Analyzing Segment Disclosures

Raytheon Company disclosed the following data related to segment sales and operating profits for

fiscal 2018.

$ millions

Total Net Sales Operating Income

2018 2017 2016 2018 2017 2016

Integrated defense systems . . . . . . . . . . . $ 6,180 $ 5,804 $ 5,529 $1,023 $ 935 $971

Intelligence, information and services . . . 6,722 6,177 6,169 538 455 467

Missile systems . . . . . . . . . . . . . . . . . . . . 8,298 7,787 7,096 973 1,010 921

Space and airborne systems . . . . . . . . . . 6,748 6,430 6,182 884 862 808

Forcepoint. . . . . . . . . . . . . . . . . . . . . . . . . 634 608 586 5 33 90

Eliminations . . . . . . . . . . . . . . . . . . . . . . . (1,514)(1423)(1361)

(1,423) (1,361)

Total net sales . . . . . . . . . . . . . . . . . . . . . $27,068 $25,383 $24,201

The company also reported the following on its balance sheet.

$ millions 2018 2017

Receivables, net of allowance for doubtful accounts of $12 and $8. . . . . . . . . . . $1,648 $1,324

Required

a. Which segment is largest in 2018? Has this ranking changed over the threeyear period?

b. Calculate the operating profit margin for each segment and determine which segment is most profit

able in 2018 by this measure.

c. Which segments sales grew the most in 2018? How does this compare to 2017 sales growth?

d. Calculate the companys accounts receivable turnover and its days sales outstanding (DSO) for

2018. Does this seem reasonable? What might explain the DSO?

e. Assess the size of the receivables allowance. Does it seem reasonable?