Minicase 1 Manitowoc Company vs. Caterpillar Corp.Manitowoc Company and Caterpillar Corporation are both producers and sellers of largefixed assets. Caterpillar is substantially larger than Manitowoc. Financial informationtaken from each company's financial statements is provided here:

Instructions

(a) Calculate the following liquidity ratios and discuss the relative liquidity of the twocompanies:(1) Current(2) Acid-test(3) Current cash debt coverage(4) Receivables turnover(5) Inventory turnover

(b) Calculate the following solvency ratios and discuss the relative solvency of the twocompanies:(1) Debt to total assets(2) Times interest earned

(c) Calculate the following profitability ratios and discuss the relative profitability of thetwo companies:(1) Asset turnover(2) Profit margin(3) Return on assets(4) Return on common stockholders' equity

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Caterpillar (in millions) Manitowoc (in thousands) Financial Highlights 1995 1994 1995 1994 Cash and short-term investments $ 638 $ 419 $ 16,635 $ 16,163 Accounts receivable 4,285 4,290 51,011 29,500 Inventory 1,921 1,835 52,928 36,793 Other current assets 803 865 14,571 14,082 Current assets 7,647 7,409 135,145 96,538 Total assets 16,830 16,250 324,915 159,465 Current liabilities 6,049 5,498 110,923 54,064 Total liabilities 13,442 13,339 243,254 84,408 Total stockholders' equity 3,388 2,911 81,661 75,057 Sales 15,451 313,149 Cost of goods sold 12,000 237,679 Interest expense 191 1,865 Income tax expense 501 8,551 Net income 1,136 14,569 Cash provided from operations 2,190 16,367