Question: With 2014 sales and revenues of $55.
With 2014 sales and revenues of $55.184 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel electric locomotives. The company principally operates through its three product segments— Resource Industries, Construction Industries, and Energy & Transportation (formerly Power Systems)—and also provides financing and related services through its Financial Products segment. Caterpillar is also a leading U.S. exporter.Â
Description of business for the Kroger Company from its Form 10-K:
The Kroger Co. was founded in 1883 and incorporated in 1902.
As of January 31, 2015, we are one of the largest retailers in the nation based on annual sales. . . . As of January 31, 2015, Kroger operated, either directly or through its subsidiaries, 2,625 supermarkets and multi-department stores, 1,330 of which had fuel centers. Approximately 48% of these supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our current strategy emphasizes self-development and ownership of store real estate. Our stores operate under several banners that have strong local ties and brand recognition. Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo storesâ€); multi-department stores; marketplace stores; or price impact warehouses.
Required:
a. Determine which company appears to have the higher operating leverage.
b. Write a paragraph or two explaining why the company you identified in Requirement a might be expected to have the higher operating leverage.
c. If revenues for both companies increased by 5 percent, which company do you think would likely experience the greater percentage increase in operating earnings? Explain your answer.
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Caterpllar, Inc. 2014 2013 Revenue $55,184 $55,656 Operating earnings 5,328 5,628 Kroger Co. 2014 2013 Revenue $108,465 $98,375 Operating earnings 3,137 2,725
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> The Curious Accountant in this chapter discussed some of the budgeting issues facing the United States Olympic Committee (USOC). First, to get a basic understanding of the sources of revenues and expenses of the USOC, review its Form 990, which shows its
> If the cost object is a manufactured product, what are the three major cost categories to accumulate?
> Identify the primary qualities of revenues and costs that are relevant for decision making.
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> Define the term annuity. What is one example of an annuity receipt?
> What are the advantages and disadvantages associated with the unadjusted rate of return method for evaluating capital investments?
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> What criteria determine whether a project is acceptable under the net present value method?
> Receiving $100,000 per year for five years is equivalent to investing what amount today at 14 percent? Provide a mathematical formula to solve this problem, assuming use of a present value annuity table to convert the future cash flows to their present
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> Pam Kelly says she has no faith in budgets. Her company, Kelly Manufacturing Corporation, spent thousands of dollars to install a sophisticated budget system. One year later the company’s expenses are still out of control. She believes budgets simply do
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> What does the term breakeven point mean? Name the two ways it can be measured.
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> Why does preparing the master budget require a committee?
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