Capital Budgeting Notes

I found a way to save my Excel files as PDFs and then convert those to JPEGs.  That should solve all of the formatting issues I’m having.  I’ll re-post the other finance notes that I put on BB as html asap.

 

Finance Notes - Capital Budgeting 1 (Click to Enlarge)

 

Finance Notes - Capital Budgeting 2 (Click to Enlarge)

 

Finance Notes - Capital Budgeting 3 (Click to Enlarge)

 

Finance Notes - Capital Budgeting (Click to Enlarge)

Cat Financial Ratios

Caterpillar Inc. Financial Ratios
Short-Term Solvency/Liquidity Ratios
Current Ratio	Current Assets			1.15
	Current Liabilities
Quick Ratio	Current Assets – Inventory			0.82
	Current Liabilities
Cash Ratio	Cash			0.05
	Current Liabilities
Long-Term Solvency/Financial Leverage Ratios
Total Debt Ratio	Total Assets – Total Equity			0.84
	Total Assets
Debt-Equity Ratio	Total Debt			2.01
	Total Equity
Equity Multiplier	Total Assets			6.32
	Total Equity
Times Interest Earned Ratio	EBIT			-17.09
	Interest
Cash Coverage Ratio	EBIT + Depreciation			14.90
	Interest
Asset Utilization/Turnover Ratios
Inventory Turnover	Cost of Goods Sold			4.53
	Inventory
Days’ Sales in Inventory	365 Days			80.59
	Inventory Turnover
Receivables Turnover	Sales			2.66
	Accounts Receivable
Days’ Sales in Receivables	365 Days			137.02
	Receivables Turnover
Total Asset Turnover	Sales			0.75
	Total Assets
Capital Intensity	Total Sales			0.75
	Assets
Profitability Ratios
Profit Margin	Net Income			0.12
	Sales
Return on Assets (ROA)	Net Income			0.09
	Total Assets
Return on Equity (ROE)	Net Income			0.55
	Total Equity
Market Value Ratios
Price-Earnings Ratio (P/E)	Price per Share			6.96
	Earnings per Share
Market-to-Book Ratio	Market Value per Share			2.84
	Book Value per Share
DuPont Identity
ROE	Net Income x	Sales x	Assets	0.40
(Net Income/Total Equity)	Sales	Assets	Equity
	Net Income x	Assets
	Assets	Total Equity
ROE	ROA x EM
	ROA x (1+Debt-Equity Ratio)			0.26
ROE	Sales x	Net Income x	Assets
	Sales	Assets	Total Equity
	ROA
	Profit Margin x	Total Asset Turnover x	Equity Multiplier
	(Operating Efficiency)	(Asset Use Efficiency)	(Financial Leverage)
ROA	PM x Total Asset Turnover			0.09
(Net Income/Total Assets)
Long-Term Financial Planning
Construct Pro Forma Income Statement and Balance Sheets
Develop Based on Percentage of Sales Approach
Dividend Payout Ratio (d)	Cash Dividends			0.06
	Net Income
Addition to R/E to Net Income	Addition to RE			4.91
	Net Income
Retention/Plowback Ratio (b)	1 – Dividend Payout Ratio			0.94
Capital Intensity Ratio	Total Assets
	Sales
External Financing Needed	Assets x	Change in Sales –	Spontaneous Liabilities x
	Sales		Sales
	Change in Sales – PM x	Projected Sales x	x (1 – d)
Financial Policy and Growth
Internal Growth Rate	ROA x b			0.10
	1 – ROA x b
Sustainable Growth Rate	ROE x b			0.60
	1 – ROE x b