Looking at profitability is a very important step in understanding a company. Profitability is essentially why the company exists and a key component in deciding whether to invest or to remain invested in a company. There are many metrics involved in calculating profitability, but for this article, I will look at Lockheed Martin‘s (LMT) earnings and earnings growth, profit margins, profitability ratios and cash flow.
Through the above-mentioned four main metrics, we will understand more about the company’s profitability. And by comparing this summary to other companies in the same sector, you will be able see which has been the most profitable.
Earnings and Earnings Growth
1. Earnings = Sales x Profit Margin
- 2010 – $45.803 billion x 6.38% = $2.926 billion
- 2011 – $46.499 billion x 5.71% = $2.655 billion
Lockheed Martin’s earnings decreased from $2.926 billion in 2010 to $2.655 billion in 2011 or an decrease of 10.2%.