Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Raytheon Co., long-term (investment) activity 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 analysis of long-term activity ratios indicates a diverging trend between fixed asset utilization and overall asset efficiency over the five-year period from 2015 to 2019. While total asset and equity turnover remained relatively stable, fixed asset turnover experienced a consistent decline.
- Net Fixed Asset Turnover
- A continuous downward trend is observed, with the ratio decreasing from 11.59 in 2015 to 8.70 in 2019. This indicates a reduction in the revenue-generating efficiency of the company's net fixed assets, suggesting that investment in fixed assets grew at a faster rate than the associated revenue.
- Net Fixed Asset Turnover (Including Right-of-Use Assets)
- This metric followed the same trajectory as the standard fixed asset turnover until 2019, at which point a significant drop to 6.90 occurred. The sharp divergence in 2019 suggests the recognition of substantial right-of-use assets on the balance sheet, likely due to updated accounting standards regarding operating leases.
- Total Asset Turnover
- Efficiency in utilizing the comprehensive asset base remained stable and showed a slight improvement, moving from 0.79 in 2015 to 0.84 in 2019. This suggests that the overall capacity to generate sales from all assets remained consistent despite the decline in fixed asset efficiency.
- Equity Turnover
- The ratio exhibited relative stability, fluctuating between a low of 2.30 in 2015 and a peak of 2.54 in 2017, before settling at 2.39 in 2019. This reflects a consistent level of efficiency in using shareholder equity to drive revenue.
In summary, the data reveals a contrast between the declining efficiency of fixed assets and the stability of total asset and equity utilization. The most notable volatility appears in the treatment of right-of-use assets in 2019, which significantly impacted the fixed asset turnover metrics without substantially altering the total asset turnover.
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Net Fixed Asset Turnover
Raytheon Co., net fixed asset turnover 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 sales | 29,176) | 27,058) | 25,348) | 24,069) | 23,247) | |
| Property, plant and equipment, net | 3,353) | 2,840) | 2,439) | 2,166) | 2,005) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 8.70 | 9.53 | 10.39 | 11.11 | 11.59 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, 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
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 29,176 ÷ 3,353 = 8.70
2 Click competitor name to see calculations.
An analysis of long-term investment activity reveals a period of consistent revenue growth accompanied by an accelerated expansion of the fixed asset base, which has resulted in a steady decline in asset utilization efficiency.
- Net Sales Performance
- Revenue exhibited a continuous upward trend over the five-year period, rising from 23,247 million US dollars in 2015 to 29,176 million US dollars in 2019.
- Fixed Asset Investment
- Net property, plant, and equipment grew significantly from 2,005 million US dollars in 2015 to 3,353 million US dollars in 2019, indicating a substantial increase in capital expenditures and long-term infrastructure investment.
- Net Fixed Asset Turnover Analysis
- The net fixed asset turnover ratio decreased progressively from 11.59 in 2015 to 8.70 in 2019. This downward trajectory demonstrates that the growth in the fixed asset base outpaced the growth in net sales, leading to a reduction in the amount of revenue generated per dollar of net fixed assets.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Raytheon Co., net fixed asset turnover (including operating lease, right-of-use asset) 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 sales | 29,176) | 27,058) | 25,348) | 24,069) | 23,247) | |
| Property, plant and equipment, net | 3,353) | 2,840) | 2,439) | 2,166) | 2,005) | |
| Operating lease right-of-use assets | 875) | —) | —) | —) | —) | |
| Property, plant and equipment, net (including operating lease, right-of-use asset) | 4,228) | 2,840) | 2,439) | 2,166) | 2,005) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 6.90 | 9.53 | 10.39 | 11.11 | 11.59 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), 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
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= 29,176 ÷ 4,228 = 6.90
2 Click competitor name to see calculations.
A consistent increase in net sales was observed between 2015 and 2019, yet this growth was significantly outpaced by the expansion of the net fixed asset base. This divergence resulted in a sustained decline in the net fixed asset turnover ratio, indicating a decrease in the efficiency with which fixed assets were utilized to generate revenue over the analyzed period.
- Revenue Trajectory
- Net sales demonstrated steady annual growth, rising from US$ 23,247 million in 2015 to US$ 29,176 million in 2019. This represents a consistent upward trend in the company's ability to expand its top-line revenue.
- Fixed Asset Accumulation
- Net property, plant, and equipment, inclusive of right-of-use assets, increased from US$ 2,005 million in 2015 to US$ 4,228 million in 2019. A particularly sharp escalation is noted in 2019, where the balance increased by approximately 49% over the previous year, suggesting a significant increase in recognized assets or a change in lease accounting treatments.
- Fixed Asset Turnover Efficiency
- The net fixed asset turnover ratio exhibited a continuous downward trend, falling from 11.59 in 2015 to 6.90 in 2019. The most pronounced contraction occurred between 2018 and 2019, where the ratio dropped from 9.53 to 6.90. This pattern indicates that the growth in the asset base significantly outstripped the growth in sales, leading to a lower ratio of revenue generated per unit of fixed asset investment.
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Total Asset Turnover
Raytheon Co., total asset turnover 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 sales | 29,176) | 27,058) | 25,348) | 24,069) | 23,247) | |
| Total assets | 34,566) | 31,864) | 30,860) | 30,052) | 29,281) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.84 | 0.85 | 0.82 | 0.80 | 0.79 | |
| Benchmarks | ||||||
| Total Asset Turnover, 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
Total asset turnover = Net sales ÷ Total assets
= 29,176 ÷ 34,566 = 0.84
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent upward trajectory in both revenue generation and asset accumulation is observed, with a corresponding improvement in operational efficiency for the majority of the period.
- Net Sales Growth
- Net sales exhibited uninterrupted growth over the five-year period, rising from 23,247 million US$ in 2015 to 29,176 million US$ in 2019. This represents a steady expansion of the top line, indicating a consistent increase in market demand or volume.
- Asset Accumulation
- Total assets grew steadily from 29,281 million US$ in 2015 to 34,566 million US$ in 2019. The expansion of the asset base remained relatively linear until 2019, where a more pronounced increase in total assets was recorded.
- Total Asset Turnover Analysis
- The total asset turnover ratio improved from 0.79 in 2015 to a peak of 0.85 in 2018, signaling an increase in the efficiency of utilizing assets to generate revenue. A slight contraction to 0.84 occurred in 2019. This marginal decline indicates that the growth in the asset base during the final year slightly outpaced the growth in net sales, momentarily tempering the efficiency gains achieved in the preceding years.
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Equity Turnover
Raytheon Co., equity turnover 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 sales | 29,176) | 27,058) | 25,348) | 24,069) | 23,247) | |
| Total Raytheon Company stockholders’ equity | 12,223) | 11,472) | 9,963) | 10,066) | 10,128) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 2.39 | 2.36 | 2.54 | 2.39 | 2.30 | |
| Benchmarks | ||||||
| Equity Turnover, 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
Equity turnover = Net sales ÷ Total Raytheon Company stockholders’ equity
= 29,176 ÷ 12,223 = 2.39
2 Click competitor name to see calculations.
The financial performance between 2015 and 2019 is characterized by consistent revenue growth and a shifting equity base, which collectively influenced the efficiency of capital utilization.
- Net Sales Trajectory
- A continuous upward trend in net sales is observed over the five-year period. Revenue increased from US$ 23,247 million in 2015 to US$ 29,176 million in 2019, representing sustained growth in top-line performance.
- Stockholders' Equity Fluctuations
- Total stockholders' equity experienced a slight decline from 2015 to 2017, moving from US$ 10,128 million to a low of US$ 9,963 million. This was followed by a period of significant expansion, with equity rising to US$ 11,472 million in 2018 and reaching US$ 12,223 million by the end of 2019.
- Equity Turnover Dynamics
- The equity turnover ratio exhibited variability in response to the diverging trends of sales and equity. Efficiency peaked in 2017 at 2.54, as sales grew while the equity base contracted. A decline to 2.36 occurred in 2018, primarily due to the substantial increase in stockholders' equity which outpaced revenue growth during that fiscal year. By 2019, the ratio stabilized at 2.39, indicating a recalibration between the company's invested capital and its sales generation capacity.
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