Financial research concept

Aerospace and Defense Contract Assets

Aerospace and defense contract assets are unbilled amounts typically created when revenue recognized on long-term contracts exceeds amounts billed to customers.

By Lee BaileyPublished Sep 22, 2026
Research context

See what supports this page, how current it is, and where comparable or historical context is available.

Research date
Sep 22, 2026Use the dated article and cited sources for the definition, examples, and stated limitations.
Operating-model context
12 connected conceptsPart of the reviewed Aerospace & Defense Program Economics; issuer definitions remain distinct where disclosed.
Company examples
1 reviewed companyRelationships reflect supported examples, not a normalized cross-company KPI ranking.
  1. Why it matters
  2. Investor caution
  3. Part of the Aerospace & Defense Program Economics
  4. See It in Company Research
  5. Continue Research

Aerospace and defense contract assets are unbilled amounts that arise when revenue recognized on long-term contracts exceeds amounts billed to customers.

Lockheed Martin reported $13.0 billion of contract assets at December 31, 2025. The company states that its contract assets are net of customer progress payments, performance-based payments, and certain advance payments.

Why it matters

Contract assets connect percentage-of-completion revenue recognition to billing and cash timing. Growth can reflect program progress that has been recognized as sales but not yet billed.

Investor caution

A contract asset is not the same as an accounts receivable balance. Billing rights, payment milestones, contract modifications, estimates, and program performance affect when the asset converts to a billed amount.

Source:

Large contract assets deserve program-level context, especially when recovery depends on future execution or contract changes.

Part of the Aerospace & Defense Program Economics

Connect backlog funding and conversion, contract and delivery mix, and long-cycle contract balances to understand aerospace and defense program economics.

How the model fits together
  • Backlog funding and conversion: Total backlog combines funded and unfunded firm orders under the issuer-specific backlog definition. Funded mix separates appropriated work from backlog still dependent on future funding, while 12-month and 24-month conversion estimates add expected revenue timing without turning backlog into guaranteed sales.
  • Contract and delivery mix: Fixed-price and cost-reimbursable sales mix show how contract risk is allocated, while product and services sales mix show what type of work is being delivered. These issuer-reported or analyst-derived mix views are not standardized peer profitability measures.
  • Contract-balance working capital: Contract assets represent recognized revenue that has not yet been billed, while contract liabilities reflect customer payments ahead of revenue recognition. They describe billing and cash timing on long-cycle work and are not backlog.

See It in Company Research

These companies are examples of how the concept is reported or discussed in public filings. Definitions can differ by issuer; these links open company research rather than a normalized metric comparison.

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