Financial Performance Measures in Order Term Paper

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7% in 2003 to 8.3% in 2004, and has climbed to the number of 9.2% in the latest fiscal year. Thus, the company has achieved better operating profit compared to Northrop Grumman company.

It is not possible to examine financial and operating position of the company by one or two ratios as the profitability and revenues are not always reflective of the true company ability to exploit and utilize assets available to the company. Asset utilization is the ratio reflecting the management skills of the company to generate revenues compared to the value of assets the company has, or the ratio of total sales to the value of total assets. Lockheed Martin company has achieved the following asset utilization ratios: 1.21 in 2003, 1.39 in 2004 and 1.

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34 in 2005. Thus, the company exploits assets efficiently, but the asset utilization coefficient has decreased slightly in the last years. Northrop Grumman company has achieved 1.06 asset utilization ratio in the year of 2004 and 1.087 in the year of 2005. Thus, the Lockheed Martin company is more capable of generating more revenues for each dollar of assets the company possesses, though the total revenues of the companies are not significantly different. The company has also been decreasing in the recent past its' total debt to equity ratio and thus funded growth without extensive borrowing.

Based on the two ratios, operating profitability and asset utilization, Lockheed Martin company is more well managed, is better.....

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