Caterpillar: A Peer Comparison Of Quality Of Earnings

Quality of earnings is generally defined as earnings’ ability to persist in years. The level of persistence is important because it gives investors a certain degree of confidence in the projections of future company performance.

The quality could be measured by calculating the accruals component of Caterpillar’s earnings. The accruals growth for the last year (2011) seems a particularly high one given the sample and could flash some warnings.

Please, check the complete analysis.

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