Northrop Grumman Corporation (NOC)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.30 | 0.27 | 0.30 | 0.32 | 0.31 |
| Debt-to-capital ratio | 0.48 | 0.44 | 0.50 | 0.57 | 0.59 |
| Debt-to-equity ratio | 0.93 | 0.77 | 0.99 | 1.35 | 1.45 |
| Financial leverage ratio | 3.15 | 2.86 | 3.29 | 4.20 | 4.66 |
The solvency ratios of Northrop Grumman Corp. provide insight into the company's ability to meet its long-term financial obligations.
The debt-to-assets ratio has remained relatively stable over the past five years, indicating that, on average, around 30% of the company's assets are financed by debt.
The debt-to-capital ratio has also followed a consistent trend, with the proportion of debt in the company's capital structure hovering around 48% over the last year. This suggests that a significant portion of Northrop Grumman's capital is derived from debt sources.
The debt-to-equity ratio has exhibited more fluctuation, but the 2023 ratio of 0.93 indicates that the company's total debt is around 93% of its total equity, a substantial decrease from the 2019 ratio of 1.45. This indicates that the company has been able to reduce its reliance on debt to finance its operations.
The financial leverage ratio, which measures the extent to which the company relies on debt in its capital structure, has also decreased over the last five years. The 2023 ratio of 3.15 indicates that the company utilizes around 3 times more debt than equity to finance its assets, signifying a decrease in leverage compared to 2019 when the ratio stood at 4.66.
Overall, Northrop Grumman Corp. has maintained a relatively conservative approach to its solvency, with a stable level of debt relative to assets and capital. The decreasing trend in the debt-to-equity and financial leverage ratios indicates a positive shift towards a healthier capital structure.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 26.71 | 67.94 | 10.16 | 6.85 | 7.52 |
The interest coverage ratio measures a company's ability to meet its interest obligations on its outstanding debt. A higher ratio indicates that the company is more capable of meeting interest payments.
Based on the data provided, Northrop Grumman Corp.'s interest coverage has decreased from 7.52 in 2019 to 4.66 in 2023. This downward trend may raise concerns about the company's ability to cover its interest expenses with its current level of earnings. However, it's important to note that an interest coverage ratio of above 1 indicates that the company is generating enough earnings to cover its interest payments.
The decline in the interest coverage ratio may be attributed to changes in the company's operating income and the amount of debt outstanding. Further analysis of Northrop Grumman's financial performance and debt levels would be necessary to fully assess the implications of the decreasing trend in the interest coverage ratio.