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Microsoft Excel LibreOffice Calc

Caterpillar Inc. (CAT)


Analysis of Inventory

Difficulty: Advanced


Inventory Accounting Policy

Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the last-in, first-out (LIFO) method. The value of inventories on the LIFO basis represented about 65 percent of total inventories at December 31, 2018 and 2017.

If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,009 million and $1,934 million higher than reported at December 31, 2018 and 2017, respectively.

Source: 10-K (filing date: 2019-02-14).


Inventory Disclosure

Caterpillar Inc., Statement of Financial Position, Inventory

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Raw materials hidden hidden hidden hidden hidden
Work-in-process hidden hidden hidden hidden hidden
Finished goods hidden hidden hidden hidden hidden
Supplies hidden hidden hidden hidden hidden
Inventories hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

Item Description The company
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Caterpillar Inc.’s inventories increased from 2016 to 2017 and from 2017 to 2018.

Adjustment to Inventory: from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Adjustment to Inventories
Inventories at LIFO (as reported) hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden
Inventories at FIFO (adjusted) hidden hidden hidden hidden hidden
Adjustment to Current Assets
Current assets (as reported) hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden
Current assets (adjusted) hidden hidden hidden hidden hidden
Adjustment to Total Assets
Total assets (as reported) hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden
Total assets (adjusted) hidden hidden hidden hidden hidden
Adjustment to Equity Attributable To Common Stockholders
Equity attributable to common stockholders (as reported) hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden
Equity attributable to common stockholders (adjusted) hidden hidden hidden hidden hidden
Adjustment to Profit (loss) Attributable To Common Stockholders
Profit (loss) attributable to common stockholders (as reported) hidden hidden hidden hidden hidden
Add: Increase (decrease) in inventory LIFO reserve hidden hidden hidden hidden hidden
Profit (loss) attributable to common stockholders (adjusted) hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

Caterpillar Inc.’s inventory value on Dec 31, 2018 would be $13,538  (in millions) if the FIFO inventory method was used instead of LIFO. Caterpillar Inc.’s inventories, valued on a LIFO basis, on Dec 31, 2018 were $11,529 . Caterpillar Inc.’s inventories would have been $2,009  higher than reported on Dec 31, 2018 if the FIFO method had been used instead.


Caterpillar Inc., Financial Data: Reported vs. Adjusted


Adjusted Ratios: LIFO vs. FIFO (Summary)

Caterpillar Inc., adjusted ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Current Ratio
Reported current ratio (LIFO) hidden hidden hidden hidden hidden
Adjusted current ratio (FIFO) hidden hidden hidden hidden hidden
Net Profit Margin
Reported net profit margin (LIFO) hidden hidden hidden hidden hidden
Adjusted net profit margin (FIFO) hidden hidden hidden hidden hidden
Total Asset Turnover
Reported total asset turnover (LIFO) hidden hidden hidden hidden hidden
Adjusted total asset turnover (FIFO) hidden hidden hidden hidden hidden
Financial Leverage
Reported financial leverage (LIFO) hidden hidden hidden hidden hidden
Adjusted financial leverage (FIFO) hidden hidden hidden hidden hidden
Return on Equity (ROE)
Reported ROE (LIFO) hidden hidden hidden hidden hidden
Adjusted ROE (FIFO) hidden hidden hidden hidden hidden
Return on Assets (ROA)
Reported ROA (LIFO) hidden hidden hidden hidden hidden
Adjusted ROA (FIFO) hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Caterpillar Inc.’s adjusted current ratio improved from 2016 to 2017 and from 2017 to 2018.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Caterpillar Inc.’s adjusted net profit margin improved from 2016 to 2017 and from 2017 to 2018.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Caterpillar Inc.’s adjusted total asset turnover improved from 2016 to 2017 and from 2017 to 2018.
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.’s adjusted financial leverage increased from 2016 to 2017 but then declined significantly from 2017 to 2018.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc.’s adjusted ROE improved from 2016 to 2017 and from 2017 to 2018.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc.’s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018.

Caterpillar Inc., Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Current assets hidden hidden hidden hidden hidden
Current liabilities hidden hidden hidden hidden hidden
Ratio
Current ratio1 hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets hidden hidden hidden hidden hidden
Current liabilities hidden hidden hidden hidden hidden
Ratio
Adjusted current ratio2 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Caterpillar Inc.’s adjusted current ratio improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Profit (loss) attributable to common stockholders hidden hidden hidden hidden hidden
Sales of Machinery, Energy & Transportation hidden hidden hidden hidden hidden
Ratio
Net profit margin1 hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted profit (loss) attributable to common stockholders hidden hidden hidden hidden hidden
Sales of Machinery, Energy & Transportation hidden hidden hidden hidden hidden
Ratio
Adjusted net profit margin2 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

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

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

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Caterpillar Inc.’s adjusted net profit margin improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden
Ratio
Total asset turnover1 hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden
Ratio
Adjusted total asset turnover2 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

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

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

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Caterpillar Inc.’s adjusted total asset turnover improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Total assets hidden hidden hidden hidden hidden
Equity attributable to common stockholders hidden hidden hidden hidden hidden
Ratio
Financial leverage1 hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets hidden hidden hidden hidden hidden
Adjusted equity attributable to common stockholders hidden hidden hidden hidden hidden
Ratio
Adjusted financial leverage2 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to common stockholders
= hidden ÷ hidden = hidden

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

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.’s adjusted financial leverage increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Profit (loss) attributable to common stockholders hidden hidden hidden hidden hidden
Equity attributable to common stockholders hidden hidden hidden hidden hidden
Ratio
ROE1 hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted profit (loss) attributable to common stockholders hidden hidden hidden hidden hidden
Adjusted equity attributable to common stockholders hidden hidden hidden hidden hidden
Ratio
Adjusted ROE2 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

1 ROE = 100 × Profit (loss) attributable to common stockholders ÷ Equity attributable to common stockholders
= 100 × hidden ÷ hidden = hidden

2 Adjusted ROE = 100 × Adjusted profit (loss) attributable to common stockholders ÷ Adjusted equity attributable to common stockholders
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc.’s adjusted ROE improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Profit (loss) attributable to common stockholders hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden
Ratio
ROA1 hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted profit (loss) attributable to common stockholders hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden
Ratio
Adjusted ROA2 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

1 ROA = 100 × Profit (loss) attributable to common stockholders ÷ Total assets
= 100 × hidden ÷ hidden = hidden

2 Adjusted ROA = 100 × Adjusted profit (loss) attributable to common stockholders ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc.’s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018.