Lockheed Martin Corporation is an international company dealing with security and aeronautics that was formed after a merger between Lockheed and Martin corporations. It is principally concerned with the development and research of technology systems for defense, security, and aerospace. In addition to this, the company also generates income through the provision of engineering, logistic, information, and scientific services to their customers. Just like most companies operating domestically or internationally, Lockheed Martin Corporation prepares annual financial reports. This paper will entail an in-depth analysis of the financial statements of the company to determine their authenticity as well as give a true financial report from the findings.
Corporations: Organization and Capital Stock Transactions
Lockheed Martin is a corporation since it meets the essential requirements of a corporation in terms of its earnings, sales volume, and several employees. Records show that the company had about 115,000 employees as of December 2013 most of whom are United States nationalities. The company’s sales volume is quite high attaining figures such as $45,358 and $47,182 in the years 2013 and 2012 respectively. The net earnings range from $2,973 to $2,981 in the years 2009 to 2013.
Like other corporations, Lockheed Martin Corporation publicly announces its shares in the stock exchange market. This is evidenced by the fact that the company sold 1,381,768 shares at an average price per share of $136.73 from September to December 2013.
Corporations: Dividends, Retained Earnings, and Income Reporting
The shareholders also gain dividends from their shareholding depending on the stock market prices. For instance, in 2013 the dividend per share was $4.78 while in 2012 the dividend was $4.15 (United States Securities and Exchange Commission, 2013 p.23). In both consecutive years, the dividends were paid out in four quarters. Lockheed Martin Corporation pays its dividends in cash. The net earnings per common share have been increasing over the five years from 2009 to 2012 as depicted in the increase from $7.64 to $9.13.
The consolidated balance sheets of 2012 and 2013 indicate an increase in retained earnings from $13,211 million to $14,200 million. This makes the total stockholder’s equity of 2013 higher than that of 2012. Further analysis of the previous year’s consolidated statements also depicts that the company’s retained earnings have been increasing over the years from $12,161 million in 2010 to $14,200 million as of December 2013.
Lockheed mainly generates its income from sales, which have been $7,958 million in 2013. This figure was however lower than the sales of previous years. The company also discloses and reports other income that it generates. A look at the way that the income reporting records of Lockheed Martin Corporation indicate that the company has been generating other net income of $276million, $238million, and $318million in 2011, 2012, and 2013 respectively.
Long-term liabilities are obligations that corporations have to pay within more than one year (Weygandt, Kimmel, and Kieso, 2013, p.173). In the case of Lockheed Martin Corporation, it has various long-term liabilities including debts, leases, and interest payments just to mention a few. The long-term liabilities of Lockheed Martin Corporation are to be paid within a period of one to five years with the total long-term liabilities recorded as $44,781 million.
Investment activities of Lockheed Martin Corporation are clearly shown in its consolidated statements. The company has two main ways of investing which include capital expenditure and acquisitions. United States Securities and Exchange Commission (2013) states that “capital expenditures amounted to $836 million in 2013, $942 million in 2012, and $987 million in 2011” (para. 43). Lockheed Martin Corporation has managed to acquire various companies and groups including Amor Group, which was acquired in 2013 for $269 million. In 2012, the company acquired Chandler for $259 million. Other investments by Lockheed Martin Corporation are Procerus and Sim-Industries which were both received in 2011.
Statement of Cash Flows
A statement of cash flow shows the cash available in an organization to settle short-term liabilities and current assets. “It monitors the flow of cash in and out of the organization” (Weygandt et al., 2013, p.187). The consolidated statement of cash flows of Lockheed Martin Corporation indicates cash and cash equivalents of $3,582 million, $1,898 million, and $2,617 million for years 2011, 2012, and 2013 respectively. This shows that in 2012, the company had lesser cash than in 2011 and 2013. This could have been attributed to a decrease in net cash received from operating activities in the 2012 financial year.
Financial Statement Analysis
The two key financial statements that any ought to prepare are the balance sheet and the income statement. The balance sheet shows how much a company is worth at a specific date while the income statement is prepared to show the profit or loss generated by a company during a given financial period. The balance sheet of Lockheed Martin Corporation shows balance sheet figures of $36,188 million and $38,657 million in years 2013 and 2012 respectively. The difference could have been caused by a reduction in the total current assets figure in 2013. On the other hand, the income statement indicates net earnings figures of $2,655 million, $2,745 million, and $2,981 million from 2011 to 2013 consecutively.
The financial analysis of Lockheed Martin Corporation indicates that the financial statements are prepared by international accounting standards. It also shows that the company is performing well financially.
United States Securities and Exchange Commission. (2013). Washington, D.C. 20549: Form 10-K. Web.
Weygandt, J., Kimmel, P., & Kieso, D. (2010). Accounting Principles, Study Guide. New York: John Wiley & Sons.