Raytheon Co. (NYSE:RTN)

The analysis of the financial data over the five-year period reveals several notable trends in the company’s operational performance and capital efficiency.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibits a consistent upward trajectory from 2015 to 2019, increasing from $2,171 million to $3,427 million. Notably, there is a slight dip in 2017 compared to 2016; however, the overall trend is strongly positive, indicating improved profitability after taxes over the period.

Invested Capital

Invested capital shows a gradual increase from $22,413 million in 2015 to $26,688 million in 2019. This steady rise suggests ongoing investment in capital assets or working capital, reflecting the company’s expansion or reinforcement of its operational base.

Return on Invested Capital (ROIC)

ROIC follows an improving trend, beginning at 9.68% in 2015 and reaching 12.84% by 2019. Despite a minor decrease in 2017, the measure of capital efficiency strengthens over the years, suggesting that the company has been increasingly effective in generating returns from its invested capital.

Overall, the data indicates that the company has experienced growth in profitability and has become more efficient in utilizing its invested capital to generate returns. The combination of rising NOPAT and ROIC alongside increasing invested capital points to a healthy operational performance and a positive trend in financial management effectiveness during the analyzed timeframe.

Operating Profit Margin (OPM)

The operating profit margin showed moderate fluctuations over the five-year period. It initially increased from 13.13% in 2015 to 13.69% in 2016, followed by a slight decline to 13.15% in 2017. In 2018, the margin decreased further to 12.33%, before rising significantly to 14.22% in 2019, which represents the highest level in the observed timeframe.

Turnover of Capital (TO)

The turnover of capital remained relatively stable throughout the period, with minor variations. It decreased slightly from 1.04 in 2015 to 1.02 in 2016, then increased to 1.08 in 2017. The value slightly dipped again to 1.04 in 2018 and rose marginally to 1.09 in 2019. Overall, the turnover ratio maintained a steady trend, indicating consistent efficiency in capital utilization.

1 – Effective Cash Tax Rate (CTR)

This measure experienced notable fluctuation, suggesting variability in the effective tax burden. Starting at 71.12% in 2015, it increased to 74.51% in 2016, then decreased to 71.83% in 2017. There was a marked increase in 2018 to 90.2%, representing a significant jump in the effective tax rate, followed by a decrease to 82.62% in 2019. These variations may reflect changes in tax policies or adjustments in taxable income.

Return on Invested Capital (ROIC)

The return on invested capital demonstrated a consistent upward trend over the period. It increased steadily from 9.68% in 2015 to 10.45% in 2016, with a slight dip to 10.16% in 2017. Subsequently, it rose significantly to 11.54% in 2018 and further to 12.84% in 2019. This improvement points to enhanced profitability relative to the invested capital and suggests improved efficiency and value generation.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrated a generally increasing trend across the five-year period. Starting at 3,052 million USD in 2015, it rose steadily to 3,337 million USD in 2018, followed by a more pronounced increase to 4,147 million USD in 2019. This reflects a consistent improvement in operating profitability before the impact of taxes.

Net Sales

Net sales exhibited a consistent upward trajectory from 23,247 million USD in 2015 to 29,176 million USD in 2019. Each year showed growth compared to the previous one, indicating sustained expansion in revenue generation over the period analyzed.

Operating Profit Margin (OPM)

The operating profit margin fluctuated over the years but generally showed resilience. It started at 13.13% in 2015, increased slightly to 13.69% in 2016, then decreased to 12.33% by 2018. However, in 2019, it recovered significantly to 14.22%, marking the highest margin in the five-year span. This suggests improvements in operational efficiency or cost management toward the end of the period.

Overall Analysis

Both net sales and net operating profit before taxes demonstrated growth year over year, highlighting a robust financial performance. The operating profit margin, despite some volatility, ended on a strong upward note, suggesting enhanced profitability. The significant jump in NOPBT in 2019, accompanied by an increase in operating margin, indicates effective management strategies or favorable market conditions during that year, contributing to improved financial health.

Net Sales

Net sales exhibited a consistent upward trajectory over the five-year period. Starting at 23,247 million USD in 2015, sales rose steadily to reach 29,176 million USD by the end of 2019, reflecting sustained revenue growth year-over-year.

Invested Capital

The invested capital showed a generally increasing trend, although the rate of growth varied. It increased from 22,413 million USD in 2015 to 23,509 million USD in 2016, then plateaued slightly around 23,548 million USD in 2017. From 2017 onwards, invested capital resumed growth, reaching 26,688 million USD in 2019. This indicates a gradual increase in the assets committed to business activities.

Turnover of Capital (TO)

The turnover of capital ratio fluctuated mildly throughout the period. Beginning at 1.04 in 2015, it dipped slightly to 1.02 in 2016 before rising to 1.08 in 2017. It decreased again to 1.04 in 2018, then climbed to its highest value of 1.09 in 2019. These variations suggest modest changes in the efficiency of the company’s use of its invested capital to generate sales, with the overall trend slightly improving by the end of the period.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes shows a generally increasing trend over the five-year period. Starting at 3,052 million US dollars in 2015, it increased steadily each year, reaching 4,147 million US dollars by 2019. This reflects overall growth in the company's operational profitability before tax considerations.

Cash Operating Taxes

The cash operating taxes exhibit notable fluctuations without a consistent upward or downward trend. The amount decreased from 881 million US dollars in 2015 to 840 million in 2016, slightly rising to 939 million in 2017. It then fell sharply to 327 million in 2018 before increasing again to 721 million in 2019. These variations suggest irregularities in tax payments, possibly influenced by changes in taxable income, tax planning strategies, or regulatory factors.

Effective Cash Tax Rate (CTR)

The effective cash tax rate shows significant variability during the period. Beginning at 28.88% in 2015, it decreased to 25.49% in 2016, then increased slightly to 28.17% in 2017. A substantial drop occurred in 2018, bringing the rate down to 9.8%, followed by a partial recovery to 17.38% in 2019. This decline in effective tax rate in 2018 and 2019 may reflect tax incentives, credits, or changes in the geographic sources of taxable income.

Relationship Between Profit, Taxes, and Tax Rate

While net operating profit before taxes consistently increased, cash operating taxes did not follow a similar steady pattern. The effective tax rate decreased notably especially in 2018, despite rising profits, indicating a potential decrease in tax burden or more efficient tax management during this period. The divergence between rising profitability and a declining effective tax rate suggests the company might have leveraged tax planning opportunities or benefited from regulatory changes to reduce tax expenses relative to profit.