This website uses cookies to ensure you have the best experience. Learn more

Caterpillar Incorporated Financial Essay

3634 words - 15 pages

Caterpillar Inc., probably better known as “CAT” throughout the world, headquartered in Peoria, Illinois, is a world leader in the manufacture of construction and mining equipment to include diesel and natural gas engines. It also has a financial services branch, Caterpillar Financial Services, earning approximately 7% of Caterpillar’s revenue by providing financing to many of Caterpillar’s customers who purchase its construction and mining equipment (Caterpillar, Inc., 2012).
Caterpillar, today, is an extremely profitable and successful corporation indicative of the results it reported in its most recent quarterly report. Its 2012 earnings per share of $2.54, a quarterly ...view middle of the document...

590 billion paying shareholders $1.98 earnings per share (John, 2012). Japan’s Komatsu, LTD. is Caterpillar’s biggest foreign competitor earned nearly $6 billion this quarter paying its shareholders approximately $.50 per share (Komatsu, 2012).
Caterpillar, Inc. is a solid, blue chip corporation having a very bright economic and financial future for 5 key reasons: analysis of its key financial statistics reveals a financially strong and stable corporation poised for growth; it is in a position to take advantage of projected U.S. economic growth; it has an exchange rate strategy in place to protect itself financially against currency fluctuations; its merger strategy past and present is aligned with its corporate strategy; and, Caterpillar has strategically positioned itself globally to maintain a competitive advantage over its competitors and take advantage of emerging markets. However, there is one glaring negative amongst all of Caterpillar’s positives: Caterpillar fails to address an exit strategy for risky markets especially China.
U.S. Economic Outlook and Caterpillar
The U.S. economy, now and in the future, appears to hold a lot of promise in terms of Caterpillar’s continued success. The Federal Reserve is doing everything in its power with monetary policy to stimulate the economy and Caterpillar should reap the benefits of its efforts. U.S. inflation and unemployment are two key factors the Federal Reserve uses to monitor the health of the economy to determine Federal Reserve economic policy, primarily the setting of interest rates having a direct effect on Caterpillar’s cost of money and capital expenditures.
Caterpillar, barring any unforeseen domestic or global economic calamities, can expect current and future interest rates to remain low. U.S. Government Consumer Price Index (CPI) figures released 16 September showed a .6% increase in the August CPI and for the last 12 months leading up to August, an unadjusted CPI of 1.7% (U.S., 2012). “Trust in Bernanke” is the phrase of the day regarding inflation. He feels even with the Fed’s zero interest rate policies inflation will remain in check for the time being (Walker, 2012).
However, Caterpillar should be on guard for inflation due to increases in the cost energy. Though energy forecasts are encouraging, the forecasts do not take into account world political events. The energy index, after declining for 4 consecutive months, increased at 5.6% during the month of August, raising a red flag although overall for the last 12 months the index is at -.6% (U.S., 2012). Even with the August increase, Caterpillar can expect energy prices to remain stable and perhaps decrease in the short term. November crude oil prices on the futures market, New York Mercantile Exchange, have already declined $3.75 to $88.14 a barrel. U.S. oil production is at a 15 year high meaning there will continue to be ample supplies of crude in the future (Washington Post, 2012).

Other Papers Like Caterpillar Incorporated Financial Essay

Case Of Saloman Vs. Saloman Co. And Case Of Macaura Vs. Northern Assurance Co

2470 words - 10 pages case of Caterpillar Financial Services (UK) Limited v Saenz Corp Limited [2012] is one of the exceptional cases in which the court exercised its discretion to pierce the veil. This decision highlights that although very rare the courts will exercise their jurisdiction to pierce the corporate veil. The Relevant Tests – Guidelines were laid down by some recent cases which sets the relevant tests that must be met before the corporate veil may be

Prime Time to Sharpen the Sword

1802 words - 8 pages industrial engines in one of the world’s larger Caterpillar dealerships by revenue and geography and through Battlefield – The CAT Rental Store operations in Canada. With the help of CIMCO Refrigeration, it also supplies refrigeration equipment used by the food and beverage industry and by the NHL to keep artificial ice surfaces frozen. Toromont was a spin-off of Enerflex, its natural business, in 2011. Enerflex and CIMCO made up Toromont’s Compression

Gaap vs. Ifrs

1329 words - 6 pages * Staff resources * Investor relations * Internal control environment * Compensation plans * Contract compliance * Training and communication The rules regarding revenue recognition under the IFRS versus GAAP have very industry detailed differences that are beyond the scope of this essay. GAAP revenue recognition controls are extensive and include a significant number of standards issued by the Financial Accounting Standards

Charles Darwin

1975 words - 8 pages Darwin didn't completely agree with that . Darwin's grandfather, Erasmus Darwin had written Zoonomia, on the laws of organic life, and had incorporated early ideas of evolution . He was also adamant on the existence of mutability of a species, seeing examples of this in transformations such of a caterpillar to a moth . Also, Charles Darwin was intensely inspired by Sir Charles Lyell's publication of The Principle of Geology. In this document, Lyell

Financial Ratio Analysis

2574 words - 11 pages get into the deep sight of financial statement and see the beautiful sight of the financial world is what the essay focuses about (Matsumoto, Melkote & James, 1995). This essay centers on demonstrating and understanding of the purpose of financial ratios analysis, applying a range of financial accounting ratios to analyze and interpret financial statements and trend analysis of financial statements, using these ratios to critically evaluate

Course Proposal Paper

4173 words - 17 pages , vendor and consumers. Tragically, in December 2013, overloaded systems and poor weather conditions fractured the integrity of FedEx. Reputable; as well as, financial losses were incurred in the aftermath. Recovery would take on the form of structural organizational change through information technology from its simplest form, automation. Then following through with rationalization, business process redesign, and if necessary paradigm shifts

Allen John

696 words - 3 pages Associate Level Material Appendix A Final Project Overview and Timeline Final Project Overview The final project for HSM 260 is a compilation of various financial aspects of a nonprofit organization. Nonprofit Organization Profile In 2000, XYZ Corporation was incorporated as a 501(c)3 nonprofit in the state of Texas. The organization’s mission is to provide psychiatric counseling services for residents of El Paso County. XYZ

Hsm260 App D

696 words - 3 pages Associate Level Material Appendix A Final Project Overview and Timeline Final Project Overview The final project for HSM 260 is a compilation of various financial aspects of a nonprofit organization. Nonprofit Organization Profile In 2000, XYZ Corporation was incorporated as a 501(c)3 nonprofit in the state of Texas. The organization’s mission is to provide psychiatric counseling services for residents of El Paso County. XYZ

Marketing Management Case Studies

2872 words - 12 pages Chapter 12 Case Study 1 1. What were some of the key steps that led to Caterpillar's becoming the industry leader in earth-moving machinery? First things first, CAT has unmatched quality and consistency; their product reliability and reputation was the key factor in their success. Caterpillar also invested a great amount of money on market research. They have and continue to innovate to meet the needs of their consumers. They also targeted

Magnolia Therapeutic Solution Case Study

924 words - 4 pages organization under non-profit ideals and generously accepted a large government donation. Sadly is the downfall of an assumption that cost Magnolia Therapeutic Solutions to discontinue services that helped so many clients involved. The intent of this essay will explore the problems and concerns of the organization, the decisions made affecting organizational infrastructure, and risks taken within management. Problems and Concerns According to the Mayo

Visa Mastercard

772 words - 4 pages USA V. VISA U.S.A. INC., VISA INTERNATIONAL CORP., AND MASTERCARD INTERNATIONAL INCORPORATED In 1998 USA filed a complaint against Visa and MasterCard re their dual governance and exclusionary rules of combinations and conspiracy in restraint of trade. (DOJ, 1998) Essay Plan My motivation for choosing the abovementioned case comes from my interest in the financial services market, its regulations and their implications on consumers. This

Related Essays

Caterpillars International Strategy Essay

4246 words - 17 pages Caterpillar by using its context as a platform for applying relevant literature. Worried about your Essay? Help is here for you! Get your coursework back on track with one of our essay services. Look below to find out how we can help. Essay Writing Service Essay Marking Service Place an Order Custom Written Work Guaranteed on Time Get The Grade You ordered Caterpillar history For clarity reasons it is considered necessary to offer a brief

Marketing Management Cat. Inc Essay

2241 words - 9 pages Caterpillar is an American organization which plans, makes, markets and offers apparatus, motors, financial and insurance to clients through an overall merchant network Caterpillar is the world's driving producer of development and mining hardware, diesel and regular gas motors, mechanical gas turbines and diesel-electric locomotives. With more than US$89 billion in resources, Caterpillar was positioned number one in its industry and number 44

Larsen And Toubro Essay

1028 words - 5 pages biscuits, soaps, glass and hydrogenated oils. Signed an agreement with Caterpillar Tractor Company, USA, for marketing earth moving equipment. At the end of the war large number of war-surplus Caterpillar Equipment, available at attractive prices. The finances required were beyond the capacity of the partners. This promoted them to raise additional equity capital. On February 1946, Larsen & Toubro private limited was incorporated. Mission

Business Paper

1012 words - 5 pages Decoding Financial Statements HW1: General Electric 1. What is General Electric’s core business? General Electric Company is one of the largest and most diversified technology and financial services companies in the world. With products ranging from aircraft engines (accounting for 15% of the total revenue), power generation (accounting for 17% of the total revenue), oil and gas production equipment’s (accounting for 11% of the total