Caterpillar Inc (CAT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.47 | 2.64 | 2.58 | 2.56 | 2.60 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 4.83 | 5.49 | 4.85 | 3.75 | 3.04 |
Based on the provided data for Caterpillar Inc, let's analyze the activity ratios:
1. Inventory Turnover: This ratio indicates how many times the inventory is sold and replaced over a period. Caterpillar's inventory turnover has fluctuated slightly over the years, ranging from 2.47 in 2024 to 2.64 in 2023. A higher inventory turnover generally indicates efficient management of inventory levels and suggests that the company is selling its products quickly.
2. Receivables Turnover: Unfortunately, there is no data provided for Caterpillar's receivables turnover, which measures how efficiently the company is collecting on its credit sales. A higher receivables turnover ratio would indicate that the company is collecting its accounts receivable faster.
3. Payables Turnover: Similarly, there is no data available for Caterpillar's payables turnover. This ratio would have indicated how quickly the company pays off its suppliers. A higher payables turnover ratio could imply that the company is managing its payables efficiently.
4. Working Capital Turnover: This ratio measures how effectively a company is using its working capital to generate sales. Caterpillar's working capital turnover has shown a consistent increasing trend over the years, from 3.04 in 2020 to 4.83 in 2024. A higher working capital turnover ratio suggests that the company is efficiently utilizing its working capital to generate revenue.
In conclusion, while Caterpillar's inventory turnover and working capital turnover ratios show relatively positive trends, the absence of data for receivables and payables turnover limits a comprehensive analysis of the company's overall efficiency in managing its working capital and operating cycle.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 148.05 | 138.05 | 141.68 | 142.46 | 140.26 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
The Days of Inventory on Hand (DOH) for Caterpillar Inc have shown a slight increase from 140.26 days in 2020 to 148.05 days in 2024. This indicates that, on average, it took Caterpillar 148.05 days to sell or use its inventory during 2024. A high DOH may suggest overstocking or slow-moving inventory, which could tie up working capital.
The Days of Sales Outstanding (DSO) and Number of Days of Payables data are not provided (indicated as "--- days"), limiting the analysis of Caterpillar's efficiency in collecting receivables and managing payables over the given period. However, the absence of data could be due to different reporting practices or data availability.
In general, it is important for Caterpillar Inc to monitor its activity ratios, especially DOH, as it can impact working capital management and overall efficiency in the utilization of resources. Additional information on DSO and payables turnover would provide a more complete picture of Caterpillar's operational effectiveness and financial health.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 4.94 | 6.24 | 3.37 |
| Total asset turnover | 0.74 | 0.77 | 0.73 | 0.62 | 0.53 |
The fixed asset turnover ratio of Caterpillar Inc has shown a significant improvement over the years, increasing from 3.37 in December 2020 to 6.24 in December 2021, then slightly declining to 4.94 in December 2022. However, there is missing data for 2023 and 2024. This ratio indicates how efficiently the company is utilizing its fixed assets to generate sales.
In contrast, the total asset turnover ratio has also exhibited an upward trend, rising from 0.53 in December 2020 to 0.62 in December 2021, further increasing to 0.73 in December 2022, and reaching 0.77 in December 2023 before slightly dropping to 0.74 in December 2024. This ratio reflects the firm's ability to generate revenues relative to its total assets.
Overall, both ratios suggest that Caterpillar Inc has been effectively managing its assets to generate sales, with the total asset turnover ratio showing a more consistent improvement compared to the fixed asset turnover ratio over the period analyzed.