Question
Please help with the below: Business Applications Operating leverage:Description of business for Caterpillar, Inc. With 2014 sales and revenues of $55.184 billion, Caterpillar is the
Please help with the below:
Business ApplicationsOperating leverage:Description of business for Caterpillar, Inc.
With 2014 sales and revenues of $55.184 billion,Caterpillaris the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three product segmentsResource Industries, Construction Industries, and Energy & Transportation (formerly Power Systems)and also provides financing and related services through its Financial Products segment. Caterpillar is also a leading U.S. exporter.
Description of business for the Kroger Company from its Form 10-K:
TheKroger Co.was founded in 1883 and incorporated in 1902. As of January 31, 2015, we are one of the largest retailers in the nation based on annualsales. . . .
As of January 31, 2015, Kroger operated, either directly or through its subsidiaries, 2,625 supermarkets and multi-department stores, 1,330 of which had fuel centers. Approximately48%of these supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our current strategy emphasizes self-development and ownership of store real estate. Our stores operate under several banners that have strong local ties and brand recognition. Supermarkets are generally operated under one of the following formats: combination food and drug stores ("combo stores"); multi-department stores; marketplace stores; or price impact warehouses.
Required
- Determine which company appears to have the higher operating leverage.
- Write paragraph or two explaining why the company you identified in Requirementamight be expected to have the higher operating leverage.
- If revenues for both companies increased by 5 percent, which company do you think would likely experience the greater percentage increase in operating earnings? Explain your answer
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