Caterpillar Inc. (CAT) is one of the worlds largest manufacturers of construction and mining equipment with revenue
Question:
Caterpillar Inc. (CAT) is one of the world’s largest manufacturers of construction and mining equipment with revenue over $50 billion per year. The following year-end data were taken from a recent Caterpillar balance sheet (in millions):
a. Compute the working capital and the current ratio as of December 31, Year 1 and Year 2. Round to two decimal places.
b. What conclusions concerning the company’s ability to meet its short-term obligations can you draw from part (a)?
December 31 Year 2 Year 1 Current assets $39,193 $38,603 Current liabilities 26,621 28,218
Step by Step Answer:
a b Caterpillars working capital increased from 10385 million in Year 1 to 12572 million in Year 2 ...View the full answer
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
Students also viewed these Business questions
-
The following items were taken from a recent income statement of PepsiCo: Required Perform a horizontal analysis on each account. Round percentages to one decimal point (i.e., 10.1%). What...
-
The following items were taken from a recent cash flow statement. Note that different companies use slightly different titles for the same item. Without referring to Exhibit 1.5, mark each item in...
-
The following data were taken from recent annual reports of Southwest Airlines, which operates a low-fare airline service to over 50 cities in the United States. (a) Determine the number of times...
-
Analiza can paint a room in 3 hours. Leoben can do it for 2 hours. Walter can do the painting job in 5 hours. If all them worked together, how long will it take them to paint the room?
-
Discuss the ramifications of China's "one-child policy" with a friend or classmate. Do the problems caused by rapid population growth justify harsh measures to limit births? What might the world...
-
A business is considering making a bid to undertake a contract. Fulfilment of the contract will require the use of two types of raw material. Quantities of both of these materials are held by the...
-
What might be the differences between a nonprofit s initial board and the board that has been in place for twenty years?
-
(a) Develop a landing sequence that gives priority to those aircraft with the highest cost of slack time. For example, Flight 616s 18.75 minutes of slack time (22 Ë 3.25) times $300 per minute...
-
6. The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future...
-
Waith Manufacturing Companys data processing department was preparing to implement a new computerized production information system at its new Madison plant. The project was divided into two parts....
-
For a recent period, the balance sheet for Costco Wholesale Corporation (COST) reported accrued expenses of $3,176 million. For the same period, Costco reported income before income taxes of $4,737...
-
The stockholders equity T-accounts of I-Cards Inc. for the year ended December 31, 20Y9, are as follows. Prepare a statement of stockholders equity for the year ended December 31, 20Y9. Common Stock...
-
Comparative figures for Best Buy and RadioShack follow. Required 1. Compute the accounts receivable turnover for Best Buy and RadioShack for each of the two most recent years using the data shown. 2....
-
Describe your experience in using excel and other analytic software. Provide an example of a specific task or project that you have accomplished by using these tools.
-
The following information is taken from their latest financial statements: Financial information Annual gross income $48,000 Annual take-home income $35,000 Annual expenses (including taxes and debt...
-
To what extent should a restaurant manager involve subordinate staff in the analysis of variance proce
-
An asset that cost $ 1 3 , 2 0 0 with a residual value of $ 1 , 2 0 0 and a useful life of 1 0 years was amortized for three years using the straight - line method. In the fourth year, residual value...
-
An amphitheater shown below has 55 rows of seats with 32 seats in the first row, 34 in the second, 38 in the third, and so on. ? By using an appropriate standard engineering software such as MATLAB,...
-
Brianna wants to purchase a new set of 4 tires for her car. She identifies two stores that sell the specific tires she is looking for. Both stores sell the tires for $119 per tire. Store A charges an...
-
Use Stokes' Theorem to evaluate f(y+sin x) dx+(z+cos y) dy+rdz, where C is the rve r(t) = (sint, cost, sin 2t), t = [0, 2].
-
Josh Reilly is the owner of Dispatch Delivery Service. Recently Josh paid interest of $4,500 on a personal loan of $75,000 that he used to begin the business. Should Dispatch Delivery Service record...
-
On July 12, Reliable Repair Service extended an offer of $150,000 for land that had been priced for sale at $185,000. On September 3, Reliable Repair Service accepted the sellers counteroffer of...
-
On July 12, Reliable Repair Service extended an offer of $150,000 for land that had been priced for sale at $185,000. On September 3, Reliable Repair Service accepted the sellers counteroffer of...
-
Consider the following data for two risk factors (1 and 2) and two securities (J and L): A0 = 0.05 bj10.80 1 = 0.01 bj2 = 1.45 12 = 0.04 bL1 = 1.75 bL2 = 2.15 a. Compute the expected returns for both...
-
Year Cash Flow (A) Cash Flow (D) $- -$ 0 348,000 51,000 1234 47,000 24,200 2 67,000 22,200 67,000 19,700 14,800 442,000 Whichever project you choose, if any, you require a return of 14 percent on...
-
Determine the static-budget variance if there is a favourable sales-volume variance of $200,000 and a favourable flexible budget variance of $50,000. Indicate whether the variance is favourable or...
Study smarter with the SolutionInn App