance-sheet-based aggregate accruals2 (607) 1,205 (322) (368)
Financial Ratio
Balance-sheet-based accruals ratio3 -4.66% 9.47% -2.62% -2.91%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Boeing Co.
Caterpillar Inc.
Cummins Inc.
General Electric Co.
Honeywell International Inc.
Lockheed Martin Corp.
RTX Corp.
Balance-Sheet-Based Accruals Ratio, Sector
Capital Goods 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Industrials 200.00%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 30,27417,551 = 12,723

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 12,72313,330 = -607

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -607 ÷ [(12,723 + 13,330) ÷ 2] = -4.66%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Raytheon Co. improved earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Raytheon Co., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income attributable to Raytheon Company 3,343 2,909 2,024 2,211 2,074
Less: Net cash provided by operating activities 4,482 3,428 2,747 2,852 2,346
Less: Net cash (used in) provided by investing activities (1,006) (521) (817) 53 (1,744)
Cash-flow-statement-based aggregate accruals (133) 2 94 (694) 1,472
Financial Ratio
Cash-flow-statement-based accruals ratio1 -1.02% 0.02% 0.77% -5.49%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Boeing Co.
Caterpillar Inc.
Cummins Inc.
General Electric Co.
Honeywell International Inc.
Lockheed Martin Corp.
RTX Corp.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Capital Goods -16.97%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Industrials -12.14%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -133 ÷ [(12,723 + 13,330) ÷ 2] = -1.02%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Raytheon Co. deteriorated earnings quality from 2018 to 2019.