Caterpillar Inc (CAT)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.42 | 1.40 | 1.28 | 1.35 | 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 |
| Quick ratio | 0.21 | 0.06 | 0.13 | 0.17 | 0.26 | 0.27 | 0.22 | 0.22 | 0.22 | 0.28 | 0.23 | 0.25 | 0.34 | 0.36 | 0.79 | 0.85 | 0.73 | 0.75 | 0.35 | 0.27 |
| Cash ratio | 0.21 | 0.06 | 0.13 | 0.17 | 0.26 | 0.27 | 0.22 | 0.22 | 0.22 | 0.28 | 0.23 | 0.25 | 0.34 | 0.36 | 0.79 | 0.85 | 0.73 | 0.75 | 0.35 | 0.27 |
The current ratio of Caterpillar Inc has ranged between 1.28 and 1.61 over the past five years, indicating that the company has generally maintained a strong ability to cover its short-term liabilities with its current assets. However, there has been some fluctuation in this ratio, with a slight decline noted in recent quarters.
The quick ratio, also known as the acid-test ratio, measures the company's ability to meet its short-term obligations using its most liquid assets. Caterpillar Inc's quick ratio has varied widely, ranging from 0.06 to 0.85 over the same period. This suggests that the company may sometimes face challenges in meeting its immediate financial obligations without having to sell inventory or receivables.
Lastly, the cash ratio, which is the most conservative liquidity ratio, focuses solely on the company's ability to pay off its current liabilities with its cash and cash equivalents. Caterpillar Inc's cash ratio has also seen fluctuations, ranging from 0.06 to 0.85 in the past five years.
In summary, while Caterpillar Inc's current ratio generally indicates sound liquidity, its quick ratio and cash ratio show more volatility, suggesting potential variations in the company's ability to meet its short-term obligations with its most liquid assets. Investors and analysts may want to monitor these ratios closely to assess the company's ongoing liquidity position.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The cash conversion cycle for Caterpillar Inc has shown fluctuations over the years, ranging from around 120 to 150 days. This metric indicates the time it takes for Caterpillar to convert its investments in inventory and other resources into cash inflows from sales.
A longer cash conversion cycle suggests that the company takes a relatively longer time to generate cash from its operational activities. On the other hand, a shorter cycle indicates that the company is more efficient in managing its working capital and converting its investments into cash.
Analyzing the data provided, we observe that the cash conversion cycle peaked at around 153 days in September 2022, indicating a potential delay in converting investments into cash during that period. However, the cycle decreased to around 138 days by December 2023, suggesting improved efficiency in working capital management.
Overall, it is important for Caterpillar Inc to continually assess and optimize its cash conversion cycle to maintain healthy cash flow levels and operational efficiency. Monitoring this metric can provide insights into the company's working capital management and liquidity position.