Caterpillar Inc. (NYSE:CAT)

The inventory levels exhibit a consistent upward trend throughout the observed periods, reflecting possible growth in production scale or stockpiling strategies.

Raw materials

The value of raw materials increased steadily from $4,021 million in 2020 to $6,681 million in 2024. This represents a notable growth, especially between 2020 and 2021, with continued though more moderate increases in subsequent years.

Work-in-process

Work-in-process inventories rose from $1,052 million in 2020 to $1,438 million in 2024. The increase was gradual, with a slight dip observed in 2023 before rising again in 2024. The trend suggests stable management of production stages but with mild fluctuations.

Finished goods

Finished goods inventories showed a robust increase from $6,054 million in 2020 to $8,329 million in 2024. The steady rise indicates accumulated stock of completed products, which may reflect either demand anticipation or slower sales turnover.

Supplies

Supplies inventories displayed a modest but consistent rise from $275 million in 2020 to $379 million in 2024, showing ongoing procurement and inventory build-up for operational needs.

Inventories (total)

Total inventories increased from $11,402 million in 2020 to $16,827 million in 2024, mirroring increases in all sub-components. The pace of growth slowed slightly in 2023 and 2024, indicating a possible stabilization or optimization in inventory levels.

Analysis of the financial data reveals several notable trends across the reported and LIFO reserve adjusted figures.

Inventories

Both reported and adjusted inventories exhibit a consistent upward trajectory from 2020 through 2024. Reported inventories increased from 11,402 million USD in 2020 to 16,827 million USD in 2024. Adjusted inventories, which account for LIFO reserve adjustments, are higher over the same period, growing from 13,534 million USD to 20,691 million USD. The adjustment indicates a significant inventory valuation impact linked to the LIFO reserve, with the gap between reported and adjusted values widening slightly over time.

Current Assets

Reported current assets rise steadily from 39,464 million USD in 2020 to a peak of 46,949 million USD in 2023, before slightly declining to 45,682 million USD in 2024. Adjusted current assets, reflecting the LIFO adjustment, display a parallel trend, increasing from 41,596 million USD in 2020 to 50,372 million USD in 2023, with a mild decrease to 49,546 million USD in 2024. The adjustment consistently adds value, maintaining a gap that reflects the inventory valuation differences.

Total Assets

Reported total assets show a moderate growth from 78,324 million USD in 2020 to 87,764 million USD by 2024. Adjusted total assets are higher in all years, rising from 80,456 million USD to 91,628 million USD over the same timeframe. The larger increase in adjusted assets highlights the material effect of inventory adjustments on the asset base, and the steady but moderate growth suggests stable asset expansion.

Equity Attributable to Common Shareholders

Reported equity shows growth from 15,331 million USD in 2020 to 19,491 million USD in 2024, with some fluctuations such as a minor decline in 2022. Adjusted equity figures are consistently higher, climbing from 17,463 million USD to 23,355 million USD across the period. The adjusted equity trend reflects stronger growth, indicating the positive influence of inventory adjustments on equity value, likely due to retained earnings associated with inventory valuation effects.

Profit Attributable to Common Stockholders

Reported profits exhibit considerable improvement, increasing sharply from 2,998 million USD in 2020 to 10,792 million USD in 2024. Adjusted profits follow the same upward pattern but remain slightly higher, going from 3,044 million USD to 11,233 million USD. This demonstrates that the inventory adjustments marginally enhance reported profitability, reflecting the economic impact of inventory valuation under LIFO adjustments on earnings.

Overall, the LIFO reserve adjustment consistently increases the value of inventories, current assets, total assets, equity, and profit figures compared to reported amounts. The trends indicate steady growth in asset and equity bases alongside increasing profitability over the analyzed period. The widening differences between reported and adjusted figures suggest the material financial effect of inventory valuation methods on the company's financial position and performance.

Current Ratio Trends

The reported current ratio shows a gradual decline from 1.53 in 2020 to a low of 1.35 in 2023, followed by a slight recovery to 1.42 in 2024. The adjusted current ratio, which accounts for the inventory LIFO reserve, mirrors this pattern but remains consistently higher, decreasing from 1.62 in 2020 to 1.45 in 2023 before improving to 1.54 in 2024. This suggests an improvement in short-term liquidity when adjustments are made.

Net Profit Margin Trends

Both reported and adjusted net profit margins exhibit an overall upward trend, with the reported margin increasing from 7.68% in 2020 to 17.59% in 2024, and the adjusted margin rising from 7.8% to 18.31% over the same period. The adjusted values are consistently slightly higher than the reported values, indicating that inventory adjustments positively affect profitability metrics.

Total Asset Turnover Trends

Reported total asset turnover has improved steadily from 0.5 in 2020 to a peak of 0.73 in 2023, dropping slightly to 0.7 in 2024. The adjusted turnover follows a similar trajectory but is marginally lower at each point, starting at 0.49 in 2020 and reaching 0.67 in 2024. This suggests increased efficiency in asset utilization over time, though adjustments reduce turnover ratios somewhat.

Financial Leverage Trends

Reported financial leverage has decreased from 5.11 in 2020 to 4.5 in 2024, with a notable dip to 4.49 in 2023. Adjusted financial leverage shows a more pronounced decline from 4.61 to 3.92 within the same period. This indicates a reduction in reliance on debt or liabilities relative to equity over the years, especially when inventory reserve effects are accounted for.

Return on Equity (ROE) Trends

Reported ROE exhibits a marked increase from 19.56% in 2020 to 55.37% in 2024, peaking at 53.02% in 2023. Adjusted ROE also rises significantly, from 17.43% to 48.1% during the period. Although the adjusted ROE is consistently lower than the reported values, both measures demonstrate substantial growth, reflecting enhanced shareholder return rates.

Return on Assets (ROA) Trends

Reported ROA more than triples from 3.83% in 2020 to 12.3% in 2024, with consistent annual growth. Adjusted ROA follows a similar trajectory, increasing from 3.78% to 12.26%. These parallel increases indicate improved overall asset profitability, irrespective of inventory accounting adjustments.

Overall Observations

The financial ratios reveal consistent improvement in profitability and efficiency metrics over the five-year span. Adjusted figures that account for the inventory LIFO reserve generally show more conservative yet similar trends compared to reported data. Liquidity ratios exhibit some volatility but improve slightly towards the end of the period. The reduction in financial leverage is indicative of deleveraging or a stronger equity base. The substantial increases in ROE and ROA suggest effective management of assets and shareholder equity to generate higher returns.

The financial data demonstrates variations across the reported and inventory LIFO reserve adjusted current assets and current ratios over the five-year period ending in 2024.

Reported Current Assets

These assets exhibit an overall upward trend from 39,464 million US dollars at the end of 2020 to a peak of 46,949 million in 2023, followed by a slight decline to 45,682 million in 2024. The increase over the initial four years indicates growth in short-term resources, with the marginal decrease in the last year suggesting a possible reallocation or reduction of liquid assets.

Adjusted Current Assets

The adjusted current assets, which account for inventory LIFO reserve, consistently remain higher than the reported values each year, reflecting the impact of inventory accounting adjustments. These assets increased steadily from 41,596 million in 2020 to a maximum of 50,372 million in 2023, then decreased to 49,546 million in 2024. The pattern closely follows that of the reported assets, with a slightly more pronounced increase and decrease over the five-year span.

Reported Current Ratio

The reported current ratio shows a gradual decline from 1.53 in 2020 to 1.35 in 2023, indicating a decreasing buffer of current assets relative to current liabilities over that period. However, in 2024, the ratio improves to 1.42, suggesting a partial recovery in short-term liquidity.

Adjusted Current Ratio

The adjusted current ratio, which incorporates inventory LIFO reserve adjustments, consistently exceeds the reported ratio values. It declines steadily from 1.62 in 2020 to 1.45 in 2023 but rebounds to 1.54 in 2024. This pattern mirrors that of the reported ratio, indicating a similar trend in liquidity when considering inventory accounting adjustments, with a higher overall liquidity position.

In summary, both reported and adjusted current assets increased notably through 2023 before experiencing a slight reduction in 2024. The current ratios, indicative of short-term financial health, declined from 2020 to 2023, reflecting a tightening liquidity position, followed by an improvement in 2024. The inventory LIFO reserve adjustments consistently show a more favorable liquidity position than the reported figures, underscoring the importance of accounting method impacts on financial analysis.

The financial results exhibit a consistent and notable upward trajectory in both reported and inventory LIFO reserve adjusted profit figures over the five-year period analyzed. The reported profit attributable to common stockholders increased steadily from $2,998 million in 2020 to $10,792 million in 2024, representing more than a threefold growth. The adjusted profit, which accounts for inventory LIFO reserve adjustments, follows a similar pattern but at marginally higher values, rising from $3,044 million in 2020 to $11,233 million in 2024. This indicates the adjustments contribute positively to the reported profitability, reflecting the impact of inventory accounting methods on earnings.

Examining the profit margins, both reported and adjusted net profit margins improve over the period, denoting enhanced profitability relative to revenue. The reported net profit margin increased from 7.68% in 2020 to 17.59% in 2024, more than doubling, while the adjusted net profit margin saw a rise from 7.8% to 18.31% across the same timeframe. The adjusted margin consistently remains slightly higher than the reported margin each year, suggesting that inventory LIFO reserve adjustments slightly bolster margin metrics.

The data reveals particularly strong improvements between 2020 and 2021, where profit figures and margins both experienced significant jumps. This upward momentum continues, though with somewhat moderated growth rates from 2022 onwards, culminating in peak profitability and margin levels in 2024. Overall, the trends suggest sustained operational efficiency and effective cost management contributing to enhanced earnings quality, with inventory adjustments materially affecting the measured financial performance in a positive manner.

Total Assets

The reported total assets exhibit a generally increasing trend from 78,324 million US dollars in 2020 to 87,764 million US dollars in 2024. There is an observed dip in 2022 to 81,943 million US dollars compared to 82,793 million US dollars in 2021, but the overall trajectory resumes its upward movement thereafter. When adjusted for the inventory LIFO reserve, the total assets display a consistently higher value across all years, starting at 80,456 million US dollars in 2020 and rising steadily to 91,628 million US dollars in 2024. Adjusted assets have maintained an upward path without the mid-series dip observed in the reported figures.

Total Asset Turnover Ratios

The reported total asset turnover ratio shows a clear improvement over the five-year period, increasing from 0.5 in 2020 to a peak of 0.73 in 2023, followed by a slight decrease to 0.7 in 2024. This suggests growing efficiency in generating sales revenue from the asset base, with a minor recent decline. Similarly, the adjusted total asset turnover mirrors this trend but with consistently lower values than the reported figures. It rises from 0.49 in 2020 to 0.7 in 2023 before decreasing to 0.67 in 2024, indicating the adjustment for LIFO reserve slightly reduces the turnover ratio, reflecting the higher asset base used in the denominator.

Insights

The comparative analysis between reported and LIFO reserve adjusted data highlights the impact of inventory accounting on the asset base and efficiency metrics. The adjusted total assets are persistently higher due to inventory reserve additions, which consequently lower the adjusted total asset turnover ratios compared to the reported ones. The firm demonstrates a general improvement in asset utilization over the five-year span, although the diminishing turnover in 2024 suggests a potential moderation in operational efficiency or an increase in asset investments that have not yet translated into higher sales.

The data reveals several noteworthy trends over the five-year period ending in 2024. Both reported and inventory LIFO reserve adjusted values indicate moderate growth in total assets and equity, alongside a declining trend in financial leverage ratios.

Total Assets

Reported total assets increased from $78,324 million in 2020 to $87,764 million in 2024, reflecting an overall growth trend. Adjusted total assets, which consider inventory LIFO reserve, similarly rose from $80,456 million to $91,628 million over the same period. The adjusted figures consistently exceed the reported values, underscoring the impact of inventory valuation adjustments.

Equity Attributable to Common Shareholders

Reported equity attributable to common shareholders showed growth from $15,331 million in 2020 to $19,491 million in 2024, with some fluctuation, particularly a dip in 2022. The adjusted equity figures also increased steadily from $17,463 million to $23,355 million, with the adjustment factor reflecting higher equity values. The growth in adjusted equity is relatively smoother and more pronounced than the reported equity.

Financial Leverage

Reported financial leverage demonstrated a declining trend from a ratio of 5.11 in 2020 to 4.50 in 2024, indicating a gradual reduction in reliance on debt relative to equity. The adjusted financial leverage followed a similar pattern, decreasing from 4.61 to 3.92. The lower adjusted financial leverage compared to the reported metrics suggests that the inventory valuation adjustment improves the capital structure perspective by lowering leverage.

Overall, these trends reflect steady asset and equity growth alongside improving leverage ratios, with inventory LIFO reserve adjustments providing a more conservative and enhanced assessment of the company’s financial position over time.

Profit Attributable to Common Stockholders

The reported profit showed a significant upward trend over the five-year period, increasing from 2,998 million US dollars in 2020 to 10,792 million US dollars in 2024. The adjusted profit figures, which account for inventory LIFO reserve adjustments, also followed a similar pattern, rising steadily from 3,044 million US dollars in 2020 to 11,233 million US dollars in 2024. Notably, the adjusted profits consistently exceeded the reported profits, indicating the positive impact of the adjustments.

Equity Attributable to Common Shareholders

Reported equity displayed moderate growth, moving from 15,331 million US dollars in 2020 to 19,491 million US dollars by 2024. However, it experienced a decline in 2022 before recovering in subsequent years. Adjusted equity, incorporating inventory LIFO reserve adjustments, exhibited a more robust increase, rising from 17,463 million US dollars in 2020 to 23,355 million US dollars in 2024. This suggests that the LIFO reserve adjustments provide a higher estimated equity value and smoother growth trajectory over the years.

Return on Equity (ROE)

The reported ROE demonstrated a strong upward trend, starting at 19.56% in 2020 and escalating substantially to 55.37% in 2024. Adjusted ROE values, which account for inventory adjustments, were consistently lower than reported ROE but still showed a pronounced increase from 17.43% in 2020 to 48.10% in 2024. The increasing ROE figures, both reported and adjusted, indicate improving profitability and efficiency in generating returns on shareholder equity over time.

Overall Insights

Both reported and adjusted financial metrics reveal substantial growth and enhanced profitability across the analysis period. The adjustments related to inventory LIFO reserve consistently result in higher profit and equity numbers, while slightly tempering return on equity percentages compared to reported figures. This pattern underscores the significance of inventory accounting on financial results and the company’s improved financial performance steadily from 2020 through 2024.

Profit Attributable to Common Stockholders

The reported profit attributable to common stockholders exhibited a significant upward trend over the five-year period, increasing from 2,998 million US dollars in 2020 to 10,792 million US dollars in 2024. This reflects more than a threefold growth in profitability. The LIFO reserve adjusted profit consistently remained slightly higher than the reported profit, with an increase from 3,044 million US dollars in 2020 to 11,233 million US dollars in 2024, indicating that adjustments for inventory valuation positively impacted the profit figures.

Total Assets

Total assets, as reported, showed a moderate increase from 78,324 million US dollars in 2020 to 87,764 million US dollars in 2024. The value fluctuated somewhat between 2021 and 2022, with a small decline in 2022 before rising again in subsequent years. Adjusted total assets, which account for LIFO reserve adjustments, were consistently higher than the reported total assets, increasing from 80,456 million US dollars in 2020 to 91,628 million US dollars in 2024. This suggests that inventory adjustments contribute a meaningful addition to asset valuation.

Return on Assets (ROA)

Reported ROA demonstrated a strong upward trajectory, starting at 3.83% in 2020 and reaching 12.3% by 2024. The adjusted ROA, which incorporates LIFO reserve impacts, followed a similar pattern but was slightly lower than the reported ROA throughout most of the period, moving from 3.78% in 2020 to 12.26% in 2024. Both measures reflect substantially improved asset efficiency and profitability over time.

Overall Trends and Insights

The financial data reveals consistent growth in profitability and asset efficiency, with the company's profits more than tripling during the assessed timeframe. Adjustments for the LIFO reserve consistently showed higher asset bases and profit figures, highlighting the importance of inventory accounting on financial outcomes. The steady improvement in ROA indicates enhanced utilization of assets to generate profit. Slight fluctuations in total asset levels around 2021 and 2022 suggest some variability in asset management or investment activity during those years, yet the overall trend remains positive.