Caterpillar Inc (CAT)
Solvency 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 4.50 | 4.45 | 4.86 | 4.75 | 4.49 | 4.24 | 4.68 | 4.61 | 5.16 | 5.19 | 5.16 | 4.82 | 5.02 | 4.85 | 4.85 | 4.87 | 5.11 | 5.13 | 5.57 | 5.35 |
Caterpillar Inc's solvency ratios over the reported periods indicate a consistently low level of debt relative to its assets, capital, and equity. The debt-to-assets, debt-to-capital, and debt-to-equity ratios remained at 0.00 across all the periods, suggesting that the company operates with minimal financial leverage and relies more on equity financing than debt.
The financial leverage ratio, on the other hand, fluctuated over the periods but generally stayed within a narrow range. The ratio peaked at 5.57 in June 2020 but has since trended downwards to around 4.50 by the end of December 2024. This implies that Caterpillar has been gradually reducing its financial risk by decreasing its reliance on debt to finance its operations.
Overall, the consistent low debt ratios and decreasing trend in the financial leverage ratio indicate Caterpillar Inc's strong solvency position and prudent financial management practices, which should provide stability and resilience in meeting its long-term financial obligations.
Coverage 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 27.54 | 26.60 | 26.86 | 27.03 | 27.37 | 27.70 | 27.25 | 24.75 | 23.19 | 21.70 | 19.70 | 18.60 | 17.12 | 13.83 | 11.90 | 9.90 | 9.41 | 10.33 | 12.99 | 16.84 |
The interest coverage ratio for Caterpillar Inc has demonstrated a generally improving trend over the analyzed period. The ratio stood at 16.84 as of March 31, 2020, indicating the company's ability to cover its interest expenses approximately 16.84 times with its operating income. However, there was a decline in the ratio to 9.41 by December 31, 2020.
Subsequently, the interest coverage ratio gradually recovered, reaching 27.37 by December 31, 2023. The ratio held relatively steady around the mid-20s from March 31, 2024, to December 31, 2024, indicating a comfortable ability to meet interest payment obligations.
Overall, the upward trend in Caterpillar Inc's interest coverage ratio is a positive indicator of the company's ability to service its debt obligations from its operating profits. Management's focus on maintaining healthy interest coverage ratios is essential for sustaining financial stability and creditors' confidence.