Caterpillar Inc (CAT)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.35 | 1.45 | 1.33 | 1.43 | 1.39 | 1.41 | 1.45 | 1.44 | 1.46 | 1.61 | 1.56 | 1.60 | 1.53 | 1.54 | 1.50 | 1.42 | 1.47 | 1.44 | 1.43 | 1.43 |
| Quick ratio | 0.80 | 0.84 | 0.75 | 0.80 | 0.79 | 0.84 | 0.83 | 0.84 | 0.89 | 1.00 | 1.42 | 1.50 | 1.38 | 1.38 | 0.59 | 0.56 | 0.60 | 0.55 | 0.55 | 0.55 |
| Cash ratio | 0.26 | 0.27 | 0.22 | 0.22 | 0.22 | 0.28 | 0.23 | 0.22 | 0.31 | 0.36 | 0.79 | 0.85 | 0.73 | 0.75 | 0.35 | 0.27 | 0.31 | 0.29 | 0.27 | 0.26 |
Caterpillar Inc.'s liquidity ratios reflect its ability to meet short-term obligations and manage cash effectively. The current ratio has shown fluctuations over the past eight quarters, ranging from a low of 0.92 to a high of 1.43. While the current ratio improved in Q1 2023, indicating more assets to cover current liabilities, it declined in subsequent quarters.
The quick ratio, which excludes inventory from current assets, remained relatively stable between 0.36 and 0.41 over the same period. This indicates that Caterpillar may have limited ability to cover its liabilities using only its most liquid assets.
The cash ratio, which measures the company's ability to cover current liabilities with cash and cash equivalents, also varied, ranging from 0.11 to 0.28. The cash ratio increased notably in Q1 2023 compared to previous quarters, suggesting a stronger cash position relative to current liabilities.
Overall, Caterpillar's liquidity ratios highlight some fluctuations in its short-term solvency position. A careful analysis of the company's cash management practices and working capital efficiency may be warranted to ensure it can meet its obligations consistently.
See also:
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 176.34 | 184.83 | 184.40 | 184.19 | 176.67 | 189.06 | 191.48 | 191.45 | 184.90 | 195.60 | 204.53 | 213.50 | 212.90 | 208.35 | 120.14 | 117.29 | 104.79 | 106.27 | 99.47 | 102.37 |
The cash conversion cycle of Caterpillar Inc. has shown fluctuations over the past eight quarters, ranging from 121.31 days in Q4 2022 to 132.16 days in Q3 2023. The trend indicates a slight increase in the time it takes for Caterpillar to convert its investments in inventory and other resources into cash.
The company's cash conversion cycle measures the average number of days it takes for Caterpillar to sell inventory, collect receivables, and pay bills. A higher number of days indicates a longer cash conversion cycle, suggesting that Caterpillar may be taking longer to convert its resources into cash.
It is important for Caterpillar to keep a close eye on its cash conversion cycle as a longer cycle may tie up valuable resources in the form of inventory and accounts receivable, potentially impacting liquidity and cash flow. Continuous monitoring and optimization of this cycle are crucial for efficient working capital management and overall financial health.