Companies for your comparative analysis: Caterpillar Inc. and Deere & Company SITUATION You are a financial analyst with HTC Corporation. HTC is an established investment banker which services an international market. A client has determined that it wants to invest $2.3 billion in either Deere & Co. or Caterpillar stock (real publicly-traded companies). Which of these companies\' shares is the best potential candidate for a long-term commitment? Both targeted companies are competitively favorable. However, based on some serious general and economic concerns about the fallout of companies in the industry in general, the CEO of the client-company has asked your CFO to conduct a financial analysis of both CAT and DE to determine if it is prudent to commit to either company. The cost of this investment is significant and any interruption in cash flow from the investment during the next few years would adversely affect the client\'s performance and profit. The CFO has given you the job of conducting this analysis. Specifically, the question is: will a commitment to invest in either Caterpillar or John Deere be financially viable over the next two to three years? YOUR SPECIFIC ASSIGNMENT Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual financial performance of both DE and CAT for the most recent three years. In addition to reviewing the traditional financial performance indicators, you are also to review both targed companies past and current stock performance for the last one year. Your report is to consist of three parts: (1) An evaluation of financial performance for the last three years, for both companies. (2) An evaluation of stock performance for the last one year, for both companies. (3) Finally, a specific recommendation, with supporting rationale, as to whether or not either targeted company\'s recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment. To assist you in your task, the CFO has provided the following general guidance. Since it is recognized that the industry is undergoing a major contraction in selected markets, it is very important to comparatively evaluate both CAT and DE relative to financial and stock performance trends against its Industry. IMPORTANT: You must include all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. These factors must include, financial ratio trends and industry comparatives, capital spending, stock growth, Beta values, credit rating service valuations, bond rating valuations, and management and investment reports - when these documents are available. REPORT REQUIREMENTS YOUR SPECIFIC ASSIGNMENT Research and analyze the following information for both Caterpillar and Deere: Annual Balance Sheets for the last three years. The Income Statements for the last three years. Annual reports, 10K or 10Q Industry .

1. Companies for your comparative analysis: Caterpillar Inc. and Deere & Company
SITUATION
You are a financial analyst with HTC Corporation. HTC is an established investment banker
which services an international market. A client has determined that it wants to invest $2.3
billion in either Deere & Co. or Caterpillar stock (real publicly-traded companies). Which of
these companies' shares is the best potential candidate for a long-term commitment? Both
targeted companies are competitively favorable. However, based on some serious general and
economic concerns about the fallout of companies in the industry in general, the CEO of the
client-company has asked your CFO to conduct a financial analysis of both CAT and DE to
determine if it is prudent to commit to either company. The cost of this investment is significant
and any interruption in cash flow from the investment during the next few years would adversely
affect the client's performance and profit. The CFO has given you the job of conducting this
analysis. Specifically, the question is: will a commitment to invest in either Caterpillar or John
Deere be financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT
Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual
financial performance of both DE and CAT for the most recent three years. In addition to
reviewing the traditional financial performance indicators, you are also to review both targed
companies past and current stock performance for the last one year. Your report is to consist of
three parts:
(1) An evaluation of financial performance for the last three years, for both companies.
(2) An evaluation of stock performance for the last one year, for both companies.
(3) Finally, a specific recommendation, with supporting rationale, as to whether or not either
targeted company's recent trend in financial and stock performance is of sufficient financial
strength to warrant entering into a long-term commitment.
To assist you in your task, the CFO has provided the following general guidance. Since it is
recognized that the industry is undergoing a major contraction in selected markets, it is very
important to comparatively evaluate both CAT and DE relative to financial and stock
performance trends against its Industry.
IMPORTANT: You must include all necessary and relevant financial performance and stock
information, trends, and projections in supporting your recommendation. These factors must
include, financial ratio trends and industry comparatives, capital spending, stock growth, Beta
values, credit rating service valuations, bond rating valuations, and management and investment
reports - when these documents are available.
REPORT REQUIREMENTS

2. YOUR SPECIFIC ASSIGNMENT
Research and analyze the following information for both Caterpillar and Deere:
Annual Balance Sheets for the last three years.
The Income Statements for the last three years.
Annual reports, 10K or 10Q
Industry data
Analysts’ reports on performance
Management reports or press releases
Using this information the students have to develop evaluation of the financial performance for
both targeted companies. (Totally 85% of the assignment grade)
Background and Industry (oneshortparagraph).
Select of most significant financial performance results for the companies: Compare Revenue,
net income, working capital, total assets for the last three years and other results of your choice
of the companies against the industry. Present the table with this information in your report.
Write about 1 page of the analysis of these financial performance results. (15% of the project
grade)
Find financial ratios for each company and the industry in the Internet. Write about 1-2 pages of
analysis of the ratio results you received. (15% of the project grade). Compare the ratio results
for each company against the other, and the industry.
Prepare a DuPont analysis for three years. (10% of the project grade). Compare the each
company’s results to each other and to the industry.
Taking the information from the Income statements and the Balance sheets, calculate each
company’s return on equity using the DuPont technique for the company for three years. Follow
general formulas for such analysis. Show and discuss your calculation!
Write about 1 page of analysis of the results that you received. Compare the results. If you think
the management of Caterpillar and John Deere would like to improve their return on equity, what
should the management of these companies do?
Evaluate other areas of financial analysis: capital spending, stock growth, Beta values, credit
rating service valuations (if possible), bond rating valuations (if possible), etc. Make an overall
conclusion about financial performance of each company during the last years. Compare the
results that you received against each company and the industry. Summarize the results that you
received in 1 pages. What are these firm’s financial strengths and weaknesses? (10% of the
project grade)
Collect and evaluate the data about stock performance of these assigned companies for the last
one year. Compare the results that you received against the industry.
Write about 1 page of analysis of the ratio results you received. (20% of the project grade).

3. Develop a specific recommendation, with supporting rationale, as to whether or not the assigned
company's recent trend in financial and stock performance is of sufficient financial strength to
warrant entering into a long-term commitment. (about 1 page) (15% of the project grade)
Solution
HTC Corporation (HTC) formerly, High Tech Computer Corporation is a manufacturer of
smartphones and
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devices,
such as, personal digital assistants (PDAs), smartphones, and other related components. The
company
alsodesigns Microsoft mobile platform, including interface software, operating systems, human
machine
interface and application software. It markets and sells products under its own brand name. The
company's
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This comprehensive SWOT profile of HTC Corporation provides you an in-depth strategic
SWOT analysis of
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- Business description – A detailed description of the company’s operations and business
divisions.
- Corporate strategy – Analyst’s summarization of the company’s business strategy.
- SWOT Analysis – A detailed analysis of the company’s strengths, weakness, opportunities and
threats.
- Company history – Progression of key events associated with the company.
- Major products and services – A list of major products, services and brands of the company.

4. - Key competitors – A list of key competitors to the company.
- Key employees – A list of the key executives of the company.
- Executive biographies – A brief summary of the executives’ employment history.
- Key operational heads – A list of personnel heading key departments/functions.
- Important locations and subsidiaries – A list and contact details of key locations and
subsidiaries of the
company.
- Detailed financial ratios for the past five years – The latest financial ratios derived from the
annual financial
statements published by the company with 5 years history.
- Interim ratios for the last five interim periods – The latest financial ratios derived from the
quarterly/semiannual
financial statements published by the company for 5 interims history.
Note: Some sections may be missing if data is unavailable for the company
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Understand and respond to your competitors’ business structure and strategies, and capitalize on
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Equip yourself with information that enables you to sharpen your strategies and transform your
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Scout for potential investments and acquisition targets, with detailed insight into the companies’

5. strategic,
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Gain key insights into the company for academic or business research.
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Contents: List of Tables
List of Figures
Section 1 - About the Company
HTC Corporation - Key Facts
HTC Corporation - Key Employees
HTC Corporation - Key Employee Biographies
HTC Corporation - Major Products and Services
HTC Corporation - History
HTC Corporation - Company Statement
HTC Corporation - Locations And Subsidiaries
Head Office
Other Locations & Subsidiaries
Section 2 – Company Analysis
HTC Corporation - Business Description
HTC Corporation - Corporate Strategy
HTC Corporation - SWOT Analysis
SWOT Analysis - Overview
HTC Corporation - Strengths
Strength - Perpetual Innovation
Strength - Improved Profitability
Strength - Patent Agreements
HTC Corporation - Weaknesses
Weakness - Patent Infringement Litigations
Weakness - Dependence on Few Customers
HTC Corporation - Opportunities
Opportunity - Increasing Demand for 3G/4G
Opportunity - Demand for Smartphones

6. Opportunity - Partnerships and Agreements
HTC Corporation - Threats
Threat - Stringent Regulations
Threat - Competitive Pressure
Threat - Rapid Technological Changes
Threat - Global Economic Scenario
HTC Corporation - Key Competitors
Section 3 – Company Financial Ratios
Financial Ratios - Capital Market Ratios
Financial Ratios - Annual Ratios
Performance Chart
Financial Performance
Financial Ratios - Interim Ratios
Financial Ratios - Ratio Charts
Section 4 – Appendix
Methodology
Ratio Definitions
About Us
Contact Us
Disclaimer
List of Tables
HTC Corporation, Key Facts
HTC Corporation, Key Employees
HTC Corporation, Key Employee Biographies
HTC Corporation, Major Products and Services
HTC Corporation, History
HTC Corporation, Other Locations