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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.┬áThe 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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