The And Construction Machinery Industry

The threat of substitute products is low to Caterpillar. This is due to organisation’s use of the most efficient technology for the associated cost of operations. There is no other viable option for buyers to consider the task to be completed in a resourceful and more timely manner.

Total asset turnover : This ratio measures the efficiency of a company’s use of its assets

To consider this we need cost of goods sold; beginning and ending inventory. The higher the ratio or lower average days in inventory suggest that management is reducing the amount of inventory on relative to sales.

This ratio is similar to ROA except that it shows only the return on the resource contributed by the shareholders. Home Depot maintained steady ratio the last two years while Lowe’s has been decreasing over the past three years.

With this company the inventory management ratios further indicate that there may be an issue with inventory and inventory controls. The inventory turnover ratio is lower than the industry average and the days’ sales in inventory are high. A company wants to turn inventory quickly to reduce storage costs, and

A third activity ratio is the inventory turnover ratio, which indicates the effectiveness with which the company is employing inventory. Since inventory is recorded on the balance sheet at cost (not at its sales value), it is advisable to use cost of goods sold as the measure of activity. The inventory turnover figure is calculated by dividing cost of goods sold by inventory:

Abbott’s fixed asset and total asset turnover ratios can tell us how well the firm uses its assets to generate revenue. The fixed asset ratio provides the proportion of sales to fixed assets and tells us how much revenue is

Accounts receivable turnover measures the average time it takes for a firm to collect on credit sales. Harley Davidson's accounts receivable turnover rate is 6.75 times for 2001 and 8.74 times for 2000. This accounts receivable turnover rate seems low and would indicate that Harley Davidson is able to turn their receivables into cash quickly.

Asset utilization ratios measure how quickly a company is able to turn over their receivables, inventory, and other assets. The faster the company is able to turn over their assets, the more efficiently the company is running because they

For the last 90 years, Caterpillar Inc. continues making growth possible while promoting constructive change throughout the world. However, customers turn to Caterpillar for the assistance of expanding infrastructure, energy, and natural resources. Sales and revenues for 2014 were $55.184 billion netting $3.695 billion, which were just below 2013 numbers of $55.656 billion resulting in $3.789 billion. Caterpillar is the front-runner for the manufacturing of “construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives” (Caterpillar, n.d.). Caterpillar mainly functions through its three product divisions of construction industries, resource industries and energy, and transportation (Company, n.d.).

Asset turnover ratio is also increasing in 1994. It shows that total assets are being efficiently used in producing revenues.

Caterpillar’s goal in competing in a global market was to seek new markets and increase its revenues. High R&D and high capital intensity of Caterpillar’s business, and homogenous customer needs favored the adoption of an aggregation strategy. Caterpillar had recognized that due to its industry focus and worldwide product standardization policies, there were significant potential savings through economies of scale and scope to be exploited by international

Caterpillar is an American company that manufactures construction and mining equipment. The company operates in a mature and cyclical product market and has underwent various restructuring plans. In the early 1980s and 1990s, Caterpillar was nearly put out of business due to the intense competition it faced. The entrance of Komatsu, a rival Japanese company, threatens Caterpillar’s position in the market. With Caterpillar refusing to lower its premium prices at that time while Komatsu offers relatively lower prices for similar products, the latter was slowly gaining the market

Total asset turnover is a ratio that narrates the amount of sales generated for every unit of the asset. In 2012 , an asset turnover ratio for Axiata is 0.41 means Axiata can produce $0.41 for every $1 worth of assets. In general, the higher the ratio means the company is more effective at using its assets. But whether a particular ratio is good or bad differs on the industry in which your company works. Furthermore,some industries are simply more asset-intensive than others ,so their total turnover ratios will be lower.

The asset turnover ratio shows that they are effective in using their assets to produce more income. As it can be looked at in-terms of, for every DKK invested how much turnover is generated.