Caterpillar Inc (CAT)
Debt-to-capital ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 24,472,000 | 25,714,000 | 26,033,000 | 25,999,000 | 26,281,000 |
| Total stockholders’ equity | US$ in thousands | 19,503,000 | 15,891,000 | 16,516,000 | 15,378,000 | 14,629,000 |
| Debt-to-capital ratio | 0.56 | 0.62 | 0.61 | 0.63 | 0.64 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $24,472,000K ÷ ($24,472,000K + $19,503,000K)
= 0.56
The debt-to-capital ratio of Caterpillar Inc. has shown a slight improvement over the past five years, decreasing from 0.72 in 2019 to 0.66 in 2023. This ratio indicates the proportion of the company's capital structure that is financed by debt. A lower debt-to-capital ratio suggests a lower level of financial risk as it shows that a smaller portion of the company's capital is derived from debt, while a higher ratio indicates higher financial leverage and potential risk.
Caterpillar Inc. has been gradually reducing its reliance on debt financing relative to its total capital base, which could indicate a more conservative approach to managing its financial obligations. It is important to note that a debt-to-capital ratio of 0.66 in 2023 means that 66% of Caterpillar's capital is funded by debt, highlighting that debt still plays a significant role in the company's capital structure.
Overall, the trend of decreasing debt-to-capital ratio is a positive indicator of Caterpillar's financial health and its ability to manage its debt obligations effectively over the years.
Peer comparison
Dec 31, 2023