Analysis of Geographic Areas
Raytheon Co. operates in 2 regions: United States and All other.
Area Asset Turnover
Raytheon Co., asset turnover by geographic area
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | |
|---|---|---|---|---|---|
| United States | 6.33 | 6.89 | 7.31 | 7.92 | 8.35 |
| All other | 84.14 | 91.07 | 105.00 | 93.23 | 92.86 |
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).
The analysis of area asset turnover reveals divergent performance patterns between domestic and international operations from 2015 to 2019. While the United States exhibits a consistent decline in asset efficiency, international operations show higher volatility but maintain turnover ratios that are significantly higher in magnitude.
- United States Asset Turnover
- A steady downward trend is observed in the United States, where the ratio decreased every year from 8.35 in 2015 to 6.33 in 2019. This continuous decline indicates a diminishing capacity to generate revenue from domestic assets over the evaluated five-year period.
- International Asset Turnover
- Operations in all other geographic areas experienced a period of growth in efficiency, peaking at a ratio of 105.00 in 2017. Following this peak, a downward trend emerged, with the ratio falling to 91.07 in 2018 and further to 84.14 by December 31, 2019.
- Comparative Geographic Efficiency
- A substantial disparity exists between the two geographic segments. The asset turnover ratios for international operations are consistently an order of magnitude higher than those of the United States, suggesting that non-domestic assets are utilized far more intensively to produce revenue.
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Area Asset Turnover: United States
Raytheon Co.; United States; area asset turnover calculation
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net sales | 20,594) | 18,953) | 17,263) | 16,517) | 16,097) |
| Property, plant and equipment, net | 3,251) | 2,751) | 2,362) | 2,085) | 1,928) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 6.33 | 6.89 | 7.31 | 7.92 | 8.35 |
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
Area asset turnover = Net sales ÷ Property, plant and equipment, net
= 20,594 ÷ 3,251 = 6.33
Between 2015 and 2019, a divergence is observed between revenue growth and the expansion of fixed assets within the United States. While net sales grew consistently, the investment in property, plant, and equipment increased at a significantly faster rate, leading to a steady decline in asset efficiency.
- Net Sales Performance
- Net sales exhibited a continuous upward trajectory, increasing from 16,097 million US dollars in 2015 to 20,594 million US dollars by 2019. This indicates a steady expansion of the revenue base throughout the analyzed period.
- Property, Plant and Equipment Investment
- There was a pronounced increase in net property, plant, and equipment, which rose from 1,928 million US dollars in 2015 to 3,251 million US dollars in 2019. The growth in fixed assets accelerated toward the end of the period, with a notable increase between 2018 and 2019.
- Area Asset Turnover Trend
- The area asset turnover ratio experienced a consistent year-over-year decline, falling from 8.35 in 2015 to 6.33 in 2019. This downward trend confirms that the rate of capital investment in fixed assets outpaced the rate of sales growth, resulting in reduced revenue generation per dollar of net fixed assets.
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Area Asset Turnover: All other
Raytheon Co.; All other; area asset turnover calculation
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net sales | 8,582) | 8,105) | 8,085) | 7,552) | 7,150) |
| Property, plant and equipment, net | 102) | 89) | 77) | 81) | 77) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 84.14 | 91.07 | 105.00 | 93.23 | 92.86 |
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
Area asset turnover = Net sales ÷ Property, plant and equipment, net
= 8,582 ÷ 102 = 84.14
Net sales within the analyzed geographic area exhibited a consistent upward trajectory from 2015 through 2019, increasing from 7,150 million US dollars to 8,582 million US dollars. This growth indicates a steady expansion of revenue generation in this segment. Simultaneously, net property, plant, and equipment remained relatively low in absolute terms compared to sales, though a general increase was observed, rising from 77 million US dollars in 2015 to 102 million US dollars by 2019.
- Net Sales Performance
- A sustained growth pattern is evident, with annual revenues rising every year. The most significant year-over-year increase occurred between 2018 and 2019, where sales grew from 8,105 million to 8,582 million US dollars, reflecting strong market demand or expanded operations in the region.
- Property, Plant and Equipment (PP&E) Trends
- The asset base remained stable between 2015 and 2017, fluctuating slightly around 77 to 81 million US dollars. However, a notable expansion in capital investment occurred after 2017, with net PP&E increasing by approximately 32% between 2017 and 2019, reaching 102 million US dollars.
- Area Asset Turnover Efficiency
- The area asset turnover ratio experienced significant volatility. Efficiency peaked in 2017 at a ratio of 105.00, coinciding with the lowest point of net PP&E during the period. Following this peak, a downward trend was observed, with the ratio declining to 91.07 in 2018 and further to 84.14 in 2019. This suggests that the growth in asset investment in the latter two years outpaced the corresponding growth in net sales, resulting in a decrease in asset utilization efficiency.
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Property, plant and equipment, net
Raytheon Co., property, plant and equipment, net by geographic area
US$ in millions
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | |
|---|---|---|---|---|---|
| United States | 3,251) | 2,751) | 2,362) | 2,085) | 1,928) |
| All other | 102) | 89) | 77) | 81) | 77) |
| Total | 3,353) | 2,840) | 2,439) | 2,166) | 2,005) |
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).
Net property, plant, and equipment (PP&E) experienced a consistent upward trajectory over the five-year period ending December 31, 2019. Total net PP&E increased from US$ 2,005 million in 2015 to US$ 3,353 million in 2019, representing an overall growth of approximately 67.2%. This expansion indicates a sustained investment in the organization's physical asset base.
- Domestic Asset Expansion
- The primary driver of growth was the United States segment, where net PP&E rose from US$ 1,928 million in 2015 to US$ 3,251 million in 2019. This growth represents an increase of approximately 68.6%, with a notable acceleration in capital allocation toward domestic assets between 2017 and 2019.
- International Asset Performance
- Assets located in all other geographic areas remained relatively marginal in comparison to domestic holdings. Net PP&E for these regions grew from US$ 77 million in 2015 to US$ 102 million in 2019. While this reflects a total increase of 32.5%, the growth was non-linear, experiencing a slight dip in 2017 before resuming an upward trend.
- Geographic Asset Concentration
- The asset base is characterized by an extreme concentration within the United States. In 2015, domestic assets constituted 96.2% of total net PP&E; by 2019, this concentration increased to 96.9%. The data confirms that nearly all capital expenditures related to property, plant, and equipment were directed toward US-based operations throughout the analyzed period.
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Net sales
Raytheon Co., net sales by geographic area
US$ in millions
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | |
|---|---|---|---|---|---|
| United States | 20,594) | 18,953) | 17,263) | 16,517) | 16,097) |
| All other | 8,582) | 8,105) | 8,085) | 7,552) | 7,150) |
| Total | 29,176) | 27,058) | 25,348) | 24,069) | 23,247) |
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).
Total net sales demonstrated a consistent upward trajectory between 2015 and 2019, rising from US$ 23,247 million to US$ 29,176 million. This represents a total growth of approximately 25.5% over the five-year period, characterized by uninterrupted annual increases.
- United States Market Performance
- Net sales within the United States grew from US$ 16,097 million in 2015 to US$ 20,594 million in 2019. This increase of approximately 28% indicates that the domestic market was the primary driver of the overall revenue growth during this period.
- International Market Performance
- Sales in all other geographic areas increased from US$ 7,150 million in 2015 to US$ 8,582 million in 2019. Although this reflects a steady growth rate of approximately 20%, the expansion in international markets was more modest compared to the growth observed in the United States.
- Geographic Revenue Concentration
- The distribution of revenue remained relatively stable, with a slight increase in domestic concentration. The United States accounted for 69.2% of total net sales in 2015, and this share grew to 70.6% by 2019. This suggests a persistent and slightly increasing reliance on the U.S. market for total revenue generation.
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