Evaluation of Corporate Performance

Question: Discuss about the Term for Evaluation of Corporate Performance? Answer: Introduction Lockheed Martin Corp is a company manufacturing security and aerospace equipment. The company operates through five segments: Aeronautics This segment is concerned with research, design, development and manufacture of military aircraft. Aeronautics is chiefly involved in development of designs and prototype applications. The Advanced Development Program of the organization, known as the Skunk Works, has been focussing on unmanned aerial systems. Information Systems Global Solutions This segment is associated with applications and management of technology systems and information technology services for a wide range of applications. ISGS has been responsible for developing certain classified systems and services for Americas national security systems. The Hanford Mission Support system is one such program developed by the company for providing infrastructure and services related to site support to Americas Department of Energy, (Bakker Kloosterhof (ed.), 2010). Missiles Fire Control This segment provides defence systems, tactical missiles and precision strike weapons. MFC's primary programs include: The Patriot Advanced Capability3 (PAC3) and Terminal High Altitude Area Defence (THAAD) air and missile defence programs. The Special Operations Forces Contractor Logistics Support Services program is meant to provide logistic support services to special operation forces of U.S. military. The technical services business of MFC is meant to provide a wide network of technical and sustainment services for improving the missions of companys customers, catering to core markets in areas covering engineering servicesà Ã‚ ¾ Command, control, communications, computers, intelligence, surveillance and reconnaissance product supportà Ã‚ ¾ Global aviation solutionsà Ã‚ ¾ Counter threat services and education and sustainment services, (Bakker Kloosterhof (ed.), 2010). Mission Systems Training This segment is associated with combat systems. The primary programs of MST include: The Aegis Combat System, a fleet ballistic missile defence system which is also connected with sea based elements of the U.S. missile defence systemà Ã‚ ¾ The LCS, a surface combatant used by the U.S. Navy and designed to operate in shallow watersà Ã‚ ¾ MH-60 mission system and sensors, which includes the digital cockpit and weapons, used for the MH60 maritime helicopterà Ã‚ ¾ The TPQ53 Radar System, a sensor used by the US Army to locate and neutralize mortar and rocket threats. Space Systems This segment provides equipment for satellites, defence missile systems and space transportation systems. The Trident II D5 Fleet Ballistic Missile, a U.S. Navy program being used for launching of intercontinental ballistic missile by a submarine of the U.S. Navyà Ã‚ ¾ The Space Based Infrared System program, which is being used by the U.S. Air Force and is capable to detect and track the launch of missilesà Ã‚ ¾ An Advanced Extremely High Frequency system, which consists of communication satellites for the U.S. Air Forceà Ã‚ ¾ The Orion Multi-Purpose Crew Vehicle program, which is a spacecraft being developed for the National Aeronautics and Space Administration and is utilizing technology for human exploration missions beyond the low orbit of earthà Ã‚ ¾ Global Positioning System (GPS) III, a program which is being developed to modernize the GPS satellite system for the U.S. Air Force, (Bakker Kloosterhof (ed.), 2010). A Review of the Financial Statement Lockheed Martin Corp is a USA based multi-task, multi-purpose and multi-program organisation which is closely associated with the countrys military, space and national security programs. Incorporated in August 1994 in Bethesda, MD and having its Headquarters there since its inception, the organisation presently employs 126,000 people, who are looking after the companys five segments discussed above, (Ault, Arnold Gest, 2010). The companys current market capital outlay of $66,548 million, which is distributed through the companys 307,295,000 shares is held by the conglomerates 29,972 shareholders. The companys current share price is being quoted at $216.56 at NSY and the companys current PE Ratio stands at 18.897. With the current dividend declaration of $6.3, Lockheed Martin Corps present Earning Per Share (EPS) stands at $11.62, (Ault, Arnold Gest, 2010). Lockheed Martin Corp has been steadily increasing its Revenue Earnings since its inception in 1994 and has been consistently increasing its Gross Margin, which now stands at 11.27% and is among the highest in the segment, (Reynolds, Williams Savage, 2000). The robust structure and the management culture of the organisation is evident from the fact that the company has always shown a positive trend in its Operating Margin, which is currently at 11.78%. Another positive feature of the company, which again showcases the managements growth oriented policies, the consistency of services, the effective deployment of its manufacturing facilities and the range of products which it has been offering has helped the company show the financial accomplishments reflected in its financial statements, (Reynolds, Williams Savage, 2000). The management has also been efficiently managing and helping in the growth of companys Assets through proper planning and deployment of the assets for their growth and strength. This is reflected in the Asset Management policies and results which are showcased in the financial statements of the company. Asset Turnover is at 1.07, Inventory Turnover is reported at 10.44 and Receivables Turnover currently stands at 6.62. The efficiency of the management is also reflected in the 9.01 times turnover in the companys Property, Plant and Equipment, (Jorgenson Landon (ed.), 1993). When we look at the Financial Ratios of the company, we come across another bright spot in the managements acumen of managing people, finance and products. With a Quick Ratio of 0.65% and Current Ratio of 1.15%, the company has kept its lenders, investors and stakeholders satisfied and their loyalty has been reinforced in the managements policies by looking at the Net Current Assets to Total Assets Ratio at 4.36%. The Revenue to Assets ratio is also showing a healthy trend of the company at 0.94%. The management, as per (Richard (ed), 2014) not only kept the current assets under control, it was also instrumental in managing the debt situation of the company, by maintaining policies which were future oriented, provided growth of funds and kept the lenders loyal to the company. With a low ratio of 4.62 for Long Term Debt to Equity and maintaining Interest Coverage at 12.27 has been strengthening the companys future policies. The management also kept the Total Debt to Equity ratio at 4. 93, which is very close to the Long Term Debt to Equity ratio, (Richard (ed), 2014). Pro Forma Financial Statements Balance Sheet Income Statement Please Refer to Attached Excel Sheet. Ratio Analysis Liquidity Liquidity Ratio is the ratio between a companys liquid assets and its liabilities for a given period. For the current period ending 31 December 2015, this ratio for Lockheed Martin Corp stands at 0.65%. Financial Leverage The financial leverage ratio of Lockheed Martin Corp is the measure of the companys overall debt as compare with the assets of the company for a specific period. For the current period ending 31 December 2015, this ratio for Lockheed Martin Corp stands at 4.93%. Asset Management Asset Management Ratios measure the company management's success in managing its assets for generating revenues. These ratios are helpful in getting an insight into the success of the management's credit policy and inventory management. Under certain rules these ratios are also termed as Activity or Turnover Ratios. For the current period ending 31 December 2015, this ratio for Lockheed Martin Corp stands at 1.07. Profitability The companys Gross Margins and Operating Margin are the ratios which show the profitability of the company. For the current period ending 31 December 2015, these ratios for Lockheed Martin Corp stand at 11.27% and 11.78% respectively. Market Value The most common market value ratio is the Book value per share of a company. For the current period ending 31 December 2015, this ratio for Lockheed Martin Corp stands at 21.25%. Return On Equity For the current period ending 31 December 2015, this ratio for Lockheed Martin Corp stands at 110.97%. Economic Value Added For the current period ending 31 December 2015, this ratio for Lockheed Martin Corp stands at 38.93%. Synopsis Recommendations While analysing the financial data of Lockheed Martin Corp, it is evident that the company has been maintaining a robust financial, manpower and social governance culture, (Gibson Fraser, 2013). The loyalty of its lenders is evident from the fact that there are 1,400 institutions which have continuously reposed their faith in the abilities of Lockheed Martin Corp and its management. These institutions hold close to 82.83% of the companys share, numbering 286,310,309. In the current year, this faith of the institutions has shown a forward leap, when the shareholding pattern of the shares held by them surged to 90.58%. From the data released by NSY, this change has not resulted from the addition of new institutions, but has resulted because of an increased holding by the existing institutions, (Gibson Fraser, 2013). The robustness of the financial structure of the company is also shown by the surge in revenues for the period ending 31 December 2015 of three of the five segments of the company in comparison to revenues for period ending 31 December 2014, (Moens Jones (ed), 2013). These three segments are Aeronautics (from $14,920 million to $15,570); Mission Systems Training (from $7,147 million to $9,091); and Space Systems (from $8,065 million to $9,105). Only Information Systems Global Solutions (from $8,065 million to $9,105) and Missile Fire Control (from $8,065 million to $9,105) have shown a declining trend. Overall revenue receipts of the company have increased from $45,600 million to $46,132, (Moens Jones (ed), 2013). On the basis of these achievements which have become a kind of ritual for Lockheed Martin Corp, it is not out of context to recommend that this company can be treated as a role model not only for emerging entrepreneurs, management aspirants, share market investors and financial institutions but should also be considered as a worthy corporate citizen of the USA, a praiseworthy employer, a techno-giant of innovative ideas and a social corporation which has the welfare of society as its foremost goal. The advice of this author to investors, financial institutions and entrepreneurs is that they should look up to this company for emulating its ideas, ideologies and policies, (Schaffer, Agusti Dhooge, 2014). List of References Ault, H. J., Arnold, B. J. and Gest, G. (2010) Comparative income taxation: a structural analysis. (3rd ed.) Amsterdam: Kluwer Law International. Bakker, A. and Kloosterhof, S. (ed.). (2010) Tax risk management. Amsterdam: IBFD. Gibson, A. and Fraser, D. (2013) Business Law 2014. Frenchs Forest, NSW: Pearson Higher Education AU. Jorgenson, W. D. and Landon, R. (ed.). (1993) Tax reform and the cost of capital: an international comparison. Washington, DC: Brookings Institution Press. Moens, G. and Jones, R. (ed) (2013) International Trade and Business Law Review. Oxon: Routledge. Reynolds, W., Williams, A. J. and Savage, W. (2000) Your Own Business: A Practical Guide to Success. (3rd ed.) Sydney: Cengage Learning Australia. Richard, T.A. (ed) (2014) Professional Business Law Essays. New York: Richard TA. Schaffer, R., Agusti, F. and Dhooge, L. (2014) International Business Law and Its Environment. (9th ed.) Stamford, CT: Cengage Learning.