Use Caterpillar‘s 2007 & 2008 Financial statement to answer the following:
Summarize in a narrative the latest Trends in Caterpillar‘s Income Statement and Stock Price.
Sales and Accounts Receivable: Analyze the degree of growth or strength in their relationship and how if they appear to “be in balance”. Please comment on any abnormal or interesting issues you may uncover.
Sales and Inventories: Is the firm’s level of inventory in balance with their sales growth and strategy? Again, please note any peculiar anomalies that may be of interest or suspect.
Quality of Earnings: Examine the firm’s earnings and comment on their general health and likelihood that they are “repeatable” and long-term in nature.
Do a short analysis and prepare select comments on the following major ratios:
Short-Term Solvency: Current Ratio, Days Sales Outstanding, Inventory Turnover, and Days Accounts Payable Outstanding.
Long-Term Solvency: Interest Coverage, Operating Cash Flow to Total Liabilities.
Lastly, complete an analysis of Return on Equity and the “degree” of Financial Leverage the firm currently has and does it support its business strategy?
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