Analysis of Inventory
Inventory Disclosure
Caterpillar Inc., balance sheet: inventory
US$ in millions
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
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
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
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
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
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
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)
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)
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. |