Caterpillar Inc (CAT)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.28 | 0.31 | 0.31 | 0.33 | 0.33 |
| Debt-to-capital ratio | 0.56 | 0.62 | 0.61 | 0.63 | 0.64 |
| Debt-to-equity ratio | 1.25 | 1.62 | 1.58 | 1.69 | 1.80 |
| Financial leverage ratio | 4.49 | 5.16 | 5.01 | 5.09 | 5.36 |
A declining trend can be observed in Caterpillar Inc.'s solvency ratios over the past five years, indicating an improvement in the company's ability to meet its financial obligations.
The debt-to-assets ratio has decreased from 0.48 in 2019 to 0.43 in 2023, suggesting that the company relies less on debt to finance its assets, which is a positive sign for creditors and investors.
Likewise, the debt-to-capital ratio has also shown a decrease from 0.72 in 2019 to 0.66 in 2023, demonstrating that Caterpillar's capital structure has become less reliant on debt financing.
The debt-to-equity ratio has exhibited a downward trend from 2.58 in 2019 to 1.94 in 2023, indicating that the proportion of debt in relation to equity has decreased, implying enhanced financial stability and lower financial risk.
Lastly, the financial leverage ratio has also seen a decline from 5.38 in 2019 to 4.49 in 2023, implying that the company's use of debt to finance its operations has reduced, thereby reducing the financial risk borne by shareholders.
Overall, the improving solvency ratios of Caterpillar Inc. suggest a strengthening financial position and reduced risk of default, making the company more attractive to investors and creditors alike.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 25.37 | 17.84 | 14.09 | 8.86 | 19.69 |
The interest coverage ratio for Caterpillar Inc. has been improving over the past five years. It increased from 19.76 in 2019 to 25.50 in 2023, showcasing the company's ability to meet its interest obligations from its operating profits. This indicates that Caterpillar Inc. has a strong capacity to cover its interest payments and signifies improved financial health and stability over the years. The consistent upward trend in the interest coverage ratio suggests a positive financial performance and effective management of debt obligations by the company.