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Northrop Grumman ( A Company

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Northrop Grumman (A Company to Invest In)
Barry Worrell
National University
FIN 609A
April 30, 2016

Purpose of Analysis:
The purpose of this document is to provide our Client an in-depth analysis, (including recommendation) as to whether they should or should not invest in Northrop Grumman Company.
Background and Brief History:
Northrop Grumman 's rich heritage includes almost two-dozen legacy companies which pioneered dramatic advances in technology that has changed the world. Some of their most notable highlights included transporting Charles Lindbergh across the Atlantic, landing astronauts on the moon, creating advanced electronic systems and information networks, and building stealthy flying wings.
On a more recent …show more content…

Financial Analysis:
Operating Performance Assessment
Northrop Grumman manage and assess our business based on their performance under contracts and programs (typically two or more closely-related contracts). Sales from their portfolio of long-term contracts are primarily recognized using the cost-to-cost method of percentage of completion accounting, but in some cases the units-of-delivery method of percentage of completion accounting is utilized. As a result, sales tend to fluctuate in concert with costs incurred across our large portfolio of contracts. Due to Federal Acquisition Regulation (FAR) rules that govern our U.S Government business and related Cost Accounting Standards (CAS), most types of costs are allocable to U.S. Government contracts, and we do not focus on individual cost groupings (such as manufacturing, engineering and design labor costs, subcontractor costs, material costs, overhead costs and general and administrative costs), as much as we do on total contract cost, which is the key driver of our sales and operating income.
In evaluating their operating performance, you will need to look primarily at changes in sales and operating income, including the effects of meaningful changes in operating income as a result of changes in contract estimates. Where applicable, significant fluctuations in operating performance attributable to

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