FIN $586/686-$ International Financial Statement Analysis

Balance Sheet Ratios $$ Practice Exercise

Caterpillar, Inc

Consolidated Financial Position at December $31($Dollars in millions$)$

$20192018$

Assets

Current assets:

Cash and short$-$term investments $ $8,284$ $ $7,857$

Receivables $17,90417,452$

Prepaid expenses and other current assets $1,7391,765$

Inventories $11,26611,529$

Total current assets $39,19338,603$

Property, plant and equipment $$ net $12,90413,574$

Long$-$term receivables $$ trade and other $1,1931,161$

Long$-$term receivables $$ finance $12,65113,286$

Noncurrent deferred and refundable income taxes $1,4111,439$

Intangible assets $1,5651,897$

Goodwill $6,1966,217$

Other assets $3,3402,332$

Total assets $ $78,453$ $ $78,509$

Liabilities

Current liabilities:

Short term borrowing $ $5,166$ $ $5,723$

Accounts payable $5,9577,051$

Accrued expenses $5,3795,957$

Customer advances $1,1871,243$

Dividends payable $567495$

Other current liabilities $2,1551,919$

Long$-$term debt due within one year: $6,2105,830$

Total current liabilities $26,62128,218$

Long$-$term debt due after one year: $26,28125,000$

Liability for postemployment benefits $6,5997,455$

Other liabilities $4,3233,756$

Total liabilities $63,82464,429$

Commitments and contingencies $($Notes $21$ and $22)$

Shareholders$$ equity

Common stock of $$1\mathrm{.}00$ par value:

Authorized shares: $2,000,000,000$ Issued shares: $(2019$ and $2018814,894,624$ shares$)$ at paid$-$in amount $5,9355,827$

Treasury stock: $(2019-264,812,014$ shares; and $2018239,351,886$ shares$)$ at cost $(24,217)(20,531)$

Profit employed in the business $34,43730,427$

Accumulated other comprehensive income $($loss$)(1,567)(1,684)$

Noncontrolling interests $4141$

Total shareholders$$ equity $14,62914,080$

Total liabilities and shareholders$$ equity $ $78,453$ $ $78,509$

$1.$ Compute the following balance sheet ratios for Caterpillar, Inc for $2019$ and $2018$ and discuss the change in each ratio $($did it improve or deteriorate$)$:

a$.$ Current ratio

b$.$ Quick ratio

c$.$ Cash ratio

$$

d$.$ Long$-$term debt to equity ratio

e$.$ Debt to assets ratio

f$.$ Financial leverage ratio