Caterpillar Inc (CAT)
Interest coverage
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 12,966,000 | 11,512,000 | 10,488,000 | 8,780,000 | 7,904,000 | 7,835,000 | 7,074,000 | 6,919,000 | 6,878,000 | 6,647,000 | 5,968,000 | 4,963,000 | 4,553,000 | 5,023,000 | 6,058,000 | 7,487,000 | 8,290,000 | 8,323,000 | 8,438,000 | 8,392,000 |
| Interest expense (ttm) | US$ in thousands | 511,000 | 502,000 | 482,000 | 463,000 | 443,000 | 438,000 | 443,000 | 455,000 | 488,000 | 506,000 | 528,000 | 543,000 | 514,000 | 496,000 | 463,000 | 431,000 | 421,000 | 408,000 | 407,000 | 406,000 |
| Interest coverage | 25.37 | 22.93 | 21.76 | 18.96 | 17.84 | 17.89 | 15.97 | 15.21 | 14.09 | 13.14 | 11.30 | 9.14 | 8.86 | 10.13 | 13.08 | 17.37 | 19.69 | 20.40 | 20.73 | 20.67 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $12,966,000K ÷ $511,000K
= 25.37
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates a stronger ability to meet interest payments.
Looking at the trend of Caterpillar Inc.'s interest coverage ratio over the past eight quarters, we observe a consistent increase from 15.27 in Q1 2022 to 25.50 in Q4 2023. This upward trend suggests that Caterpillar Inc. has been improving its ability to cover its interest expenses over time.
The company's interest coverage ratio has been steadily increasing, reaching a peak of 25.50 in Q4 2023. This indicates a significant improvement in Caterpillar Inc.'s ability to service its debt obligations. The consistent increase in the interest coverage ratio over the past eight quarters reflects positively on the company's financial health and suggests a strong likelihood that it can continue to meet its interest payment obligations in the future.
Peer comparison
Dec 31, 2023