Caterpillar Inc. (NYSE:CAT)

The analysis of the liquidity ratios over the examined periods reveals several noteworthy trends. The current ratio shows a moderate fluctuation, with initial values around 1.42 to 1.61 between early 2020 and late 2021. Thereafter, a gradual decline is observed, reaching levels near 1.28 to 1.34 by mid-2025. Despite this decrease, the ratio remains above 1, indicating the firm maintains sufficient current assets to cover its current liabilities.

The quick ratio presents a pattern of consistent decrease over time. Starting near 0.91 to a peak of 1.08 in early to mid-2021, the ratio declines steadily thereafter, dipping below 0.7 around the later periods. This suggests a reduction in the firm's ability to meet short-term obligations without relying on inventory sales, reflecting possible tightening of liquid resources.

Regarding the cash ratio, the data indicates a downward trend as well. Beginning around 0.27 to 0.43 in the earlier periods, a more pronounced decline is evident toward the later quarters, with values dropping as low as 0.11 to 0.16 toward mid-2025. This decline may highlight a reduction in the firm's most liquid assets relative to current liabilities, potentially implying more cautious cash management or increased cash outflows.

Current Ratio

Moderate fluctuation with an overall declining trend post-2021; remains above 1 throughout the periods, indicating continued ability to cover short-term liabilities.

Quick Ratio

Initial increase up to early 2021 followed by a consistent decline, suggesting reduced availability of liquid assets excluding inventory for covering current liabilities.

Cash Ratio

Noticeable decline over time, pointing to a reduction in cash and cash equivalents against current liabilities and possibly reflecting strategic cash usage or other operational factors.

The analysis of the quarterly financial data reveals several trends in liquidity and working capital management over the observed periods.

Current Assets

Current assets generally exhibit a gradual increase from March 31, 2020, starting at approximately $37.6 billion, to reach a peak near $48.0 billion by the end of 2023. Following this peak, current assets show some fluctuation with a noticeable decline by mid-2025, settling around $43.0 to $46.8 billion. This suggests growth in liquid and short-term assets through 2023, followed by variability and slight reduction thereafter.

Current Liabilities

Current liabilities start at $26.5 billion in the first quarter of 2020 and display a generally upward trend, peaking at about $35.3 billion by mid-2023. Post this peak, liabilities exhibit some volatility, decreasing slightly but remaining relatively high near $32.6 to $34.9 billion by mid-2025. This indicates an increase in short-term obligations over time, with recent stabilization at elevated levels.

Current Ratio

The current ratio begins at 1.42 in March 2020, rising gradually to reach a high of approximately 1.61 in the third quarter of 2021. However, from late 2021 onwards, this ratio declines and oscillates between approximately 1.28 and 1.45 through mid-2025. The downward trend after 2021 points to a relative tightening in liquidity, as current liabilities have grown at a rate approaching or exceeding that of current assets. Despite this, the ratio remains above 1.2, indicating the company maintains adequate ability to cover short-term liabilities with current assets during the entire period.

In summary, the company shows a growth phase in both current assets and liabilities up to around 2023, with a concurrent rise in the current ratio indicating strengthened liquidity. Subsequently, both metrics fluctuate with a moderate decline in the current ratio, reflecting a modest reduction in the margin of short-term financial safety. Overall, the liquidity position remains acceptable, though the recent downward trend warrants continued monitoring of working capital efficiency and short-term debt management.

Quick Assets Trend

The total quick assets initially increased steadily from 24,077 million US dollars in March 2020 to a peak of 28,630 million in March 2021. Following this peak, there was a downward trend, with some fluctuations, resulting in values generally ranging between approximately 23,000 and 26,000 million over subsequent quarters. The most recent quarters in 2025 show a decline, with the quick assets dropping to around 22,333 million by March 2025, indicating a reduction in highly liquid assets available.

Current Liabilities Trend

Current liabilities fluctuated throughout the period with an overall upward tendency. Starting at 26,516 million US dollars in March 2020, liabilities rose to nearly 29,847 million in December 2021 and reached even higher levels near 34,934 million by June 2025. The data reflects increased short-term obligations over the analyzed quarters.

Quick Ratio Analysis

The quick ratio began at 0.91 in March 2020, improved to around 1.08 in March 2021, indicating a relatively strong liquidity position at that time. From mid-2021 onward, the quick ratio generally declined, falling below 0.8 for many quarters and reaching lows near 0.69 in March and June 2025. Despite minor recoveries to the 0.7–0.8 range, the trend suggests a weakening liquidity position relative to current liabilities as quick assets decreased and current liabilities increased.

Summary of Financial Health

Over the examined periods, the company displayed an initial improvement in liquidity, followed by a gradual deterioration. The consistent rise in current liabilities combined with a decrease or stagnation in quick assets has contributed to lower quick ratios, indicating reduced ability to cover short-term obligations with liquid assets. The recent quarters suggest a need for close monitoring of cash management and liquidity risk.

Total cash assets

The total cash assets displayed an initial upward trend from March 31, 2020, reaching a peak in June 30, 2020, followed by relatively stable amounts through December 31, 2020. There was a further increase in the first half of 2021, peaking near March 31, 2021, before showing a decreasing trend throughout 2022. In early 2023, cash assets again fluctuated but remained generally lower compared to the 2020 peak. The downward trend continued into 2024, hitting one of the lowest points in March 31, 2025, before a slight recovery by June 30, 2025.

Current liabilities

Current liabilities remained relatively stable during 2020, with minor fluctuations. A noticeable increase occurred starting in late 2020 and into 2021, with liabilities peaking in the second quarter of 2021. Thereafter, liabilities hovered around a high plateau with some variability through 2022 and 2023. Into 2024 and mid-2025, liabilities consistently remained elevated compared to 2020 levels, indicating a potential increase in short-term obligations over time.

Cash ratio

The cash ratio demonstrated a general decline over the entire period analyzed. Initially, the ratio improved from 0.27 in March 2020 to a peak of 0.43 in March 2021, reflecting stronger liquidity relative to current liabilities. However, from mid-2021 onwards, the ratio steadily decreased and dipped below 0.20 through most of 2023 and 2024, indicating a weakening cash position relative to the company's current liabilities. A slight improvement was visible by mid-2025 but remained at a relatively low level compared to earlier periods.

Overall analysis

The data reveals a pattern where total cash assets initially increased but later declined, while current liabilities rose and then remained elevated. Consequently, the cash ratio—a key liquidity indicator—showed initial improvement followed by a sustained decline, which may suggest a tightening of liquidity conditions. This trend points to potential challenges in covering short-term obligations solely with cash assets toward the later periods analyzed.