With respect to short-term solvency, Caterpillar is in no danger. While the firm's inventory and receivables turn have been reduced as a result of the downturn, the current ratio has actually improved. In 2007, Cat's current ratio was 1.14, while at the end of 2008 it was 1.22, both of these being healthy figures. As further evidence of Caterpillar's financial strength, its accounts payable turnover improved during the period. Accounts payable increased just 2.2% while sales increased 14.1%. Caterpillar maintained its payments to suppliers even when its customers were delaying payments and its inventories were building up.
With respect to long-term solvency, long-term debt increased 28.07% and total liabilities increased 30.5%, both rates much faster than the growth in sales. Neither the 2007 nor 2008 income statement highlighted the firm's interest expense. However, it is worth noting that the company is highly levered. Total liabilities to total assets increased from 84% to 91%, both figures being high. The largest increases in liabilities were in long-term debt and in "other liabilities," the latter category increasing 142% in the year. These figures are not cause for immediate alarm, but clearly Caterpillar has...
Caterpillar Inc. Global Financial Prospectus, 2010 A financial and qualitative leader in product and services in the heavy equipment industry, Caterpillar has been an expert in construction and mining equipment, diesel and natural gas engines and industrial gas turbines for over 80 years. Outperformance of stated goals is consistent to Caterpillar's brand identity and expert financial outcomes in its manufacturer industry class. Subsidiaries Cat Financial, Caterpillar Logistics Services Inc., and Caterpillar Remanufacturing
While Caterpillar has its own financing arm, firms are not only dependent on Caterpillar to provide financing. Moreover, with interest rates at historic lows and capital investment low, the financing arm cannot be counted on to deliver strong top or bottom line growth. The present economic situation is a perfect storm for Caterpillar. Commodities prices have dropped dramatically over the past nine months. Credit is unavailable and when Caterpillar offers
Caterpillar The world of investing is full of choices. Selecting those areas which can provide above average returns requires focusing on corporations with: strong management, balance sheets and business models. These elements allow firms to increase its earnings, dividends and shareholder value. This is what some of the most successful corporations do to achieve these objectives. Since 1926, Caterpillar has been focused on providing tractors, construction equipment and other machinery to a
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