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Caterpillar Altman Z-Score

: 2.76 (As of Today)
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Warning Sign:

Altman Z-score of 2.73 is in the grey area. This implies that the company is under some kind of financial stress. If it is below 1.8, the company may face bankruptcy risk.

Caterpillar has a Altman Z-Score of 2.76, indicating it is in Grey Zones. This implies that Caterpillar is in some kind of financial stress. If it is below 1.81, the company may face bankrupcy risk.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Caterpillar's Altman Z-Score or its related term are showing as below:

CAT' s Altman Z-Score Range Over the Past 10 Years
Min: 1.09   Med: 2.08   Max: 3.24
Current: 2.73

During the past 13 years, Caterpillar's highest Altman Z-Score was 3.24. The lowest was 1.09. And the median was 2.08.


Caterpillar Altman Z-Score Historical Data

The historical data trend for Caterpillar's Altman Z-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Caterpillar Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Altman Z-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 2.31 2.43 2.60 2.51 2.83

Caterpillar Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Altman Z-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 2.77 2.76 2.83 2.97 2.80

Competitive Comparison

For the Farm & Heavy Construction Machinery subindustry, Caterpillar's Altman Z-Score, along with its competitors' market caps and Altman Z-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Caterpillar Altman Z-Score Distribution

For the Farm & Heavy Construction Machinery industry and Industrials sector, Caterpillar's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Caterpillar's Altman Z-Score falls into.



Caterpillar Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

Caterpillar's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.1605+1.4*0.5087+3.3*0.1094+0.6*1.3833+1.0*0.6662
=2.76

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Jun. 2022:
Total Assets was $81,107 Mil.
Total Current Assets was $41,982 Mil.
Total Current Liabilities was $28,963 Mil.
Retained Earnings was $41,263 Mil.
Pre-Tax Income was 2096 + 1999 + 2562 + 1775 = $8,432 Mil.
Interest Expense was -108 + -109 + -112 + -114 = $-443 Mil.
Revenue was 14247 + 13589 + 13798 + 12397 = $54,031 Mil.
Market Cap (Today) was $90,394 Mil.
Total Liabilities was $65,348 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(41982 - 28963)/81107
=0.1605

X2=Retained Earnings/Total Assets
=41263/81107
=0.5087

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(8432 - -443)/81107
=0.1094

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=90393.883/65348
=1.3833

X5=Revenue/Total Assets
=54031/81107
=0.6662

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Caterpillar has a Altman Z-Score of 2.76 indicating it is in Grey Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Caterpillar  (NYSE:CAT) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Caterpillar Altman Z-Score Related Terms

Thank you for viewing the detailed overview of Caterpillar's Altman Z-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


Caterpillar Business Description

Caterpillar logo
Address
510 Lake Cook Road, Suite 100, Deerfield, IL, USA, 60015
Caterpillar is an iconic manufacturer of heavy equipment, power solutions, and locomotives. It is currently the world's largest manufacturer of heavy equipment with over 13% market share in 2021. The company is divided into four reportable segments: construction industries, resource industries, energy and transportation, and Caterpillar Financial Services. Its products are available through a dealer network that covers the globe with over 2,000 branches maintained by 168 dealers. Caterpillar Financial Services provides retail financing for machinery and engines to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Caterpillar product sales.
Executives
Schaupp William E officer: Chief Accounting Officer PPG INDUSTRIES, INC. ONE PPG PLACE PITTSBURGH PA 15272
Maclennan David director 14701 CHARLSON ROAD EDEN PRAIRIE MN 55347
Johnson Gerald director 300 RENAISSANCE CENTER M/C: 482-C23-A68 DETROIT MI 48265
Fassino Anthony D. officer: Group President 510 LAKE COOK ROAD SUITE 100 DEERFIELD IL 60015
Marvel Gary Michael officer: Chief Accounting Officer 510 LAKE COOK ROAD SUITE 100 DEERFIELD IL 60015
Ainsworth William P officer: Group President 510 LAKE COOK ROAD SUITE 100 DEERFIELD X1 60015
Bonfield Andrew R J officer: Chief Financial Officer C/O BRISTOL MYERS SQUIBB CO 345 PARK AVE NEW YORK NY 10164
Younessi Ramin officer: Group President 510 LAKE COOK ROAD SUITE 100 DEERFIELD IL 60015
Creed Joseph E officer: Interim CFO 510 LAKE COOK ROAD SUITE 100 DEERFIELD IL 60015
Ayotte Kelly director C/O NEWS CORPORATION 1211 AVENUE OF THE AMERICAS NEW YORK NY 10036
Johnson Cheryl H officer: Chief Human Resources Officer 40 WESTMINSTER STREET PROVIDENCE RI 02903
Wilkins Rayford Jr director 208 S. AKARD ST. -- DALLAS TX 75202
Long Suzette M officer: Int. Executive Vice President 510 LAKE COOK ROAD SUITE 100 DEERFILED IL 60015
De Lange Bob officer: Group President 510 LAKE COOK ROAD SUITE 100 DEERFIELD IL 60015
Johnson Denise C officer: Group President C/O CATERPILLAR, INCORPORATED 901 WEST WASHINGTON, CV41110 EAST PEORIA IL 61630

Caterpillar Headlines

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