Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Raytheon Co., solvency ratios
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 financial data indicates a consistent improvement in solvency and a systematic reduction in leverage between 2015 and 2019. A clear trend of deleveraging is observed, characterized by a decrease in the proportion of debt relative to equity, total capital, and assets, coupled with a strengthening capacity to service debt obligations.
- Leverage Ratios
- A steady decline is observed in the debt-to-equity ratio, which moved from 0.53 in 2015 to 0.39 in 2019. This trend is mirrored in the debt-to-capital ratio, which decreased from 0.34 to 0.28 over the five-year period. Furthermore, the debt-to-assets ratio fell from 0.18 to 0.14, indicating a reduced reliance on borrowed funds to finance the asset base.
- Coverage Ratios
- The company demonstrated a significant increase in its ability to cover financial obligations. The interest coverage ratio improved consistently every year, rising from 12.96 in 2015 to 23.14 in 2019. Similarly, the fixed charge coverage ratio showed a continuous upward trajectory, increasing from 6.94 to 10.49, which suggests a substantial margin of safety regarding the payment of fixed costs and interest.
- Operating Lease Impact and Financial Leverage
- The inclusion of operating lease liabilities reveals a divergence in 2019, where the debt-to-equity and debt-to-capital ratios experienced slight increases compared to the previous year, whereas ratios excluding leases continued to decline. Financial leverage remained relatively stable throughout the period, peaking at 3.10 in 2017 before moderating to 2.83 by the end of 2019.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Debt to Equity
Raytheon Co., debt to equity calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and current portion of long-term debt | 1,499) | 300) | 300) | —) | —) | |
| Long-term debt, excluding current portion | 3,261) | 4,755) | 4,750) | 5,335) | 5,330) | |
| Total debt | 4,760) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Total Raytheon Company stockholders’ equity | 12,223) | 11,472) | 9,963) | 10,066) | 10,128) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.39 | 0.44 | 0.51 | 0.53 | 0.53 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Debt to equity = Total debt ÷ Total Raytheon Company stockholders’ equity
= 4,760 ÷ 12,223 = 0.39
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent improvement in the solvency position is observed. This trend is characterized by a dual effect of reducing overall debt obligations and strengthening the equity base, which resulted in a decreased reliance on borrowed funds to finance assets.
- Total Debt Trend
- Total debt exhibited a gradual decline over the five-year period. Starting at 5,330 million US$ in 2015, debt levels remained relatively stable through 2016 before entering a downward trajectory, concluding at 4,760 million US$ in 2019. This indicates a sustained effort to reduce the company's total liabilities.
- Stockholders' Equity Evolution
- Stockholders' equity experienced marginal declines between 2015 and 2017, moving from 10,128 million US$ to 9,963 million US$. However, a significant upward shift occurred in 2018, with equity rising to 11,472 million US$, and continuing to grow to 12,223 million US$ by the end of 2019. This growth reflects an expansion of the company's internal capital.
- Debt to Equity Ratio Analysis
- The debt to equity ratio shows a steady downward trend, decreasing from 0.53 in 2015 and 2016 to 0.39 by 2019. The most notable compression of this ratio occurred between 2017 and 2019, where it fell from 0.51 to 0.39. This trajectory demonstrates a shift toward a more conservative capital structure and an enhanced solvency profile.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Debt to Equity (including Operating Lease Liability)
Raytheon Co., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and current portion of long-term debt | 1,499) | 300) | 300) | —) | —) | |
| Long-term debt, excluding current portion | 3,261) | 4,755) | 4,750) | 5,335) | 5,330) | |
| Total debt | 4,760) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Operating lease liabilities, current | 213) | —) | —) | —) | —) | |
| Operating lease liabilities, noncurrent | 706) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 5,679) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Total Raytheon Company stockholders’ equity | 12,223) | 11,472) | 9,963) | 10,066) | 10,128) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.46 | 0.44 | 0.51 | 0.53 | 0.53 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Raytheon Company stockholders’ equity
= 5,679 ÷ 12,223 = 0.46
2 Click competitor name to see calculations.
The financial solvency of the organization exhibited a strengthening trend between 2015 and 2019, characterized by a reduction in the reliance on debt relative to equity. Although total liabilities increased toward the end of the period, the growth in shareholders' equity outpaced this increase, resulting in a lower overall leverage ratio.
- Total Debt Obligations
- Total debt, inclusive of operating lease liabilities, remained relatively stable from 2015 through 2018, fluctuating between 5,050 million and 5,335 million US dollars. A moderate increase was recorded in 2019, with debt rising to 5,679 million US dollars, representing the highest level of obligations within the analyzed five-year period.
- Stockholders' Equity Expansion
- Equity levels showed a slight contraction from 2015 to 2017, reaching a minimum of 9,963 million US dollars. However, a significant upward trend began in 2018, with equity increasing to 11,472 million US dollars and further climbing to 12,223 million US dollars by the end of 2019. This indicates a substantial expansion of the organization's net asset base.
- Debt to Equity Ratio Analysis
- The debt to equity ratio demonstrated a general downward trajectory, decreasing from 0.53 in 2015 and 2016 to a low of 0.44 in 2018. Despite a slight increase to 0.46 in 2019, the ratio remained below the 2015-2017 levels. This progression suggests an improved solvency position and a reduced risk profile regarding long-term financial obligations.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Debt to Capital
Raytheon Co., debt to capital calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and current portion of long-term debt | 1,499) | 300) | 300) | —) | —) | |
| Long-term debt, excluding current portion | 3,261) | 4,755) | 4,750) | 5,335) | 5,330) | |
| Total debt | 4,760) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Total Raytheon Company stockholders’ equity | 12,223) | 11,472) | 9,963) | 10,066) | 10,128) | |
| Total capital | 16,983) | 16,527) | 15,013) | 15,401) | 15,458) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.28 | 0.31 | 0.34 | 0.35 | 0.34 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Debt to capital = Total debt ÷ Total capital
= 4,760 ÷ 16,983 = 0.28
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2015 to 2019 reveals a consistent strengthening of the capital structure, characterized by a reduction in leverage and an expansion of the total capital base.
- Total Debt Trends
- Total debt remained relatively stable between 2015 and 2018, fluctuating slightly around the 5 billion USD mark. However, a more pronounced reduction occurred by December 31, 2019, when total debt reached its lowest point in the five-year period at 4,760 million USD, representing a total decrease of approximately 10.7% from 2015 levels.
- Total Capital Evolution
- Total capital exhibited a slight downward trend between 2015 and 2017, dipping from 15,458 million USD to 15,013 million USD. This trend reversed sharply in 2018, with capital increasing to 16,527 million USD and continuing to rise to 16,983 million USD by the end of 2019. This growth in the denominator, combined with falling debt, indicates a shift toward a more equity-heavy or internally funded capital structure.
- Debt to Capital Ratio Performance
- The debt to capital ratio peaked at 0.35 in 2016 before entering a steady decline. By December 31, 2019, the ratio had dropped to 0.28. This downward trajectory signifies a decreasing reliance on borrowed funds to finance assets and operations, thereby improving the overall solvency profile and reducing financial risk.
The convergence of declining total debt and increasing total capital over the final two years of the period suggests a deliberate deleveraging strategy, resulting in a more conservative financial position by 2019.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Debt to Capital (including Operating Lease Liability)
Raytheon Co., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and current portion of long-term debt | 1,499) | 300) | 300) | —) | —) | |
| Long-term debt, excluding current portion | 3,261) | 4,755) | 4,750) | 5,335) | 5,330) | |
| Total debt | 4,760) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Operating lease liabilities, current | 213) | —) | —) | —) | —) | |
| Operating lease liabilities, noncurrent | 706) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 5,679) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Total Raytheon Company stockholders’ equity | 12,223) | 11,472) | 9,963) | 10,066) | 10,128) | |
| Total capital (including operating lease liability) | 17,902) | 16,527) | 15,013) | 15,401) | 15,458) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.32 | 0.31 | 0.34 | 0.35 | 0.34 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 5,679 ÷ 17,902 = 0.32
2 Click competitor name to see calculations.
The solvency profile from 2015 through 2019 demonstrates significant stability, with the organization maintaining a consistent balance between its debt obligations and total capital. The overall trend suggests a disciplined approach to leverage management, as the ratio of debt to capital remained within a narrow range despite fluctuations in absolute dollar values.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, remained relatively stagnant between 2015 and 2018, oscillating between 5,050 million and 5,335 million USD. A shift occurred in 2019, with debt increasing to 5,679 million USD, marking the highest absolute debt level in the five-year period.
- Total Capital Trends
- Total capital experienced a slight decline from 15,458 million USD in 2015 to a low of 15,013 million USD in 2017. Subsequently, a period of expansion began, with total capital rising to 16,527 million USD in 2018 and further increasing to 17,902 million USD by the end of 2019.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained stable, fluctuating slightly between 0.31 and 0.35. A peak of 0.35 was observed in 2016, followed by a decline to a period low of 0.31 in 2018. In 2019, the ratio settled at 0.32; while absolute debt increased, the simultaneous growth in total capital prevented a significant rise in the leverage ratio, thereby maintaining a stable solvency position.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Debt to Assets
Raytheon Co., debt to assets calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and current portion of long-term debt | 1,499) | 300) | 300) | —) | —) | |
| Long-term debt, excluding current portion | 3,261) | 4,755) | 4,750) | 5,335) | 5,330) | |
| Total debt | 4,760) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Total assets | 34,566) | 31,864) | 30,860) | 30,052) | 29,281) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.14 | 0.16 | 0.16 | 0.18 | 0.18 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Debt to assets = Total debt ÷ Total assets
= 4,760 ÷ 34,566 = 0.14
2 Click competitor name to see calculations.
A consistent improvement in solvency is observed between 2015 and 2019. The financial structure reflects a strategic reduction in leverage relative to the total asset base, indicating a strengthening of the long-term financial position.
- Total Debt Trends
- Total debt experienced a general decline over the five-year period. After remaining nearly flat between 2015 and 2016 at approximately US$ 5,330 million, debt levels decreased to US$ 4,760 million by December 31, 2019.
- Total Asset Growth
- Total assets exhibited uninterrupted year-over-year growth. From a starting value of US$ 29,281 million in 2015, the asset base expanded to US$ 34,566 million by 2019, reflecting a consistent increase in the company's scale of operations.
- Debt to Assets Ratio Analysis
- The debt to assets ratio declined from 0.18 in 2015 and 2016 to 0.14 by the end of 2019. This downward trajectory is a result of the simultaneous reduction in total debt and the expansion of total assets, which collectively reduced the proportion of assets financed through debt, thereby lowering the solvency risk profile.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Debt to Assets (including Operating Lease Liability)
Raytheon Co., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and current portion of long-term debt | 1,499) | 300) | 300) | —) | —) | |
| Long-term debt, excluding current portion | 3,261) | 4,755) | 4,750) | 5,335) | 5,330) | |
| Total debt | 4,760) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Operating lease liabilities, current | 213) | —) | —) | —) | —) | |
| Operating lease liabilities, noncurrent | 706) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 5,679) | 5,055) | 5,050) | 5,335) | 5,330) | |
| Total assets | 34,566) | 31,864) | 30,860) | 30,052) | 29,281) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.16 | 0.16 | 0.16 | 0.18 | 0.18 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 5,679 ÷ 34,566 = 0.16
2 Click competitor name to see calculations.
The solvency profile of the organization from 2015 to 2019 is characterized by a stable and low leverage ratio, reflecting a conservative capital structure. The overall debt-to-assets ratio, which includes operating lease liabilities, decreased from 0.18 in 2015 to 0.16 by 2019, signifying a gradual reduction in the proportion of assets funded by debt.
- Asset Expansion
- Total assets grew consistently throughout the five-year period, increasing from US$ 29,281 million in 2015 to US$ 34,566 million in 2019. This upward trajectory indicates a steady expansion of the company's resource base.
- Debt Dynamics
- Total debt, including operating lease liabilities, remained relatively flat between 2015 and 2018, fluctuating between US$ 5,050 million and US$ 5,335 million. A notable increase occurred in 2019, where total debt rose to US$ 5,679 million.
- Leverage Ratio Interpretation
- Despite the increase in total debt during the final year of the analysis, the debt-to-assets ratio remained constant at 0.16 from 2017 through 2019. This stability suggests that the growth in total assets sufficiently offset the increase in liabilities, preventing a deterioration of the solvency position.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Financial Leverage
Raytheon Co., financial leverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 34,566) | 31,864) | 30,860) | 30,052) | 29,281) | |
| Total Raytheon Company stockholders’ equity | 12,223) | 11,472) | 9,963) | 10,066) | 10,128) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.83 | 2.78 | 3.10 | 2.99 | 2.89 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Financial leverage = Total assets ÷ Total Raytheon Company stockholders’ equity
= 34,566 ÷ 12,223 = 2.83
2 Click competitor name to see calculations.
An analysis of the financial structure between 2015 and 2019 reveals a consistent expansion of total assets, which grew from 29,281 million to 34,566 million. This steady growth in the asset base is contrasted by fluctuating levels of stockholders' equity and resulting shifts in financial leverage.
- Leverage Escalation (2015–2017)
- During the initial three-year period, a rising trend in financial leverage is observed, increasing from 2.89 in 2015 to a peak of 3.10 in 2017. This trend was driven by a combination of steady asset growth and a marginal decline in stockholders' equity, which fell from 10,128 million to 9,963 million, indicating an increased reliance on debt to fund operations and acquisitions.
- Equity Expansion and Deleveraging (2018)
- A significant correction in the leverage profile occurred in 2018. Stockholders' equity increased substantially to 11,472 million, which resulted in the financial leverage ratio dropping to 2.78. This represents the lowest leverage point in the observed period, suggesting a strengthening of the solvency position through equity accumulation.
- Recent Stabilization (2019)
- By the end of 2019, the financial leverage ratio stabilized at 2.83. While total assets saw a significant jump to 34,566 million, the concurrent increase in stockholders' equity to 12,223 million served to moderate the impact on the leverage ratio, preventing a return to the higher leverage levels seen in 2017.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Interest Coverage
Raytheon Co., interest coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Raytheon Company | 3,343) | 2,909) | 2,024) | 2,211) | 2,074) | |
| Add: Net income attributable to noncontrolling interest | (14) | (27) | (23) | (37) | (7) | |
| Less: Income (loss) from discontinued operations, net of tax | 1) | (1) | 2) | 1) | 13) | |
| Add: Income tax expense | 658) | 264) | 1,114) | 857) | 733) | |
| Add: Interest expense | 180) | 184) | 205) | 232) | 233) | |
| Earnings before interest and tax (EBIT) | 4,166) | 3,331) | 3,318) | 3,262) | 3,020) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 23.14 | 18.10 | 16.19 | 14.06 | 12.96 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Interest coverage = EBIT ÷ Interest expense
= 4,166 ÷ 180 = 23.14
2 Click competitor name to see calculations.
The financial solvency of the organization regarding its interest obligations demonstrated a consistent and significant strengthening between 2015 and 2019. This improvement is the result of a simultaneous increase in operational profitability and a reduction in the cost of debt service.
- Earnings Before Interest and Tax (EBIT)
- A steady upward trajectory in operating earnings is observed, with EBIT rising from 3,020 million US$ in 2015 to 4,166 million US$ by 2019. The most pronounced growth occurred between 2018 and 2019, where earnings increased by approximately 25%, indicating a substantial expansion in operational capacity or efficiency.
- Interest Expense
- Interest obligations experienced a continuous decline throughout the five-year period. Costs decreased from 233 million US$ in 2015 to 180 million US$ in 2019. This downward trend suggests either a reduction in the total principal of outstanding debt or a successful refinancing of obligations at lower interest rates.
- Interest Coverage Ratio
- The interest coverage ratio improved markedly from 12.96 in 2015 to 23.14 in 2019. This indicates that the ability to cover interest payments from operating profits nearly doubled over the period. The consistent annual increase in this ratio reflects a diminishing risk of default and a significantly enhanced margin of safety for creditors.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Fixed Charge Coverage
Raytheon Co., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Raytheon Company | 3,343) | 2,909) | 2,024) | 2,211) | 2,074) | |
| Add: Net income attributable to noncontrolling interest | (14) | (27) | (23) | (37) | (7) | |
| Less: Income (loss) from discontinued operations, net of tax | 1) | (1) | 2) | 1) | 13) | |
| Add: Income tax expense | 658) | 264) | 1,114) | 857) | 733) | |
| Add: Interest expense | 180) | 184) | 205) | 232) | 233) | |
| Earnings before interest and tax (EBIT) | 4,166) | 3,331) | 3,318) | 3,262) | 3,020) | |
| Add: Operating lease cost | 240) | 236) | 232) | 239) | 236) | |
| Earnings before fixed charges and tax | 4,406) | 3,567) | 3,550) | 3,501) | 3,256) | |
| Interest expense | 180) | 184) | 205) | 232) | 233) | |
| Operating lease cost | 240) | 236) | 232) | 239) | 236) | |
| Fixed charges | 420) | 420) | 437) | 471) | 469) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 10.49 | 8.49 | 8.12 | 7.43 | 6.94 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 4,406 ÷ 420 = 10.49
2 Click competitor name to see calculations.
The analysis of solvency metrics reveals a consistent strengthening of the organization's capacity to meet its fixed financial obligations between 2015 and 2019.
- Earnings Before Fixed Charges and Tax (EBFCT)
- A sustained growth trajectory is observed in earnings, which increased from US$ 3,256 million in 2015 to US$ 4,406 million by 2019. While growth was steady between 2015 and 2018, a significant acceleration occurred in 2019, marking the highest earnings level in the five-year period.
- Fixed Charges Management
- Fixed charges remained relatively stable with an overall downward trend following 2016. After reaching a peak of US$ 471 million in 2016, these obligations decreased to US$ 420 million by 2018 and remained flat through 2019, indicating effective management of fixed costs or a reduction in debt-servicing requirements.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio demonstrates a continuous and progressive improvement, rising from 6.94 in 2015 to 10.49 in 2019. This upward trend is driven by the simultaneous increase in operating earnings and the reduction of fixed charges, resulting in a substantially higher margin of safety and reduced solvency risk.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?