One critical component of financial analysis involves comparing a firm’s financial statements with other firms in the industry. Through such a comparison, financial managers can reveal useful information about risks, investment opportunities, market indicators, and economic factors.
Throughout this course, you have been researching and analyzing various financial statements for Deere & Company. For this Final Paper, you will culminate your analysis with an in-depth comparison of Deere & Company and Caterpillar Inc.
In your project, you will complete the following items based on the files you downloaded above:
· Examine the four primary financial statements for each firm and address the following:
· Statement of Cash Flows:
· Compare the statement of cash flows for the two firms, noting the major inflows and outflows of cash.
· Income Statement:
· Compare the income statements for the two firms, noting the issues each one faces regarding sales projections.
· Balance Sheet:
· Compare the balance sheets for the two firms, noting any issues each firm may want to address regarding liability, and how each firm might be impacted by increasing interest rates.
· Shareholder Equity:
· Calculate the shareholder equity for each firm.
· Calculate the following ratios and trend analyses on each company:
· ROI analysis
· Ratio analysis, to include the following ratios:
· Profit Margin
· Return on Assets
· Return on equity
· Receivable Turnover
· Average Collection period
· Inventory turnover
· Current ratio
· Working Capital
· Debt to total assets
· Debt to equity
· Earnings per share
· Price to Earnings ratio
· Horizontal, vertical, and trend analysis of financial statements
· Compare and contrast the two firms in the context of the global economy, noting which types of cultural differences might impact each firm as it does business in other countries.
· Include examples to illustrate your point.
· Compare and contrast each firm’s global strategic plan based on the information in the annual report from two years ago.
· Propose which company would be better to invest in, based on the above comparisons. Your proposal should include the key metrics you used to make your decision.
The Final Project
· Must be eight to 10 double-spaced pages in length (not including title and references pages) and formatted according to APA style
Link to caterpillar financials: https://s7d2.scene7.com/is/content/Caterpillar/CM20220502-1dbb9-7449c
Caterpillar 2021 Q4: https://www.caterpillar.com/content/dam/caterpillarDotCom/releases/4q21/4q21-caterpillar-inc-financial-results.pdf
CAT 2021 Q4: https://www.caterpillar.com/content/dam/caterpillarDotCom/releases/4q21/4q21-cat-financial-financial-results.pdf
Deere Annual Report: https://s22.q4cdn.com/253594569/files/doc_financials/2021/ar/Deere-Co_Annual-Report-2021.pdf
Deere 2021 Q4: https://s22.q4cdn.com/253594569/files/doc_financials/2021/q3/4Q_2021_News-Release-and-Financials.pdf