Questions relate to Caterpillar Stock (Q1 2018). All websites should show the sa

Question

Questions relate to Caterpillar Stock (Q1 2018). All websites should show the same values, however I am using MSN Money as the site that I get my data from for grading. Also note that when looking at financials, you will need to select the Quarterly button to get the quarterly results. Yahoo Stock Price History can also be helpful and you will want to use end-of-day close values.

Show and compute the following (don’t use Key Ratios precomputed from the site). Compute the ratios using the methods described in this class (which may not always give you the same number as shown in Key Ratios). In particular, many websites report Financial Ratios based on the last reported annual results, but in this assignment we are reporting ratios for Q1 2018. Note that sales = Total Revenue, and Shares outstanding is reported at the end of the Balance Sheet as “Ordinary Shares Outstanding”

Gross Margin (compute) Enter as a whole number (i.e. 18.2% would be entered as 18.2)=

Net Margin (compute) Enter as a whole number (i.e. 18.2% would be entered as 18.2)=

Inventory Turnover Ratio (compute) State as a decimal=

P/E Ratio (Compute) state as a decimal=

Explanation / Answer

Values are taken from MSN Money for the period Q1 FY18 (Values are in $ Millions except price and Earning per share) :

Total Revenue :12,859

Cost of Revenue : 8,566

Gross Profit= Total Revenue - Cost of Revenue

So Gross Profit = 12859 - 8566 = 4293

Now, Gross Margin = Gross Profit / Total Revenue

So Gross Margin = 4293 / 12859= 33.38

Net Income = 1,665

Net Margin = Net Income / Total Revenue

So Net Margin = 1665 / 12859 = 12.95

Inventory for starting of Q1 FY 18 =  Inventory for ending of Q4 FY 17 = 10,018 (a)

Inventory for ending of Q1 FY 18 = 10,947 (b)

Average Inventory = (a+b)/2

So Average Inventory = (10018+10947)/2 = 10482.5

Cost of Sales =  8,566

Inventory Turnover = Cost of Sales / Average inventory

So Inventory Turnover = 8556 / 10482.5 = 0.816

Price of Stock = 136.58

Earning per share (Diluted) = 2.74

P/E = 136.58/2.74 = 49.84 ( This is current P/E ratio)

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