Caterpillar an Overview
About Caterpillar
Caterpillar is the world 's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. Caterpillar was founded in 1925, in Peoria, Illinois, which remains the base for much of today 's production. Their ideal environment stemmed from demand created during World War II, when large parts of Europe and Asia needed rebuilding. This paved the way for healthy growth and profitability right through to the early 1980s. Caterpillar as a global company from U.S base with 75% of employees and 70% of production residing in the U.S (Wall Street Journal,1992). It manufactures products in wholly owned or
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If the forecasted value of the peso in 90 days is sufficiently below the 90-day forward rate, the MNC may decide not to hedge. Forecasting may enable the firm to make a decision that will increase its cash flows.
• Short-term investment decision. Corporations sometimes have a substantial amount of excess cash available for a short time period. Large deposits can be established in several currencies. The ideal currency for deposits will (1) exhibit a high interest rate and (2) strengthen in value over the investment period.
EXAMPLE: Lafayette Co. has excess cash and considers depositing the cash into a British bank account. If the British pound appreciates against the dollar by the end of the deposit period when pounds will be withdrawn and exchanged for U.S. dollars, more dollars will be received. Thus, the firm can use forecasts of the pound’s exchange rate when determining whether to invest the short term cash in a British account or a U.S. account.
• Capital budgeting decision. When an MNC’s parent assesses whether to invest funds in a foreign project, the firm takes into account that the project may periodically require the exchange of currencies. The capital budgeting analysis can be completed only when all estimated cash flows are measured in the parent’s local currency.
EXAMPLE: Evansville Co. wants to determine whether to establish a subsidiary in Thailand. Forecasts
The exchange rates risk that is associated with economic, transaction, and translation exposure in Indian market. From the analysis, anticipate the fluctuations that seem to occur in the next 24 months
While the economic downturn slowed business activities worldwide in 2009, Caterpillar Inc. and John Deere continued to deliver strong financial results in 2010. Caterpillar and John Deere stayed true to their mission and vision and business strategies to achieve solid results as they go through 2010. Sales, profit margin, and earnings per share have increased for both Caterpillar and John Deere in 2010.
Caterpillar’s extensive competitive advantage allows the organisation to focus their attention on their main customers and huge efforts are being put in nationwide and globally with larger organisations and various countries around the globe.
Long the pride of Peoria, Illinois, Caterpillar, Inc. has established itself as a premier global manufacturing powerhouse whose commercial construction, transportation and engine solutions have come to symbolize durability, quality, and economic progress. This project paper examines the operational and financial numbers resulting from the company’s global sales reach. This paper reviews the publically available corporate financial results for the last decade. This financial data review will be expanded to incorporate how operating and investing activities and results have also impact the Caterpillar bottom line. The paper will conclude with a short summary analysis providing team conclusions to whether the Caterpillar
In order to reduce risk, the company is using two hedging derivatives: forward contracts and put options to sell dollars. The aim of the paper is to determine an appropriate hedging policy which answers two main questions: how much to hedge, and in what proportions of forwards
Virtually all general managers face capital-budgeting decisions in the course of their careers. Among the most common of these is the either/or choice about a capital investment. The following describes some general guidelines to orient the decision-maker in these situations.
Per contra, the Belgian Francs is in SHORT position: the company will loose money if Belgian Francs appreciate.
a. Capital budgeting is the process of analyzing projects and determining which ones to accept and include in the capital budget.
Caterpillar Incorporated is the world’s largest producer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Caterpillar's headquarters are located in Peoria, Illinois, United States. The company operates in three principal lines of business: machinery, engines, and financial products. The machinery segment includes the design, manufacture, marketing, and selling of all kinds of machinery such as; tractors, forestry and mining machinery, off-highway trucks, and paving products. The machinery segment also includes logistics services for other companies. The second business segment that Caterpillar operates in is engines. This includes the design, manufacture, marketing, and
their future, because the more successful their customer becomes, the more successful they become. This commitment to their customer is evident in all aspects of their business. One of their goals over the next five years is to become the global leader everywhere they do business. They claim their customers will make more money with them than with their competitors (Caterpillar Company, 2011). Elements of their business that will continue to set them apart from their competitors include having products, services and solutions that help their customers succeed. Their supply chain and distribution system give them a competitive advantage over their competitors, and they have a superior business model with proven results. Their mission is to "enable economic growth through infrastructure and energy development, and to provide solutions that protect people and preserve the planet" (Caterpillar
Caterpillar Inc. (CAT) is an American-based company and the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. CAT can trace its origins back to a 1925 merger between two tractor companies. However, the official genesis was in 1986 when the company reorganized under the Caterpillar Inc. name. The CAT headquarters are in Peoria, Illinois.
Caterpillar Inc. (Caterpillar) is an American company listed on the New York Stock Exchange. The company is the world’s largest manufacture of heavy-duty mining and construction equipment, natural gas and diesel engines and turbines. The
Capital budgeting is the making of long term planning decision for investment fixed assets and their financing. Capital budgeting decision is concerned with current investment that will pay for itself and yield an acceptable rate of return over its life span. Hampton (1992) defines capital budgeting as the decision making process by which firms evaluate the purchase of major fixed assets, including buildings, equipment. It also covers decisions to acquire other firms, either through purchase of their common stock or groups of assets that can be used to conduct an on-going business. It is a process used to evaluate capital expenditures. The primary objective in capital budgeting decision is
This chapter focuses on three aspects of foreign investment analysis that are infrequently considered in evaluating domestic projects: the difference between project and parent cash flows; incorporating political risks such as expropriation and currency controls; and factoring in inflation and exchange rate changes in cash flow estimates. It also evaluates the various methods used to incorporate in the investment analysis the additional risks encountered overseas. These points are brought out in the process of working through the International Diesel Corporation Case. The ability to perform a capital budgeting analysis is one of the most valuable skills we can provide our
Understanding and forecasting the foreign exchange rate are specially important for multi- national companies because they make important decisions based on forecasting information. I mention some of these decisions.