Caterpillar Inc. (NYSE:CAT)

Return on Assets (ROA)

The Return on Assets exhibits a clear upward trajectory starting from 3.83% in December 2020 and reaching a peak of 13.43% by March 2024. Following this peak, there is a gradual decline towards the end of the period analyzed, with ROA decreasing to 11.7% by March 2025. This suggests an overall improvement in asset profitability over the years, with some moderation in the most recent quarters.

Financial Leverage

Financial leverage fluctuates moderately over the time span. It starts above 5.3 in early 2020, decreases to a low around 4.24 in September 2023, and then shows an upward movement again, reaching 4.7 by March 2025. The overall trend indicates a reduction in leverage until late 2023 followed by a slight increase, implying some changes in the company’s capital structure or financing strategy.

Return on Equity (ROE)

Return on Equity demonstrates a strong increasing trend beginning at 19.56% in December 2020 and surging to above 63% by June 2024. Similar to ROA, there is a slight decrease toward the final months, settling around 55% by March 2025. The elevated levels of ROE over the period indicate a highly efficient use of equity capital, with significant growth particularly evident through 2021 to mid-2024.

Net Profit Margin

The net profit margin demonstrates a general upward trend starting from 7.68% in March 2020 and steadily increasing to a peak of 17.65% by December 2024. Following this peak, there is a slight decline towards 16.63% by March 2025. This indicates an overall improvement in profitability over the observed periods, suggesting enhanced efficiency in converting revenue into net income.

Asset Turnover

Asset turnover exhibits a consistent growth trend beginning at 0.5 in March 2020 and reaching a maximum of 0.76 by June and September of 2024. After this peak, the ratio decreases slightly to 0.70 by March 2025. The increase reflects improving efficiency in utilizing assets to generate sales, although the slight dip toward the end could point to marginally reduced asset productivity or increased asset base.

Financial Leverage

Financial leverage shows fluctuations but generally maintains a downward trajectory from 5.35 in March 2020 to a low of 4.24 in September 2023. Post-September 2023, leverage increases moderately, reaching 4.70 by March 2025. This implies a gradual reduction in debt reliance or equity amplification up to late 2023, followed by a modest increase in leverage thereafter. The decrease in leverage initially portrays a more conservative capital structure, which slightly reverts in the final periods observed.

Return on Equity (ROE)

Return on equity exhibits a strong and sustained increase, moving from 19.56% in March 2020 to an exceptional 64.26% in September 2024. Subsequently, it declines somewhat but remains elevated around 55% by March 2025. The significant growth in ROE suggests substantial improvement in financial performance and profitability relative to shareholders' equity, driven by increases in net profit margin and asset turnover combined with variations in financial leverage. The post-peak decrease still indicates robust profitability levels.

Tax Burden

The tax burden ratio shows a generally stable pattern beginning from a value of 0.75 in March 2020 and gradually increasing to approximately 0.8 by March 2025. This indicates a consistent proportion of earnings retained after taxes over the examined periods.

Interest Burden

The interest burden ratio remains steady and slightly improving from 0.89 in early 2020 to 0.96 by the end of the data period. This upward movement suggests a marginally reduced relative impact of interest expenses on earnings before tax, enhancing profitability.

EBIT Margin

The EBIT margin (%) demonstrates a strong upward trend, starting around 11.58% in early 2020 and increasing steadily to peak at around 22.83% in late 2024 before slightly decreasing to 21.64% in early 2025. This rise reflects improved operating efficiency and stronger earnings performance from core operations over time.

Asset Turnover

Asset turnover ratio improves from 0.5 in early 2020 to a peak near 0.76 in mid-2024, indicating enhanced efficiency in utilizing assets to generate sales. Although there is a slight decline to 0.7 at the start of 2025, the overall trend over the years is positive.

Financial Leverage

Financial leverage shows fluctuation but an overall downward trend from 5.35 in March 2020 to about 4.7 by March 2025. The reduction in leverage suggests decreased dependence on debt financing, potentially lowering financial risk.

Return on Equity (ROE)

Return on equity exhibits a marked increase from approximately 19.56% in early 2020 to over 55% by 2025. Notably, ROE peaks above 63% in mid-2024 before stabilizing slightly lower but still significantly elevated compared to earlier periods. This strong growth is attributable to improvements in operating margin, asset turnover, and controlled leverage, demonstrating enhanced value generation for shareholders.

Net Profit Margin

The net profit margin exhibited a consistent upward trend from the first recorded data point in March 2021 at 7.68% through to March 2025, where it stood at 16.63%. Initially, the margin increased steadily each quarter, reaching a peak of 17.65% in June 2024. Following this peak, a slight decline was observed, with the margin falling to 16.63% by March 2025. Overall, the margin more than doubled during the examined period, indicating improving profitability relative to sales.

Asset Turnover

Asset turnover showed gradual improvement over the reported periods, starting from 0.50 in March 2021 and reaching a maximum of 0.76 in both June and September 2024. After this peak, a mild decrease to 0.70 was observed by March 2025. The trend reflects enhanced efficiency in utilizing assets to generate sales, although there was a slight dip in the most recent quarters after prolonged growth.

Return on Assets (ROA)

Return on assets followed a positive trajectory paralleling the rise in net profit margin and asset turnover. Beginning at 3.83% in March 2021, ROA climbed steadily to reach a high of 13.43% in June 2024. Post-peak, a moderate decline ensued, with ROA ending at 11.7% in March 2025. This pattern suggests increasing effectiveness in generating earnings from the asset base over time, despite a mild downturn in the latter stages.

The financial ratios for the company demonstrate several notable trends over the observed periods, reflecting changes in profitability, efficiency, and financial burden.

Tax Burden

The tax burden ratio remains relatively stable starting from March 31, 2021, with values fluctuating slightly around 0.75 to 0.80. This indicates a consistent proportion of earnings retained after taxes through the periods, with minor variation suggesting a stable tax environment or effective tax management.

Interest Burden

This ratio shows a gradual improvement over time, beginning at 0.89 in early 2021 and rising steadily to approximately 0.96 by late 2024 and early 2025. This increasing trend suggests a decreasing impact of interest expenses on earnings, potentially due to lower debt levels or improved interest coverage.

EBIT Margin

The EBIT margin exhibits a clear upward trajectory from 11.58% at the start of the recorded periods to a peak above 22% by 2024. Despite slight fluctuations, the overall trend indicates growing operational profitability and improved efficiency in managing operating expenses relative to revenue.

Asset Turnover

Asset turnover also shows a consistent increase from 0.50 to about 0.73 by 2023, followed by some stabilization and minor decline to around 0.70 by 2025. This trend suggests enhancing efficiency in using assets to generate sales, although the slight dip towards the end could point to marginal challenges in asset utilization or slower sales growth.

Return on Assets (ROA)

The ROA reflects improvement over the observed timeframe, rising from 3.83% in early periods to a peak near 13.43% in 2024 before a moderate decline to about 11.7% in early 2025. This pattern correlates with the improving EBIT margin and asset turnover, indicating stronger overall profitability from asset investments despite recent small decreases.

In summary, the company demonstrates positive trends in operating efficiency and profitability, supported by stable tax and interest burdens. The temporary declines in asset turnover and ROA towards the latest periods merit monitoring to ensure sustained performance.

Tax Burden

The tax burden ratio shows a general upward trend beginning at 0.75 in the first reported quarter of 2020 and stabilizing around the 0.79 to 0.80 range from 2021 onwards. This stability continues through to early 2025, indicating a consistent effective tax rate impacting net profitability.

Interest Burden

The interest burden ratio also demonstrates an improvement over the observed periods. Starting from 0.89 in early 2020, it gradually increases to approximately 0.96 by 2021 and remains consistently at that level through to 2025. This suggests a reduction in interest expense relative to earnings before interest and taxes, possibly reflecting better interest management or lower debt financing costs.

EBIT Margin

The EBIT margin presents a robust upward trajectory from 11.58% in early 2020 to a peak of around 22.83% in late 2023. While there is slight fluctuation thereafter, with margins oscillating between 21.64% and 22.71%, the overall trend represents a significant improvement in operational profitability over the period.

Net Profit Margin

Net profit margin similarly rises from 7.68% in the earliest quarter to a high of approximately 17.65% by late 2023. Although there is a minor decline towards 16.63% in early 2025, the sustained increase over the years indicates enhanced bottom-line profitability, supported by improved EBIT margins and stable interest and tax burdens.