SEC 10-K Part 4

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University of Maryland, Baltimore *

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Feb 20, 2024

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Jonelle White University of Maryland Global Campus ACCT 301 : Accounts for Non-accounting Managers Dr. Hilary Evbayiro 2/06/2024

Review of Corporation's Statement of Cash Flows After reviewing the SEC 10-K report for Caterpillar Inc, I would conclude that the company is in a good financial position. Their profits, sales and revenue for the company have steadily increased over a three-year period. The statement of Cash Flow purpose is to show the money coming in and going out of the company (Franklin et al., 2019). It shows what the company spends cash on, as well as how cash is made. The money coming into Caterpillar Inc is from the sale of equipment and machinery made, transportation provided and other financial products. A few sources of money coming in includes expenses, operating cost, and tax benefits. Conceptual explanation of report Reported in the operating activities section is the total sales and revenue for the fiscal year 2022 which is $59,427. In addition, the total operating cost of the company is reported which as well is $51,523. And finally, the operating profit which is calculated as sales and revenue minus total operating cost, profit equaling to $7,904. Not much was reported in the financial and investing activities section of the company SEC 10-K report. Items reported in the financial activities section are equity in profit (loss) of unconsolidated affiliated companies which is $19, profit/loss due to noncontrolling interests which is ($1), and common shares which is $526.9. The investment section for the company includes reported items such as interest expense excluding financial product $443 and other income $1,291 (Caterpillar Inc, 2022) . The goal and purpose of the statement is to illustrate the source of company’s cash and

aid in monitoring incoming and outgoing cash. This is important because it shows the financial strength and profitability of the company, and the longevity of the company. Indirect method and Adjusted Cash Flow Amount The net income is brought over from the income statement to the cash flow. The indirect method starts with the net income of the company, then adds or subtracts items to find the cash flow of the business. Caterpillar Inc. started with the net income then subtracted foreign currency translation and available-for-sale securities and added pension and other postretirement benefits and Derivative financial instruments. Below is the exact figures and indirect method used for Caterpillar Inc: Net Income $6,704 Foreign currency translation ($820) Pension and other postretirement benefits: $23 Derivative financial instruments: $31 Available-for-sale securities ($138) Deductions ($908) Net Cash Flow $5,800 Primary source of Cash The main source of cash for Caterpillar Inc. is Operating Activities with a profit of $7,904. The main operating activities for this company were the selling of machinery, energy and

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