Caterpillar 's Return On Assets Essay

1572 Words Jan 3rd, 2016 7 Pages
Therefore, Caterpillar earned 4.36% from existing assets in the year 2014. Results from 2013 were equivalent while holding at 4.46%, and in the year 2012 Caterpillar’s return on assets was 6.39%. Caterpillar’s competitors displayed improved results with the Terex Corporation having a return on assets of 5.38% in the year 2014. Another competitor of Parker-Hannifin Corporation held a 7.84% return on assets, which is superior to Caterpillar’s 4.38%. (Quotes & Info- Yahoo! Finance, n.d.).
The Terex Corporation and Parker-Hannifin Corporation performed superior to Caterpillar in regards to return on assets. Caterpillar needs to keep a watchful eye upon the improved performance from its competitors to ensure business is not lost to either company. The industry of Farm & Construction Machinery maintains a standard of 5.24% (Construction & Mining Machinery Industry, n.d.). Caterpillar’s competitors Terex and Parker-Hannifin are above average in the industry with advanced performance. However, Caterpillar fell slightly below the industry average. It becomes crucial for Caterpillar to remain focused in order to maintain status as an industry leader. Return on Equity Return on equity (ROE) is also a profitability ratio determining how much financial gain a company receives or net income, divided by the amount it provides for its stockholders or stockholder equity (Block, Hirt, & Danielsen, 2014, p. 60). Caterpillar’s return on equity for 2014 was 22.06% and in 2013, it…

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