Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Caterpillar Inc. (NYSE:CAT)

Analysis of Inventory

Advanced level

Inventory Disclosure

Caterpillar Inc., balance sheet: inventory

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Raw materials 4,021  4,263  3,382  2,802  2,102 
Work-in-process 1,052  1,147  2,674  2,254  1,719 
Finished goods 6,054  5,598  5,241  4,761  4,576 
Supplies 275  258  232  201  217 
Inventories 11,402  11,266  11,529  10,018  8,614 

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

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 decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.

Adjustment to Inventory: Conversion from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Inventories
Inventories at LIFO (as reported) 11,402  11,266  11,529  10,018  8,614 
Add: Inventory LIFO reserve 2,132  2,086  2,009  1,934  2,139 
Inventories at FIFO (adjusted) 13,534  13,352  13,538  11,952  10,753 
Adjustment to Current Assets
Current assets (as reported) 39,464  39,193  38,603  36,244  31,967 
Add: Inventory LIFO reserve 2,132  2,086  2,009  1,934  2,139 
Current assets (adjusted) 41,596  41,279  40,612  38,178  34,106 
Adjustment to Total Assets
Total assets (as reported) 78,324  78,453  78,509  76,962  74,704 
Add: Inventory LIFO reserve 2,132  2,086  2,009  1,934  2,139 
Total assets (adjusted) 80,456  80,539  80,518  78,896  76,843 
Adjustment to Equity Attributable To Common Stockholders
Equity attributable to common stockholders (as reported) 15,331  14,588  14,039  13,697  13,137 
Add: Inventory LIFO reserve 2,132  2,086  2,009  1,934  2,139 
Equity attributable to common stockholders (adjusted) 17,463  16,674  16,048  15,631  15,276 
Adjustment to Profit (loss) Attributable To Common Stockholders
Profit (loss) attributable to common stockholders (as reported) 2,998  6,093  6,147  754  (67)
Add: Increase (decrease) in inventory LIFO reserve 46  77  75  (205) (359)
Profit (loss) attributable to common stockholders (adjusted) 3,044  6,170  6,222  549  (426)

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

Caterpillar Inc.’s inventory value on Dec 31, 2020 would be $13,534  (in millions) if the FIFO inventory method was used instead of LIFO. Caterpillar Inc.’s inventories, valued on a LIFO basis, on Dec 31, 2020 were $11,402 . Caterpillar Inc.’s inventories would have been $2,132  higher than reported on Dec 31, 2020 if the FIFO method had been used instead.


Caterpillar Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

Caterpillar Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Current Ratio
Reported current ratio (LIFO) 1.53 1.47 1.37 1.35 1.22
Adjusted current ratio (FIFO) 1.62 1.55 1.44 1.42 1.31
Net Profit Margin
Reported net profit margin (LIFO) 7.68% 12.00% 11.86% 1.77% -0.19%
Adjusted net profit margin (FIFO) 7.80% 12.16% 12.01% 1.29% -1.19%
Total Asset Turnover
Reported total asset turnover (LIFO) 0.50 0.65 0.66 0.55 0.48
Adjusted total asset turnover (FIFO) 0.49 0.63 0.64 0.54 0.47
Financial Leverage
Reported financial leverage (LIFO) 5.11 5.38 5.59 5.62 5.69
Adjusted financial leverage (FIFO) 4.61 4.83 5.02 5.05 5.03
Return on Equity (ROE)
Reported ROE (LIFO) 19.56% 41.77% 43.79% 5.50% -0.51%
Adjusted ROE (FIFO) 17.43% 37.00% 38.77% 3.51% -2.79%
Return on Assets (ROA)
Reported ROA (LIFO) 3.83% 7.77% 7.83% 0.98% -0.09%
Adjusted ROA (FIFO) 3.78% 7.66% 7.73% 0.70% -0.55%

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

Financial 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 2018 to 2019 and from 2019 to 2020.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Caterpillar Inc.’s adjusted net profit margin ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Caterpillar Inc.’s adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
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 ratio decreased from 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc.’s adjusted ROE deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc.’s adjusted ROA deteriorated from 2018 to 2019 and from 2019 to 2020.

Caterpillar Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Current assets 39,464  39,193  38,603  36,244  31,967 
Current liabilities 25,717  26,621  28,218  26,931  26,132 
Liquidity Ratio
Current ratio1 1.53 1.47 1.37 1.35 1.22
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets 41,596  41,279  40,612  38,178  34,106 
Current liabilities 25,717  26,621  28,218  26,931  26,132 
Liquidity Ratio
Adjusted current ratio2 1.62 1.55 1.44 1.42 1.31

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

2020 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 39,464 ÷ 25,717 = 1.53

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 41,596 ÷ 25,717 = 1.62

Liquidity 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 2018 to 2019 and from 2019 to 2020.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Profit (loss) attributable to common stockholders 2,998  6,093  6,147  754  (67)
Sales of Machinery, Energy & Transportation 39,022  50,755  51,822  42,676  35,773 
Profitability Ratio
Net profit margin1 7.68% 12.00% 11.86% 1.77% -0.19%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted profit (loss) attributable to common stockholders 3,044  6,170  6,222  549  (426)
Sales of Machinery, Energy & Transportation 39,022  50,755  51,822  42,676  35,773 
Profitability Ratio
Adjusted net profit margin2 7.80% 12.16% 12.01% 1.29% -1.19%

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

2020 Calculations

1 Net profit margin = 100 × Profit (loss) attributable to common stockholders ÷ Sales of Machinery, Energy & Transportation
= 100 × 2,998 ÷ 39,022 = 7.68%

2 Adjusted net profit margin = 100 × Adjusted profit (loss) attributable to common stockholders ÷ Sales of Machinery, Energy & Transportation
= 100 × 3,044 ÷ 39,022 = 7.80%

Profitability 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 ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation 39,022  50,755  51,822  42,676  35,773 
Total assets 78,324  78,453  78,509  76,962  74,704 
Activity Ratio
Total asset turnover1 0.50 0.65 0.66 0.55 0.48
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Sales of Machinery, Energy & Transportation 39,022  50,755  51,822  42,676  35,773 
Adjusted total assets 80,456  80,539  80,518  78,896  76,843 
Activity Ratio
Adjusted total asset turnover2 0.49 0.63 0.64 0.54 0.47

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

2020 Calculations

1 Total asset turnover = Sales of Machinery, Energy & Transportation ÷ Total assets
= 39,022 ÷ 78,324 = 0.50

2 Adjusted total asset turnover = Sales of Machinery, Energy & Transportation ÷ Adjusted total assets
= 39,022 ÷ 80,456 = 0.49

Activity 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 ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 78,324  78,453  78,509  76,962  74,704 
Equity attributable to common stockholders 15,331  14,588  14,039  13,697  13,137 
Solvency Ratio
Financial leverage1 5.11 5.38 5.59 5.62 5.69
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets 80,456  80,539  80,518  78,896  76,843 
Adjusted equity attributable to common stockholders 17,463  16,674  16,048  15,631  15,276 
Solvency Ratio
Adjusted financial leverage2 4.61 4.83 5.02 5.05 5.03

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

2020 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to common stockholders
= 78,324 ÷ 15,331 = 5.11

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to common stockholders
= 80,456 ÷ 17,463 = 4.61

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.’s adjusted financial leverage ratio decreased from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Profit (loss) attributable to common stockholders 2,998  6,093  6,147  754  (67)
Equity attributable to common stockholders 15,331  14,588  14,039  13,697  13,137 
Profitability Ratio
ROE1 19.56% 41.77% 43.79% 5.50% -0.51%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted profit (loss) attributable to common stockholders 3,044  6,170  6,222  549  (426)
Adjusted equity attributable to common stockholders 17,463  16,674  16,048  15,631  15,276 
Profitability Ratio
Adjusted ROE2 17.43% 37.00% 38.77% 3.51% -2.79%

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

2020 Calculations

1 ROE = 100 × Profit (loss) attributable to common stockholders ÷ Equity attributable to common stockholders
= 100 × 2,998 ÷ 15,331 = 19.56%

2 Adjusted ROE = 100 × Adjusted profit (loss) attributable to common stockholders ÷ Adjusted equity attributable to common stockholders
= 100 × 3,044 ÷ 17,463 = 17.43%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Caterpillar Inc.’s adjusted ROE deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Profit (loss) attributable to common stockholders 2,998  6,093  6,147  754  (67)
Total assets 78,324  78,453  78,509  76,962  74,704 
Profitability Ratio
ROA1 3.83% 7.77% 7.83% 0.98% -0.09%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted profit (loss) attributable to common stockholders 3,044  6,170  6,222  549  (426)
Adjusted total assets 80,456  80,539  80,518  78,896  76,843 
Profitability Ratio
Adjusted ROA2 3.78% 7.66% 7.73% 0.70% -0.55%

Based on: 10-K (filing date: 2021-02-17), 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15).

2020 Calculations

1 ROA = 100 × Profit (loss) attributable to common stockholders ÷ Total assets
= 100 × 2,998 ÷ 78,324 = 3.83%

2 Adjusted ROA = 100 × Adjusted profit (loss) attributable to common stockholders ÷ Adjusted total assets
= 100 × 3,044 ÷ 80,456 = 3.78%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Caterpillar Inc.’s adjusted ROA deteriorated from 2018 to 2019 and from 2019 to 2020.