Stock Analysis on Net
Stock Analysis on Net

Caterpillar Inc. (NYSE:CAT)

Analysis of Income Taxes

Microsoft Excel

Income Tax Expense (Benefit)

Caterpillar Inc., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
U.S. 1,627 1,055 766 18 405
Non-U.S. 1,592 1,255 1,283 1,031 1,261
State (U.S.) 154 134 76 31 52
Current tax provision 3,373 2,444 2,125 1,080 1,718
U.S. (391) (404) (387) (44) 17
Non-U.S. (164) 50 54 (34) (7)
State (U.S.) (37) (23) (50) 4 18
Deferred tax provision (benefit) (592) (377) (383) (74) 28
Provision for income taxes 2,781 2,067 1,742 1,006 1,746

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Current tax provision Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Caterpillar Inc. current tax provision increased from 2021 to 2022 and from 2022 to 2023.
Deferred tax provision (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Caterpillar Inc. deferred tax provision (benefit) increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Provision for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Caterpillar Inc. provision for income taxes increased from 2021 to 2022 and from 2022 to 2023.

Effective Income Tax Rate (EITR)

Caterpillar Inc., effective income tax rate (EITR) reconciliation

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
U.S. statutory tax rate 21.00% 21.00% 21.00% 21.00% 21.00%
Non-U.S. subsidiaries taxed at other than the U.S. rate 1.00% 2.70% 2.60% 7.10% 4.70%
State and local taxes, net of federal 0.70% 1.00% 0.30% 0.80% 0.80%
U.S. tax incentives -1.30% -1.90% -1.50% -1.30% -1.90%
Nondeductible goodwill 0.00% 1.80% 0.00% 0.00% 0.00%
Mandatory deemed repatriation of non-U.S. earnings 0.00% 0.00% 0.00% 0.00% -2.30%
Other, net -0.10% -1.00% -1.20% -2.40% 0.10%
Effective tax rate 21.30% 23.60% 21.20% 25.20% 22.40%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Effective tax rate Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Caterpillar Inc. effective tax rate increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Components of Deferred Tax Assets and Liabilities

Caterpillar Inc., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Tax carryforwards 1,389 1,349 1,380 1,346 1,218
Research expenditures 1,350 949 415 193 219
Postemployment benefits 656 728 959 1,315 1,321
Employee compensation and benefits 634 459 464 267 304
Warranty reserves 325 282 266 247 263
Post sale discounts 253 159 143 153 200
Lease obligations 144 144 159 154 157
Inventory valuation 138 147 — — —
Allowance for credit losses 109 113 106 126 171
Other, net 197 376 515 317 250
Deferred income tax assets, gross 5,195 4,706 4,407 4,118 4,103
Valuation allowance for deferred tax assets (934) (1,014) (1,028) (1,009) (928)
Deferred income tax assets 4,261 3,692 3,379 3,109 3,175
Capital and intangible assets, including lease basis differences (1,312) (1,401) (1,457) (1,526) (1,574)
Undistributed profits, including translation adjustments (401) (344) (289) (242) (312)
Other outside basis differences (267) (264) (264) (284) (257)
Bond discount (101) (107) (112) (117) (122)
Deferred income tax liabilities (2,081) (2,116) (2,122) (2,169) (2,265)
Deferred income taxes, net 2,180 1,576 1,257 940 910

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Deferred income tax assets, gross Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Caterpillar Inc. deferred income tax assets, gross increased from 2021 to 2022 and from 2022 to 2023.
Deferred income tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Caterpillar Inc. deferred income tax assets increased from 2021 to 2022 and from 2022 to 2023.
Deferred income taxes, net Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Caterpillar Inc. deferred income taxes, net increased from 2021 to 2022 and from 2022 to 2023.

Deferred Tax Assets and Liabilities, Classification

Caterpillar Inc., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Deferred income tax assets (included in Noncurrent deferred and refundable income taxes) 2,634 2,047 1,669 1,358 1,324
Deferred income tax liabilities (included in Other liabilities) 454 471 412 418 414

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Deferred income tax assets (included in Noncurrent deferred and refundable income taxes) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Caterpillar Inc. deferred income tax assets (included in Noncurrent deferred and refundable income taxes) increased from 2021 to 2022 and from 2022 to 2023.
Deferred income tax liabilities (included in Other liabilities) Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Caterpillar Inc. deferred income tax liabilities (included in Other liabilities) increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Adjustments to Financial Statements: Removal of Deferred Taxes

Caterpillar Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported) 87,476 81,943 82,793 78,324 78,453
Less: Noncurrent deferred tax assets, net 2,634 2,047 1,669 1,358 1,324
Total assets (adjusted) 84,842 79,896 81,124 76,966 77,129
Adjustment to Total Liabilities
Total liabilities (as reported) 67,973 66,052 66,277 62,946 63,824
Less: Noncurrent deferred tax liabilities, net 454 471 412 418 414
Total liabilities (adjusted) 67,519 65,581 65,865 62,528 63,410
Adjustment to Equity Attributable To Common Shareholders
Equity attributable to common shareholders (as reported) 19,494 15,869 16,484 15,331 14,588
Less: Net deferred tax assets (liabilities) 2,180 1,576 1,257 940 910
Equity attributable to common shareholders (adjusted) 17,314 14,293 15,227 14,391 13,678
Adjustment to Profit Attributable To Common Stockholders
Profit attributable to common stockholders (as reported) 10,335 6,705 6,489 2,998 6,093
Add: Deferred income tax expense (benefit) (592) (377) (383) (74) 28
Profit attributable to common stockholders (adjusted) 9,743 6,328 6,106 2,924 6,121

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Caterpillar Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Caterpillar Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net Profit Margin
Reported net profit margin 16.18% 11.85% 13.47% 7.68% 12.00%
Adjusted net profit margin 15.25% 11.19% 12.67% 7.49% 12.06%
Total Asset Turnover
Reported total asset turnover 0.73 0.69 0.58 0.50 0.65
Adjusted total asset turnover 0.75 0.71 0.59 0.51 0.66
Financial Leverage
Reported financial leverage 4.49 5.16 5.02 5.11 5.38
Adjusted financial leverage 4.90 5.59 5.33 5.35 5.64
Return on Equity (ROE)
Reported ROE 53.02% 42.25% 39.37% 19.56% 41.77%
Adjusted ROE 56.27% 44.27% 40.10% 20.32% 44.75%
Return on Assets (ROA)
Reported ROA 11.81% 8.18% 7.84% 3.83% 7.77%
Adjusted ROA 11.48% 7.92% 7.53% 3.80% 7.94%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Caterpillar Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Caterpillar Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Caterpillar Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Caterpillar Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Profit attributable to common stockholders 10,335 6,705 6,489 2,998 6,093
Sales of Machinery, Energy & Transportation 63,869 56,574 48,188 39,022 50,755
Profitability Ratio
Net profit margin1 16.18% 11.85% 13.47% 7.68% 12.00%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted profit attributable to common stockholders 9,743 6,328 6,106 2,924 6,121
Sales of Machinery, Energy & Transportation 63,869 56,574 48,188 39,022 50,755
Profitability Ratio
Adjusted net profit margin2 15.25% 11.19% 12.67% 7.49% 12.06%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Net profit margin = 100 × Profit attributable to common stockholders ÷ Sales of Machinery, Energy & Transportation
= 100 × 10,335 ÷ 63,869 = 16.18%

2 Adjusted net profit margin = 100 × Adjusted profit attributable to common stockholders ÷ Sales of Machinery, Energy & Transportation
= 100 × 9,743 ÷ 63,869 = 15.25%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Caterpillar Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation 63,869 56,574 48,188 39,022 50,755
Total assets 87,476 81,943 82,793 78,324 78,453
Activity Ratio
Total asset turnover1 0.73 0.69 0.58 0.50 0.65
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation 63,869 56,574 48,188 39,022 50,755
Adjusted total assets 84,842 79,896 81,124 76,966 77,129
Activity Ratio
Adjusted total asset turnover2 0.75 0.71 0.59 0.51 0.66

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Total asset turnover = Sales of Machinery, Energy & Transportation ÷ Total assets
= 63,869 ÷ 87,476 = 0.73

2 Adjusted total asset turnover = Sales of Machinery, Energy & Transportation ÷ Adjusted total assets
= 63,869 ÷ 84,842 = 0.75

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Caterpillar Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets 87,476 81,943 82,793 78,324 78,453
Equity attributable to common shareholders 19,494 15,869 16,484 15,331 14,588
Solvency Ratio
Financial leverage1 4.49 5.16 5.02 5.11 5.38
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 84,842 79,896 81,124 76,966 77,129
Adjusted equity attributable to common shareholders 17,314 14,293 15,227 14,391 13,678
Solvency Ratio
Adjusted financial leverage2 4.90 5.59 5.33 5.35 5.64

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to common shareholders
= 87,476 ÷ 19,494 = 4.49

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to common shareholders
= 84,842 ÷ 17,314 = 4.90

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Caterpillar Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Profit attributable to common stockholders 10,335 6,705 6,489 2,998 6,093
Equity attributable to common shareholders 19,494 15,869 16,484 15,331 14,588
Profitability Ratio
ROE1 53.02% 42.25% 39.37% 19.56% 41.77%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted profit attributable to common stockholders 9,743 6,328 6,106 2,924 6,121
Adjusted equity attributable to common shareholders 17,314 14,293 15,227 14,391 13,678
Profitability Ratio
Adjusted ROE2 56.27% 44.27% 40.10% 20.32% 44.75%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROE = 100 × Profit attributable to common stockholders ÷ Equity attributable to common shareholders
= 100 × 10,335 ÷ 19,494 = 53.02%

2 Adjusted ROE = 100 × Adjusted profit attributable to common stockholders ÷ Adjusted equity attributable to common shareholders
= 100 × 9,743 ÷ 17,314 = 56.27%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Profit attributable to common stockholders 10,335 6,705 6,489 2,998 6,093
Total assets 87,476 81,943 82,793 78,324 78,453
Profitability Ratio
ROA1 11.81% 8.18% 7.84% 3.83% 7.77%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted profit attributable to common stockholders 9,743 6,328 6,106 2,924 6,121
Adjusted total assets 84,842 79,896 81,124 76,966 77,129
Profitability Ratio
Adjusted ROA2 11.48% 7.92% 7.53% 3.80% 7.94%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROA = 100 × Profit attributable to common stockholders ÷ Total assets
= 100 × 10,335 ÷ 87,476 = 11.81%

2 Adjusted ROA = 100 × Adjusted profit attributable to common stockholders ÷ Adjusted total assets
= 100 × 9,743 ÷ 84,842 = 11.48%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.