Financial statement analysis and common stock valuation

Aggregate Accruals

Financial reporting quality relates to the accuracy with which Caterpillar Inc. reported financial statements reflect its operating performance and to their usefulness for forecasting future cash flows.
Aggregate accruals deriving measures of the accrual component of Caterpillar Inc. earnings.

• Balance-Sheet-Based Accruals Ratio
• Cash-Flow-Statement-Based Accruals Ratio

Common-Size Balance Sheet: Assets

Assets components shown as percentage of total assets.

Analysis of Liquidity Ratios
Quarterly Data

Measures the adequacy of a Caterpillar Inc. cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Common-Size Income Statement
Quarterly Data

Income statement components (revenues and expenses) shown as percentage of total sales.

Capital Asset Pricing Model (CAPM)

CAPM is a theory concentrated with deriving the expected rates of return on risky assets based on the assets’ systematic risk levels. Systematic risk is the variability of returns that is due to macroeconomic factors that affect all risky assets. It cannot be eliminated by diversification.

• Rates of Return
• Variance and Covariance
• Systematic Risk (β) Estimation
• Expected Rate of Return

Analysis of Long-term (Investment) Activity Ratios

Measures how efficiently Caterpillar Inc. generates revenues from its investments in fixed or total assets.

• Long-term Activity Ratios (Summary)
• Net Fixed Asset Turnover
• Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
• Total Asset Turnover
• Equity Turnover

Balance Sheet: Assets
Quarterly Data

The assets reports major classes and amounts of resources owned or controlled by Caterpillar Inc..

Enterprise Value to FCFF (EV/FCFF)

Free cash flow to the firm is the cash flow available to the Caterpillar Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to The Firm (FCFF)
• Interest Paid, Net of Tax
• EV to FCFF Ratio, Current
• EV to FCFF Ratio, Historical

Analysis of Reportable Segments

Caterpillar Inc. operates in 4 segments: Construction Industries; Resource Industries; Power & Energy; and Financial Products Segment.

• Segment Profit Margin
• Segment Return on Assets (Segment ROA)
• Segment Asset Turnover
• Segment Capital Expenditures to Depreciation
• Sales and revenues
• Profit
• Assets
• Depreciation and amortization
• Capital expenditures

Analysis of Profitability Ratios
Quarterly Data

Measures the income of Caterpillar Inc. relative to its revenues and invested capital.

• Profitability Ratios (Summary)
• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin
• Return on Equity (ROE)
• Return on Assets (ROA)

Cash Flow Statement

The cash flow statement provides information about Caterpillar Inc. cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on Caterpillar Inc. balance sheet.

Analysis of Debt

• Total Debt (Carrying Amount)
• Total Debt (Fair Value)
• Weighted-average Interest Rate on Debt