RTX Corp. (NYSE:RTX)

The overall value of goodwill and intangible assets decreased over the five-year period, from US$92.952 billion in 2021 to US$85.188 billion in 2025. This decline is primarily driven by changes within the identifiable intangible asset portfolio, particularly customer relationships and amortized intangible assets.

Goodwill

Goodwill experienced a slight initial decrease from US$54.436 billion in 2021 to US$53.699 billion in 2023. A further reduction occurred in 2024, falling to US$52.789 billion, before a modest increase to US$53.343 billion in 2025. The overall trend suggests relative stability with minor fluctuations.

Identifiable Intangible Assets

A consistent downward trend is observed in identifiable intangible assets, decreasing from US$38.516 billion in 2021 to US$31.845 billion in 2025. This decline is most pronounced in customer relationships and amortized intangible assets, net.

Customer Relationships

Customer relationships exhibited a steady decline throughout the period, moving from US$29.982 billion in 2021 to US$29.338 billion in 2025. While the decrease is gradual, it consistently contributes to the overall reduction in identifiable intangible assets.

Amortized Intangible Assets

Gross amortized intangible assets increased from US$39.188 billion in 2021 to US$40.744 billion in 2025. However, accumulated amortization increased significantly, from negative US$9.368 billion to negative US$17.379 billion over the same period. Consequently, net amortized intangible assets decreased substantially, from US$29.820 billion in 2021 to US$23.365 billion in 2025. This indicates increasing amortization expense impacting the net carrying value.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets, consisting of trademarks and other items, remained relatively stable throughout the period, fluctuating between US$8.641 billion and US$8.696 billion. A slight decrease to US$8.463 billion in 2024 was followed by a minor recovery to US$8.480 billion in 2025.

Collaboration and Exclusivity Assets

Both collaboration assets and exclusivity assets demonstrated consistent growth. Collaboration assets increased from US$5.319 billion in 2021 to US$6.234 billion in 2025, while exclusivity assets rose from US$2.673 billion to US$3.980 billion over the same timeframe. These represent areas of investment and potential future value.

Developed Technology and Other

Developed technology and other intangible assets remained relatively flat, with values ranging between US$1.192 billion and US$1.219 billion throughout the period. This suggests a stable level of investment in this category.

In summary, the reduction in goodwill and intangible assets is largely attributable to the decline in customer relationships and the impact of increasing amortization on amortized intangible assets. Growth in collaboration and exclusivity assets partially offsets these declines, but does not fully compensate for the overall downward trend.

The financial information reveals a significant divergence between reported and adjusted asset and equity figures over the five-year period. The adjustments appear to primarily relate to the removal of goodwill and intangible assets, resulting in substantially lower values for adjusted total assets and adjusted shareowners’ equity.

Total Assets

Reported total assets demonstrate relative stability, fluctuating between US$158.864 billion and US$171.079 billion. However, adjusted total assets exhibit a consistently lower magnitude, ranging from US$105.024 billion to US$117.736 billion. The difference between reported and adjusted total assets widens over time, indicating an increasing amount of goodwill or intangible assets being removed from the balance sheet through adjustments. A general upward trend is observed in adjusted total assets from 2022 to 2025, though remaining considerably below reported figures.

Shareowners’ Equity

Reported shareowners’ equity experiences a decline from US$73.068 billion in 2021 to US$59.798 billion in 2023, followed by a modest recovery to US$65.245 billion in 2025. The adjusted shareowners’ equity figures are dramatically lower, starting at US$18.632 billion in 2021 and reaching US$11.902 billion in 2025. The gap between reported and adjusted equity is substantial and grows in the earlier years, suggesting a significant write-down of goodwill or intangible assets impacting equity. The adjusted equity shows a more pronounced upward trend from 2023 to 2025 than the reported equity.

The consistent and substantial difference between reported and adjusted figures suggests a systematic approach to removing goodwill and/or intangible assets from the balance sheet. The impact of these adjustments is more pronounced on equity than on total assets, potentially indicating that the removed assets were associated with acquisitions that have not performed as expected, leading to impairment charges directly affecting net income and retained earnings. The increasing trend in adjusted total assets and adjusted shareowners’ equity in the later years may reflect a stabilization of acquisitions or a change in accounting practices related to goodwill impairment.

The financial metrics demonstrate a significant impact from adjusting for goodwill and intangible assets. Reported ratios generally show more moderate changes compared to the adjusted ratios, indicating that goodwill constitutes a substantial portion of the company’s reported assets. A consistent pattern emerges where removing goodwill leads to substantially altered financial performance indicators.

Total Asset Turnover

Reported total asset turnover exhibits a gradual increase from 0.40 in 2021 to 0.52 in 2025. However, the adjusted total asset turnover reveals a more pronounced improvement, rising from 0.60 in 2021 to 0.75 in 2025. This suggests that the core business operations are more efficient when goodwill is excluded from the asset base. The difference between reported and adjusted values widens over time, implying a growing proportion of assets tied up in goodwill.

Financial Leverage

Reported financial leverage fluctuates between 2.19 and 2.71 over the period, indicating a relatively stable capital structure. In contrast, adjusted financial leverage shows a dramatic increase from 5.74 in 2021 to a peak of 17.74 in 2023, before declining to 9.89 in 2025. This substantial change highlights the extent to which goodwill inflates the asset base and, consequently, reduces the apparent level of financial risk when considered in traditional leverage calculations. The decrease from 2023 to 2025 suggests a potential reduction in goodwill or other intangible assets.

Return on Equity (ROE)

Reported ROE demonstrates volatility, increasing from 5.29% in 2021 to 7.16% in 2022, decreasing to 5.34% in 2023, and then rising to 10.32% in 2025. The adjusted ROE, however, shows a much more substantial and consistent upward trend, escalating from 20.74% in 2021 to a high of 64.80% in 2024, before moderating to 56.56% in 2025. This indicates that the underlying profitability relative to equity is significantly higher when goodwill is excluded, suggesting that reported equity is inflated by goodwill.

Return on Assets (ROA)

Reported ROA follows a similar pattern to ROE, with moderate fluctuations ranging from 1.97% to 3.94%. The adjusted ROA also increases over the period, moving from 3.61% in 2021 to 5.72% in 2025, but the magnitude of the change is less dramatic than that observed in ROE. This suggests that the impact of goodwill is more pronounced on equity-based returns than on asset-based returns. The adjusted ROA consistently exceeds the reported ROA, reinforcing the conclusion that goodwill reduces the apparent efficiency of asset utilization.

In summary, the adjusted ratios reveal a considerably different financial picture than the reported ratios. The substantial differences underscore the significant influence of goodwill on the company’s reported financial performance and position. The trends suggest that the company’s core operations are more profitable and efficient, and its financial risk profile is different, when goodwill is not considered.

An examination of the financial information reveals trends in both reported and adjusted total assets, alongside their corresponding turnover ratios, over a five-year period. Reported total assets experienced a slight decrease between 2021 and 2022, followed by increases in subsequent years, culminating in a notable rise from 2024 to 2025. Adjusted total assets mirrored this pattern, exhibiting a similar initial decrease, followed by consistent growth throughout the period.

Reported Total Asset Turnover

The reported total asset turnover ratio demonstrates a consistent upward trend. Beginning at 0.40 in 2021, the ratio increased to 0.42 in 2022 and 0.43 in 2023. A more substantial increase is observed between 2023 and 2024, reaching 0.50, and continues to rise to 0.52 in 2025. This indicates increasing efficiency in generating revenue from reported assets.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio also exhibits an increasing trend, but at a higher level than the reported ratio. Starting at 0.60 in 2021, it rose to 0.64 in 2022 and remained stable in 2023. A significant increase is then noted from 2023 to 2024, reaching 0.73, and further increasing to 0.75 in 2025. The consistently higher adjusted turnover suggests that excluding certain asset components results in a more favorable view of asset utilization efficiency.

The divergence between the reported and adjusted total asset turnover ratios suggests that the difference between reported and adjusted total assets is impacting the perceived efficiency of asset utilization. The increasing gap between the two ratios over time indicates a growing influence of the adjustments made to total assets on the overall turnover calculation. The consistent increases in both ratios suggest improving operational efficiency, though the magnitude of improvement is more pronounced when considering the adjusted figures.

The financial information reveals significant shifts in adjusted financial leverage over the five-year period. Reported total assets demonstrate relative stability, with a slight increase observed between 2021 and 2025. Reported shareowners’ equity experienced a decrease between 2021 and 2023, followed by a recovery in 2024 and 2025, but remains below the 2021 level. However, the adjusted figures present a markedly different picture, particularly concerning equity and leverage.

Adjusted Total Assets

Adjusted total assets decreased from US$106,968 million in 2021 to US$105,024 million in 2022, then exhibited growth through 2025, reaching US$117,736 million. This indicates a growing reliance on assets considered tangible or readily valued after adjustments are made.

Adjusted Shareowners’ Equity

Adjusted shareowners’ equity remained relatively stable between 2021 and 2022, at approximately US$18.8 billion. A substantial decline occurred in 2023, falling to US$6.099 billion, before a partial recovery to US$11.902 billion by 2025. This suggests significant changes in the valuation of equity components following adjustments, potentially related to intangible asset write-downs or revaluations.

Reported Financial Leverage

Reported financial leverage remained relatively consistent between 2021 and 2024, fluctuating between 2.19 and 2.71. A slight decrease to 2.62 was observed in 2025. This indicates a stable relationship between reported assets and equity.

Adjusted Financial Leverage

Adjusted financial leverage experienced a dramatic increase from 5.74 in 2021 to 17.74 in 2023, before decreasing to 9.89 in 2025. This substantial rise and subsequent decline suggest a significant impact from the adjustments made to both assets and equity. The high leverage in 2023, coupled with the low adjusted equity, warrants further investigation into the nature of the adjustments and their implications for the company’s financial risk profile. The decrease in 2024 and 2025 suggests a partial correction, but the adjusted leverage remains considerably higher than the reported leverage throughout the period.

The divergence between reported and adjusted financial leverage highlights the importance of considering the impact of goodwill and intangible assets on the company’s financial position. The substantial fluctuations in adjusted equity suggest that these adjustments are material and have a significant effect on the assessment of the company’s financial risk.

The period between 2021 and 2025 demonstrates significant fluctuations in shareowners’ equity and, consequently, return on equity. A notable divergence exists between reported and adjusted figures for both equity and ROE, suggesting the impact of intangible assets and goodwill on the company’s financial performance.

Shareowners’ Equity

Reported shareowners’ equity experienced a slight decrease from 2021 to 2022, followed by a substantial decline in 2023. A modest recovery occurred in 2024 and continued into 2025, but the equity level remained below the initial value recorded in 2021. Conversely, adjusted shareowners’ equity exhibited a similar pattern of decline in 2023, but the magnitude of the decrease was considerably larger. The adjusted equity values were consistently and significantly lower than the reported values throughout the period, indicating a substantial portion of reported equity is tied to items adjusted for in this analysis.

Reported Return on Equity (ROE)

Reported ROE showed volatility over the five-year period. It increased from 5.29% in 2021 to 7.16% in 2022, decreased to 5.34% in 2023, and then rose sharply to 7.94% in 2024. The highest reported ROE was achieved in 2025, reaching 10.32%. This trend generally aligns with the fluctuations in reported shareowners’ equity, though the ROE increases appear amplified.

Adjusted Return on Equity (ROE)

Adjusted ROE exhibited a markedly different trend. It began at 20.74% in 2021 and increased to 27.66% in 2022. A dramatic surge occurred in 2023, reaching 52.39%, followed by further increases to 64.80% in 2024. While decreasing slightly in 2025 to 56.56%, the adjusted ROE remained substantially higher than the reported ROE throughout the entire period. This suggests that the inclusion of adjustments related to goodwill and intangible assets significantly impacts the true profitability of the company as measured by ROE. The substantial increases in adjusted ROE, particularly in 2023 and 2024, warrant further investigation into the nature and impact of these adjustments.

The considerable difference between reported and adjusted ROE highlights the importance of considering the impact of goodwill and intangible assets when evaluating the company’s financial performance. The trends suggest that while reported equity and ROE present a moderate picture, the underlying economic reality, as reflected in the adjusted figures, indicates a potentially more robust, though volatile, profitability profile.

The analysis reveals distinct trends in reported and adjusted return on assets (ROA) over the five-year period. A notable divergence exists between the two ROA calculations, stemming from differences in total asset valuation. Reported total assets demonstrate relative stability with a slight increasing trend, while adjusted total assets show a more consistent upward trajectory.

Reported Return on Assets (ROA)

Reported ROA exhibits volatility. It increased from 2.39% in 2021 to 3.27% in 2022, then decreased to 1.97% in 2023. A recovery to 2.93% occurred in 2024, followed by a further increase to 3.94% in 2025. This pattern suggests sensitivity to factors impacting reported asset values and profitability.

Adjusted Return on Assets (ROA)

Adjusted ROA demonstrates a more pronounced and consistent upward trend. It rose from 3.61% in 2021 to 4.95% in 2022, experienced a slight dip to 2.95% in 2023, and then increased significantly to 4.34% in 2024 and 5.72% in 2025. The higher values and consistent growth indicate improved profitability when considering the adjusted asset base.

Total Asset Trends

Reported total assets decreased slightly from $161,404 million in 2021 to $158,864 million in 2022, before increasing to $161,869 million in 2023, $162,861 million in 2024, and $171,079 million in 2025. Adjusted total assets decreased from $106,968 million in 2021 to $105,024 million in 2022, then increased steadily to $108,170 million in 2023, $110,072 million in 2024, and $117,736 million in 2025. The difference between reported and adjusted assets widens over time, suggesting a growing impact from items excluded in the adjusted calculation, likely goodwill and intangible assets.

The increasing disparity between reported and adjusted ROA, coupled with the diverging asset trends, suggests that intangible assets and goodwill are significantly impacting reported asset values and, consequently, the reported ROA. The adjusted ROA provides a potentially more conservative and stable view of underlying profitability, excluding these items. The consistent growth in adjusted ROA indicates improving operational efficiency and profitability when these items are not considered.