Caterpillar Inc

Caterpillar Inc.

First of all the liquidity ratios:

- Current ration for CAT is decreasing slightly from 2007 to 2009, but the company still able to pay its short- term obligation. Also, according to the table the current ratio for 2010 for CAT is 1.4 and the industry ratio is 1.4. That means the company is doing great in their work dealing with their cash.

Financial Condition Company Industry S&P 500

Debt/Equity Ratio 2.91 2.13 1.07

Current Ratio 1.4 1.4 1.4

Quick Ratio 1.0 0.9 1.0

http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=FinancialCondition&Symbol=CAT

- When we exclude inventory and other current assets and measure the Quick Ratio. It's clear that the company is improving from year to year, because the quick ratio increased from .82 to 1.06 which means the company able to pay its debts.

- The inventory turnover in 2007 was 6 days and in the 2009 decreased to 5 days and in 2010 is 3.5 days and the industry average is 3.9 days. Although a high ratio implies either strong sales or ineffective buying, High inventory levels are unhealthy. Therefore, the inventory turnover compared with the average is good.

Management Efficiency Company Industry S&P 500

Inventory Turnover 3.5 3.9 10.8

http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=ManagementEfficiency&Symbol=CAT

- Days sales outstanding (DOS) in 2007 was 134 days, however this number increased rapidly to 170 days. Honestly I do not know the reason but I think because of the financial crisis.

- The DSO can be used to determine whether a company is trying to disguise weak sales, or is generally being ineffective at bringing money in. For most businesses, DSO is looked at either quarterly or annually.

- The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset specifically property, plant and equipment (PP&E). In 2007 the company fixed-asset turnover ratio was 4.5, but this number decreased dramatically to 2.6 in 2009. That means the effective the investment in the fixed assets was better than 2009. And the same thing for the assets turnover. In 2007 was .8 and in 2009 was 0.54. Nowadays the ratio is .6 and the average industry is .8 days which is