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.
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- Income Statement
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Aggregate Accruals
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Long-term Activity Ratios (Summary)
General Dynamics Corp., long-term (investment) activity ratios
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
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 the financial ratios over the five-year period highlights several notable trends.
- Net Fixed Asset Turnover
- This ratio showed a gradual decline from 9.08 in 2015 to 8.32 in 2018, before experiencing a slight recovery to 8.79 in 2019. The trend indicates a modest decrease in the efficiency of using fixed assets to generate sales, followed by a minor improvement in the final year.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- The ratio remained identical to the standard net fixed asset turnover from 2015 through 2018. However, in 2019, it decreased significantly to 6.66, suggesting the incorporation of operating leases and right-of-use assets had a notable impact on asset utilization measures in that year.
- Total Asset Turnover
- This ratio experienced a consistent decline over the period, dropping from 0.98 in 2015 to a low of 0.80 in 2018, with a minor increase to 0.81 in 2019. The trend reflects a decreasing efficiency in generating revenue from total assets, with only a slight improvement at the end of the period.
- Equity Turnover
- Equity turnover showed some variability, starting at 2.93 in 2015 and declining to 2.71 in 2017. It then increased sharply to 3.08 in 2018, before decreasing again to 2.90 in 2019. This pattern implies fluctuations in the efficiency of using shareholders' equity to generate sales, with a peak in 2018 followed by a moderate decline.
Overall, the data suggest a gradual decrease in asset efficiency metrics over the period, particularly in total asset and net fixed asset turnover, with a significant adjustment in the last year when considering operating leases. Equity turnover displayed a less consistent pattern but generally remained within a similar range, indicating some variability in equity utilization efficiency.
Net Fixed Asset Turnover
General Dynamics Corp., 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) | ||||||
| Revenue | ||||||
| Property, plant and equipment, net | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| 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 = Revenue ÷ Property, plant and equipment, net
= ÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- The revenue showed a slight decline from 31,469 million USD in 2015 to 30,973 million USD in 2017, indicating a decreasing trend during this period. However, the revenue increased significantly afterward, reaching 36,193 million USD in 2018 and further rising to 39,350 million USD in 2019. This suggests a recovery and growth phase in the latter two years.
- Property, Plant, and Equipment (PP&E) Trends
- Net property, plant, and equipment remained relatively stable between 2015 and 2017, with values around 3,466 to 3,517 million USD. Starting from 2018, there was a notable increase to 4,348 million USD, which continued modestly to 4,475 million USD in 2019. This trend indicates capital investment and expansion in fixed assets during the last two years.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio decreased steadily from 9.08 in 2015 to a low of 8.32 in 2018, reflecting diminishing efficiency in generating revenue from fixed assets. However, this ratio improved somewhat in 2019 to 8.79, suggesting a partial rebound in asset utilization efficiency despite the ongoing increase in fixed asset base.
- Overall Insights
- The data presents an initial period of slight revenue contraction coupled with stable fixed assets, followed by growth in both revenue and capital assets starting in 2018. The decline and subsequent partial recovery in fixed asset turnover ratio imply that asset investments initially outpaced revenue growth but later became more effective. This pattern may reflect strategic investments in capacity or modernization aligning with improved sales performance.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
General Dynamics Corp., 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) | ||||||
| Revenue | ||||||
| Property, plant and equipment, net | ||||||
| Right-of-use (ROU) assets, operating leases (included in Noncurrent other assets) | ||||||
| Property, plant and equipment, net (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| 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) = Revenue ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
- Revenue
- The revenue exhibited a generally stable trend from 2015 through 2017, with values fluctuating slightly around the 31,000 million US$ mark. From 2018 onwards, there was a notable increase, with revenue rising from 36,193 million US$ in 2018 to 39,350 million US$ in 2019. This upward trend suggests improved sales or market conditions during the last two years in the period analyzed.
- Property, Plant, and Equipment, Net
- The net value of property, plant, and equipment, including operating lease and right-of-use assets, showed a marked upward trajectory throughout the period. Beginning at 3,466 million US$ in 2015, the figure remained relatively flat through 2016 and 2017, before increasing significantly to 4,348 million US$ in 2018 and further to 5,907 million US$ in 2019. This steady investment or capitalization trend suggests expansion or modernization of fixed assets.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio declined progressively over the five-year period, moving from 9.08 in 2015 to 6.66 in 2019. This indicates that despite increased investment in fixed assets, the efficiency with which these assets generate revenue decreased. The reduction in turnover could reflect underutilization of assets or a lag in revenue generation relative to asset growth.
- Overall Observations
- The data presents a scenario where revenue has increased substantially in the last two years, coinciding with a pronounced rise in net property, plant, and equipment values. However, the declining net fixed asset turnover ratio points to a decreasing efficiency of asset usage. This combination suggests that while investments in fixed assets have grown significantly, the corresponding revenue growth may not be fully optimized relative to the asset base size.
Total Asset Turnover
General Dynamics Corp., 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) | ||||||
| Revenue | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| 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 = Revenue ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period indicates several notable trends in revenue, total assets, and asset efficiency.
- Revenue
- Revenue remained relatively stable from 2015 through 2017, fluctuating slightly around the 31,000 million US$ mark. In 2018, there was a marked increase, with revenue rising to approximately 36,193 million US$, continuing to increase further to 39,350 million US$ in 2019. This upward trend in the last two years suggests growth in operational scale or market demand.
- Total Assets
- Total assets showed a consistent increase year over year, starting from 31,997 million US$ in 2015 and rising steadily to 48,841 million US$ by 2019. This reflects expansion and accumulation of resources or investments, with particularly strong growth observed from 2017 onwards.
- Total Asset Turnover Ratio
- The total asset turnover ratio, which measures the efficiency of asset use in generating revenue, demonstrated a declining trend. It decreased from 0.98 in 2015 to 0.81 in 2019, indicating that each unit of asset is generating less revenue over time. The most significant drop occurred between 2016 and 2018. Despite revenue increases in later years, asset growth outpaced revenue growth, contributing to this ratio's decline.
In summary, the company experienced steady revenue growth primarily in the later years of the period analyzed, alongside continuous increases in total asset base. However, the efficiency of asset utilization decreased, suggesting potential challenges in converting asset expansion into proportional revenue gains.
Equity Turnover
General Dynamics Corp., 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) | ||||||
| Revenue | ||||||
| Shareholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| 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 = Revenue ÷ Shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends across the five-year period from 2015 to 2019. Revenue demonstrated an overall upward trajectory, growing from 31,469 million US dollars in 2015 to 39,350 million US dollars in 2019. This represents a significant increase, with a notable jump occurring between 2017 and 2018, where revenue rose from 30,973 million to 36,193 million US dollars, indicating strong growth momentum during this interval.
Shareholders’ equity also experienced a consistent increase over the period. Starting at 10,738 million US dollars in 2015, it steadily rose each year to reach 13,577 million US dollars by 2019. This growth signals a strengthening of the company’s net asset base and improved financial stability, reflecting retained earnings and possibly additional capital contributions or positive market valuation effects.
The equity turnover ratio, which measures the efficiency of equity in generating revenue, showed some variability during the period. It started at 2.93 in 2015, gradually declined to 2.71 in 2017, and then increased sharply to 3.08 in 2018 before slightly declining again to 2.90 in 2019. This suggests fluctuating operational efficiency, with a peak in 2018 possibly linked to the substantial increase in revenue that year. However, the slight decrease in 2019 may warrant further analysis to understand changes in asset utilization or business strategies.
- Revenue
- Overall growth from 31,469 million to 39,350 million US dollars, with a significant increase from 2017 to 2018.
- Shareholders’ Equity
- Steady increase from 10,738 million to 13,577 million US dollars, indicating strengthened financial position.
- Equity Turnover Ratio
- Fluctuating trend with a low in 2017 (2.71) and a peak in 2018 (3.08), suggesting varying levels of efficiency in generating revenue from equity.
In summary, the data shows positive revenue growth coupled with strengthening equity, although the equity turnover ratio indicates varying operational efficiency across the analyzed years. This combination reflects an overall expansion phase but highlights areas for assessment regarding utilization of equity to maximize revenue generation.