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)
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).
- Debt to Equity Ratios
- The debt to equity ratio showed a gradual decline from 0.53 in 2015 and 2016 to 0.39 by the end of 2019, indicating a reduction in reliance on debt relative to equity. However, when including operating lease liabilities, the ratio slightly increased in 2019 to 0.46, suggesting that lease obligations impact the overall leverage picture.
- Debt to Capital Ratios
- Debt to capital ratios decreased consistently from 0.34 in 2015 and 2017 to 0.28 in 2019, signifying a lower proportion of debt financing within the capital structure. Inclusion of operating lease liabilities slightly raised the ratio in 2019 to 0.32, though the general trend remained downward.
- Debt to Assets Ratios
- Debt to assets ratios declined from 0.18 in 2015 and 2016 to 0.14 in 2019, indicating reduced leverage against total assets. The inclusion of operating lease liabilities resulted in a minor adjustment, keeping the ratio steady at 0.16 in 2019 rather than the lower figure without lease obligations.
- Financial Leverage Ratio
- Financial leverage, reflecting total assets relative to equity, experienced minor fluctuations. It rose from 2.89 in 2015 to a peak of 3.10 in 2017, then decreased to 2.78 in 2018 before slightly increasing again to 2.83 in 2019. This suggests some variability in asset funding proportions over time but no clear long-term trend.
- Interest Coverage Ratio
- Interest coverage improved markedly, rising from 12.96 in 2015 to 23.14 in 2019. This indicates a significant enhancement in the company’s ability to meet interest expenses with operating earnings, reflecting stronger earnings growth or reduced interest liabilities.
- Fixed Charge Coverage Ratio
- Fixed charge coverage also improved steadily from 6.94 in 2015 to 10.49 in 2019, underscoring a growing capacity to cover fixed financial obligations beyond just interest, such as lease payments. This aligns with the increased emphasis on covering fixed charges over the period.
Debt Ratios
Coverage Ratios
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.
The financial data over the five-year period demonstrates notable trends in debt management and equity growth.
- Total debt
-
The total debt level remained relatively stable between 2015 and 2016, with a slight increase of 5 million US dollars (from 5,330 to 5,335 million). Subsequently, a gradual decline is observed from 2017 through 2019, decreasing by nearly 570 million US dollars overall. This reduction suggests efforts toward deleveraging or strategically managing liabilities.
- Total stockholders' equity
-
Stockholders' equity showed a generally upward trend throughout the period. After a minor decrease from 10,128 million US dollars in 2015 to 9,963 million in 2017, a significant rebound occurs in 2018 and continues in 2019, ultimately increasing to 12,223 million US dollars. This indicates strengthened financial stability and potentially improved profitability or retained earnings accumulation.
- Debt to equity ratio
-
The debt to equity ratio follows a consistent decreasing trajectory from 0.53 in 2015 and 2016 down to 0.39 in 2019. This decline aligns with the trends observed in total debt reduction and equity growth, reflecting a reduction in financial leverage and an enhancement in the capital structure. A lower ratio suggests a lower reliance on debt financing relative to equity, which may be viewed positively by investors and creditors.
Overall, the data indicates a strategic focus on strengthening the equity base while reducing debt levels. The improved debt to equity ratio over time reflects enhanced financial health and potentially lower financial risk.
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 data over the five-year period indicates several notable trends in the company's capital structure and leverage.
- Total debt (including operating lease liability)
- The total debt level remained relatively stable from 2015 through 2018, fluctuating slightly around the 5,000 million USD mark. There was a minor decrease observed in 2017 and 2018 compared to 2015 and 2016, before increasing to 5,679 million USD in 2019. This uptick in 2019 suggests a marginal increase in borrowing or lease obligations at the end of the period.
- Total stockholders’ equity
- Equity showed a general declining trend from 2015 (10,128 million USD) through 2017 (9,963 million USD), followed by a substantial increase in 2018 and 2019, reaching 12,223 million USD in the latter year. This growth in equity indicates an improvement in net assets and possibly retained earnings or capital injections during the last two years.
- Debt to equity ratio (including operating lease liability)
- The debt to equity ratio exhibited a gradual decrease from 0.53 in 2015 and 2016 to 0.44 in 2018, reflecting a reduction in leverage relative to equity. In 2019, this ratio slightly increased to 0.46, aligning with the increase in total debt and equity observed. Overall, the ratio remained under 0.6 throughout the period, indicating a moderately leveraged financial position.
In summary, the company maintained a stable level of debt with a gradual improvement in equity from 2017 onwards, resulting in decreased leverage through 2018. The slight rise in both debt and debt-to-equity ratio in 2019 suggests a strategic adjustment in the capital structure, potentially to support growth or operational needs, while maintaining financial stability.
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.
The financial data reveals distinct trends regarding the company's debt and capital structure over the five-year period ending in 2019.
- Total Debt
- The total debt level remained relatively stable from 2015 to 2016, with a negligible increase from 5330 million USD to 5335 million USD. Following this, there was a consistent decline in total debt through to 2019, falling from 5335 million USD to 4760 million USD. This represents a gradual reduction in debt over the latter half of the period, indicating a possible strategic focus on deleveraging or debt repayment.
- Total Capital
- Total capital showed a mild downward trend initially, decreasing from 15458 million USD in 2015 to a low of 15013 million USD in 2017. However, from 2017 onwards, total capital increased significantly, rising sharply to 16527 million USD in 2018 and continuing to 16983 million USD in 2019. This upward movement suggests increased investment, equity financing, or retained earnings accumulation during these years.
- Debt to Capital Ratio
- The debt to capital ratio exhibits a steady decline throughout the period. Starting at 0.34 in 2015, it remained stable in 2016 and slightly decreased to 0.34 in 2017. From 2017 onwards, the ratio decreased more markedly to 0.31 in 2018 and further to 0.28 in 2019. This declining ratio implies an improving capital structure, with reduced reliance on debt financing relative to total capital.
Overall, the data indicates a strategic shift towards strengthening the financial position by reducing debt levels and increasing total capital. The combination of stable then decreasing debt alongside growing capital reflects a potentially lower financial risk profile and enhanced balance sheet strength by the end of 2019.
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.
- Total debt (including operating lease liability)
- The total debt remained relatively stable from 2015 to 2018, fluctuating slightly around the 5,000 million US dollar mark. Specifically, the debt was approximately 5,330 million in 2015, slightly increased to 5,335 million in 2016, and then decreased to 5,050 million in both 2017 and 2018. However, in 2019, there was a noticeable increase in total debt to 5,679 million US dollars, representing a rise after a period of relative stability.
- Total capital (including operating lease liability)
- Total capital demonstrated a generally upward trend over the period. Starting at 15,458 million US dollars in 2015, it experienced a minor decline through 2017, reaching 15,013 million US dollars. From 2018 onwards, total capital increased significantly, rising to 16,527 million in 2018 and further to 17,902 million US dollars in 2019. This represents growth in the capital base, particularly in the last two years of the period analyzed.
- Debt to capital (including operating lease liability)
- The debt to capital ratio showed a modest downward trend over the period examined, indicating an improvement in capital structure. The ratio started at 0.34 in 2015, slightly increased to 0.35 in 2016, and then declined to 0.34 in 2017. The most notable change occurred between 2017 and 2018 when it decreased to 0.31, followed by a slight increase to 0.32 in 2019. Overall, the ratio indicates a stable and somewhat improved leverage position with debt constituting approximately one-third of the total capital.
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.
The financial data reveals several key trends in the company's leverage and asset base over the five-year period from 2015 to 2019.
- Total Debt
- Total debt remained relatively stable between 2015 and 2016, showing a marginal increase from 5,330 million US dollars to 5,335 million US dollars. Thereafter, the company reduced its total debt consistently each year, decreasing to 5,050 million in 2017, holding steady at 5,055 million in 2018, and declining more substantially to 4,760 million in 2019. Overall, this indicates a gradual deleveraging trend after 2016.
- Total Assets
- The total asset base expanded consistently throughout the period, rising each year from 29,281 million US dollars at the end of 2015 to 34,566 million US dollars by the end of 2019. This steady growth reflects ongoing asset accumulation or appreciation over time, suggesting possible investments or increases in asset valuations.
- Debt to Assets Ratio
- The debt to assets ratio declined gradually from 0.18 in 2015 and 2016 to 0.16 in 2017 and 2018, and further to 0.14 in 2019. This steady decline corresponds with the simultaneous reduction in total debt and increase in total assets, indicating a strengthening balance sheet with lower relative financial leverage over time.
In summary, the company demonstrated prudent financial management by reducing its debt burden while growing its asset base, resulting in lower leverage ratios. These trends suggest improved financial stability and potentially enhanced capacity for future investment or resilience against economic fluctuations.
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 financial data reveals the following trends and insights regarding the debt and asset position over the five-year period ending in 2019:
- Total Debt (Including Operating Lease Liability)
- Maintained a relatively stable range from 2015 to 2018, fluctuating slightly between approximately $5,330 million and $5,055 million. Notably, in 2019, total debt increased to about $5,679 million, indicating a rise in leverage or financing activities that year.
- Total Assets
- Demonstrated a consistent upward trend throughout the period, growing steadily from $29,281 million in 2015 to $34,566 million in 2019. This progression reflects ongoing asset growth and potentially expanded operations or acquisitions.
- Debt to Assets Ratio (Including Operating Lease Liability)
- Exhibited a slight decline from 0.18 in 2015 and 2016 to 0.16 in 2017, remaining stable through to 2019. This reduction and stabilization of the leverage ratio indicates a modest improvement in asset base relative to indebtedness, despite the increase in debt during 2019.
In summary, the organization experienced asset growth alongside relatively stable debt levels until 2018, which resulted in a gradual decrease in leverage ratio. The uptick in debt in 2019, however, did not significantly impact the overall debt-to-asset ratio, suggesting proportionate asset increases or effective financial management during that period.
Financial Leverage
Raytheon Co., financial leverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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.
- Total Assets
- The total assets exhibited a consistent upward trend over the five-year period. Starting at $29,281 million in 2015, the asset base increased steadily each year, reaching $34,566 million by the end of 2019. This growth indicates an expansion in the scale of operations or acquisition of additional resources over time.
- Total Stockholders’ Equity
- Stockholders’ equity remained relatively stable from 2015 to 2017, with a slight decline from $10,128 million to $9,963 million. However, a notable increase occurred in subsequent years, rising to $11,472 million in 2018 and further to $12,223 million in 2019. This pattern suggests improved profitability, retained earnings, or capital contributions strengthening the equity base in later years.
- Financial Leverage
- Financial leverage ratios fluctuated during the period under review. It rose gradually from 2.89 in 2015 to 3.10 in 2017, indicating an increasing reliance on debt relative to equity. Following this peak, the leverage ratio declined to 2.78 in 2018 before slightly increasing to 2.83 in 2019. The variations suggest adjustments in the company’s capital structure, possibly reflecting efforts to optimize debt and equity financing.
Interest Coverage
Raytheon Co., interest coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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.
- Earnings before interest and tax (EBIT)
- The EBIT shows a consistent upward trend over the five-year period. Starting at $3,020 million in 2015, it increased moderately each year until 2018 when it reached $3,331 million. A more pronounced rise is observed in 2019, with EBIT reaching $4,166 million, representing a significant improvement compared to previous years.
- Interest expense
- Interest expense exhibits a gradual decline over the period. Beginning at $233 million in 2015, it decreased steadily each year, reaching $180 million in 2019. This downward trend suggests improved cost management or refinancing at more favorable interest rates.
- Interest coverage
- The interest coverage ratio has shown substantial improvement over the years. From 12.96 in 2015, it increased progressively to 23.14 in 2019. This indicates the company’s enhanced ability to meet interest obligations through operating earnings, reflecting stronger financial health and reduced risk related to debt servicing.
Fixed Charge Coverage
Raytheon Co., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 the financial data reveals notable trends in earnings, fixed charges, and coverage ratio over the five-year period ending December 31, 2019.
- Earnings Before Fixed Charges and Tax
- There is a consistent upward trend in earnings before fixed charges and tax, increasing from US$3,256 million in 2015 to US$4,406 million in 2019. This represents a significant growth, particularly marked by a sharp increase from 2018 to 2019, suggesting improved operational performance or higher revenue generation capabilities.
- Fixed Charges
- Fixed charges have demonstrated a slight decline over the period, decreasing from US$469 million in 2015 to US$420 million in 2019. This steady reduction in fixed charges may reflect effective cost management or refinancing strategies that resulted in lower interest or lease expenses.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio exhibits a continuous improvement, rising from 6.94 in 2015 to 10.49 in 2019. This metric indicates an enhanced ability to cover fixed charges from earnings, with a particularly notable increase in 2019. The rise in this ratio is consistent with both the increase in earnings and the decrease in fixed charges, implying a strengthening financial position and greater earnings stability to meet fixed financial obligations.
In summary, the data indicates a positive financial trajectory characterized by growing earnings, controlled or reduced fixed expenses, and an improving capacity to cover fixed charges, all of which suggest improved financial health and operational efficiency during the period analyzed.