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Caterpillar Inc. (CAT)

Profitability Analysis

Difficulty: Beginner

Profitability ratios measure the company’s ability to generate profitable sales from its resources (assets).

Ratios (Summary)
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Return on Equity (ROE)
Return on Assets (ROA)

Ratios (Summary)

Caterpillar Inc., profitability ratios

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Return on Sales
	Gross profit margin
	Operating profit margin
	Net profit margin
	Return on Investment
	Return on equity (ROE)
	Return on assets (ROA)

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
Gross profit margin	Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures.	Caterpillar Inc.’s gross profit margin improved from 2016 to 2017 and from 2017 to 2018.
Operating profit margin	A profitability ratio calculated as operating income divided by revenue.	Caterpillar Inc.’s operating profit margin improved from 2016 to 2017 and from 2017 to 2018.
Net profit margin	An indicator of profitability, calculated as net income divided by revenue.	Caterpillar Inc.’s net profit margin improved from 2016 to 2017 and from 2017 to 2018.

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

Gross Profit Margin

Caterpillar Inc., gross profit margin calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Gross margin
	Sales of Machinery, Energy & Transportation
	Ratio
	Gross profit margin¹
	Benchmarks
	Gross Profit Margin, Competitors
	Illinois Tool Works Inc.

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 Gross profit margin = 100 × Gross margin ÷ Sales of Machinery, Energy & Transportation
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Gross profit margin	Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures.	Caterpillar Inc.’s gross profit margin improved from 2016 to 2017 and from 2017 to 2018.

Operating Profit Margin

Caterpillar Inc., operating profit margin calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Operating profit
	Sales of Machinery, Energy & Transportation
	Ratio
	Operating profit margin¹
	Benchmarks
	Operating Profit Margin, Competitors
	Illinois Tool Works Inc.
	Operating Profit Margin, Sector
	Industrial Engineering
	Operating Profit Margin, Industry
	Industrials

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 Operating profit margin = 100 × Operating profit ÷ Sales of Machinery, Energy & Transportation
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Operating profit margin	A profitability ratio calculated as operating income divided by revenue.	Caterpillar Inc.’s operating profit margin improved from 2016 to 2017 and from 2017 to 2018.

Net Profit Margin

Caterpillar Inc., net profit margin calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Profit (loss) attributable to common stockholders
	Sales of Machinery, Energy & Transportation
	Ratio
	Net profit margin¹
	Benchmarks
	Net Profit Margin, Competitors
	Illinois Tool Works Inc.
	Net Profit Margin, Sector
	Industrial Engineering
	Net Profit Margin, Industry
	Industrials

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

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

Return on Equity (ROE)

Caterpillar Inc., ROE calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Profit (loss) attributable to common stockholders
	Equity attributable to common stockholders
	Ratio
	ROE¹
	Benchmarks
	ROE, Competitors
	Illinois Tool Works Inc.
	ROE, Sector
	Industrial Engineering
	ROE, Industry
	Industrials

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

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

Return on Assets (ROA)

Caterpillar Inc., ROA calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Profit (loss) attributable to common stockholders
	Total assets
	Ratio
	ROA¹
	Benchmarks
	ROA, Competitors
	Illinois Tool Works Inc.
	ROA, Sector
	Industrial Engineering
	ROA, Industry
	Industrials

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

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

	Caterpillar Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality