Caterpillar Inc (CAT)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 148.22 | 150.16 | 146.56 | 142.58 | 138.05 | 144.86 | 147.93 | 151.19 | 141.68 | 153.01 | 150.19 | 146.39 | 142.46 | 147.69 | 144.08 | 146.03 | 140.26 | 134.59 | 126.69 | 120.34 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 148.22 | 150.16 | 146.56 | 142.58 | 138.05 | 144.86 | 147.93 | 151.19 | 141.68 | 153.01 | 150.19 | 146.39 | 142.46 | 147.69 | 144.08 | 146.03 | 140.26 | 134.59 | 126.69 | 120.34 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 148.22 + — – —
= 148.22
The cash conversion cycle of Caterpillar Inc has shown some fluctuations over the periods provided. The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 120.34 days to a high of 153.01 days. During this period, there were ups and downs in the cycle, indicating variations in the efficiency of Caterpillar's management of working capital.
Generally, a shorter cash conversion cycle is favorable as it suggests that the company is able to efficiently manage its inventories, accounts receivable, and accounts payable. On the other hand, a longer cash conversion cycle may indicate inefficiencies in managing working capital, leading to potential liquidity issues.
For Caterpillar Inc, the cash conversion cycle peaked at 153.01 days on September 30, 2022, indicating a prolonged period to convert investments into cash. However, the company managed to reduce the cycle to 138.05 days by December 31, 2023, showing improvement in working capital management.
Overall, analyzing the cash conversion cycle provides insights into how efficiently Caterpillar Inc is managing its working capital and converting investments into cash flows, which is essential for assessing the company's liquidity and operational efficiency.
Peer comparison
Dec 31, 2024