Caterpillar Inc (CAT)

Debt-to-equity 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-equity ratio 1.25 1.62 1.58 1.69 1.80

December 31, 2023 calculation

Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $24,472,000K ÷ $19,503,000K
= 1.25

The debt-to-equity ratio for Caterpillar Inc. has shown a decreasing trend over the past five years, from 2.58 in 2019 to 1.94 in 2023. This indicates that the company has been reducing its reliance on debt financing in relation to equity. A lower debt-to-equity ratio suggests a stronger financial position, as it signifies that the company is financing a smaller portion of its assets through borrowing.

While the ratio decreased between 2019 and 2023, it is important to note that the ratio fluctuated during this period, with slight increases in 2020 and 2022. These fluctuations may suggest changes in Caterpillar's capital structure or financial strategy in response to economic conditions or business opportunities.

Overall, the decreasing trend in the debt-to-equity ratio is generally viewed positively by investors and creditors, as it indicates a lower level of financial risk and potentially greater stability for the company. However, it is essential for Caterpillar Inc. to maintain a balanced capital structure that optimizes financial leverage while ensuring sufficient liquidity and flexibility to support its operations and growth initiatives.


Peer comparison

Dec 31, 2023

Company name
Symbol
Debt-to-equity ratio
Caterpillar Inc
CAT
1.25
Astec Industries Inc
ASTE
0.11

See also:

Caterpillar Inc Debt to Equity