Stock Analysis on Net

Caterpillar Inc. (NYSE:CAT)

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Analysis of Income Taxes

Microsoft Excel

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Income Tax Expense (Benefit)

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

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
U.S.
Non-U.S.
State (U.S.)
Current tax provision
U.S.
Non-U.S.
State (U.S.)
Deferred tax provision (benefit)
Provision for income taxes

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

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 decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Deferred tax provision (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Caterpillar Inc. deferred tax provision (benefit) decreased from 2019 to 2020 and from 2020 to 2021.
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 decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Effective Income Tax Rate (EITR)

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

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
U.S. statutory tax rate
Non-U.S. subsidiaries taxed at other than the U.S. rate
State and local taxes, net of federal
Interest and penalties, net of tax
U.S. tax incentives
Net excess tax benefits from stock-based compensation
Prior year tax adjustments
Mandatory deemed repatriation of non-U.S. earnings
Valuation allowances
Other, net
Effective tax rate, before U.S. deferred tax rate change
U.S. deferred tax rate change
Effective tax rate

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Effective tax rate, before U.S. deferred tax rate change Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Caterpillar Inc. effective tax rate, before U.S. deferred tax rate change increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.

Components of Deferred Tax Assets and Liabilities

Caterpillar Inc., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Tax carryforwards
Postemployment benefits other than pensions
Employee compensation and benefits
Research expenditures
Intercompany prepayments
Warranty reserves
Lease obligations
Post sale discounts
Pension
Allowance for credit losses
Other, net
Deferred income tax assets, gross
Valuation allowance for deferred tax assets
Deferred income tax assets
Capital and intangible assets, including lease basis differences
Other outside basis differences
Translation
Bond discount
Undistributed profits of non-U.S. subsidiaries
Deferred income tax liabilities
Deferred income taxes, net

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

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 2019 to 2020 and from 2020 to 2021.
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 decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
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 2019 to 2020 and from 2020 to 2021.

Deferred Tax Assets and Liabilities, Classification

Caterpillar Inc., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Deferred income tax assets (included in Noncurrent deferred and refundable income taxes)
Deferred income tax liabilities (included in Other liabilities)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

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 2019 to 2020 and from 2020 to 2021.
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 2019 to 2020 but then decreased significantly from 2020 to 2021.

Adjustments to Financial Statements: Removal of Deferred Taxes

Caterpillar Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Adjustment to Total Assets
Total assets (as reported)
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Equity Attributable To Common Shareholders
Equity attributable to common shareholders (as reported)
Less: Net deferred tax assets (liabilities)
Equity attributable to common shareholders (adjusted)
Adjustment to Profit Attributable To Common Stockholders
Profit attributable to common stockholders (as reported)
Add: Deferred income tax expense (benefit)
Profit attributable to common stockholders (adjusted)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).


Caterpillar Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Caterpillar Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net Profit Margin
Reported net profit margin
Adjusted net profit margin
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

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 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Caterpillar Inc. adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.
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 decreased from 2019 to 2020 and from 2020 to 2021.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc. adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc. adjusted ROA deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Caterpillar Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Profit attributable to common stockholders
Sales of Machinery, Energy & Transportation
Profitability Ratio
Net profit margin1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted profit attributable to common stockholders
Sales of Machinery, Energy & Transportation
Profitability Ratio
Adjusted net profit margin2

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Net profit margin = 100 × Profit attributable to common stockholders ÷ Sales of Machinery, Energy & Transportation
= 100 × ÷ =

2 Adjusted net profit margin = 100 × Adjusted profit attributable to common stockholders ÷ Sales of Machinery, Energy & Transportation
= 100 × ÷ =

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 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Total asset turnover = Sales of Machinery, Energy & Transportation ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Sales of Machinery, Energy & Transportation ÷ Adjusted total assets
= ÷ =

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 deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Total assets
Equity attributable to common shareholders
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets
Adjusted equity attributable to common shareholders
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to common shareholders
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to common shareholders
= ÷ =

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 decreased from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Profit attributable to common stockholders
Equity attributable to common shareholders
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted profit attributable to common stockholders
Adjusted equity attributable to common shareholders
Profitability Ratio
Adjusted ROE2

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 ROE = 100 × Profit attributable to common stockholders ÷ Equity attributable to common shareholders
= 100 × ÷ =

2 Adjusted ROE = 100 × Adjusted profit attributable to common stockholders ÷ Adjusted equity attributable to common shareholders
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc. adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in millions)
Profit attributable to common stockholders
Total assets
Profitability Ratio
ROA1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted profit attributable to common stockholders
Adjusted total assets
Profitability Ratio
Adjusted ROA2

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 ROA = 100 × Profit attributable to common stockholders ÷ Total assets
= 100 × ÷ =

2 Adjusted ROA = 100 × Adjusted profit attributable to common stockholders ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc. adjusted ROA deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.