Caterpillar Inc. (NYSE:CAT)

The analysis of the liquidity ratios over the specified quarters reveals several important trends and changes in the company's short-term financial health.

Current Ratio

The current ratio exhibits a generally decreasing trend from 1.6 in March 2021 to around 1.35 in mid-2024, indicating a slight reduction in the company’s ability to cover its short-term liabilities with current assets. Minor fluctuations are present, with short-term increases in some quarters, such as an uptick to 1.43 in March 2023 and reaching 1.42 in December 2024. Despite these temporary increases, the ratio remains below the initial 2021 values, suggesting a modest decline in liquidity over the period.

Quick Ratio

The quick ratio demonstrates a clear and consistent downward trajectory from 1.08 in March 2021 to as low as 0.69 in mid-2024 and towards 0.78 by March 2025. This indicates a reduction in the company’s most liquid assets relative to its current liabilities, excluding inventory. The ratio fell below 1.0 starting from September 2021 and remained under this critical threshold for the majority of the periods, signaling potentially tighter immediate liquidity conditions during these quarters.

Cash Ratio

The cash ratio shows the most significant decline among the three liquidity ratios, dropping steadily from 0.43 in March 2021 to a low of 0.11 in September 2025. This ratio remains under 0.25 for the entire observed period after the initial quarters, reflecting a diminishing cash reserve relative to current liabilities. Although slight recoveries are seen intermittently (e.g., moving from 0.15 in March 2024 to 0.21 by March 2025), the overall trend illustrates a conservative cash position, which could imply either strategic use of cash resources or a need to optimize cash holdings.

In summary, the company’s liquidity position has weakened moderately over the observed quarters, with all three ratios declining. The current ratio maintains a level above 1.3, suggesting ongoing ability to meet liabilities, but the quick and cash ratios indicate tighter immediate liquidity. This may warrant closer monitoring of cash management and short-term asset liquidity going forward.

Current Assets

Current assets exhibit some fluctuation over the periods analyzed. Starting at 42,581 million US dollars in March 2021, the value experienced slight decreases and increases but generally trended upward from early 2023 onward. Peaks are notable in June 2023 and September 2025, reaching 47,000 million and 49,818 million respectively, suggesting improving liquidity or asset acquisition in recent quarters.

Current Liabilities

Current liabilities show a steady upward trend through the timeline. From 26,578 million US dollars in March 2021, liabilities increased consistently, peaking at 35,991 million in September 2025. Periodic increases, especially from mid-2022 to the end of 2023 and again in 2025, indicate growing short-term financial obligations.

Current Ratio

The current ratio indicates the company's short-term liquidity position. Initially, the ratio stood at 1.6 in March 2021, and it displayed a gradual decline with minor fluctuations. The ratio remained above 1.3 throughout the period but generally trended downward, reaching lows around 1.28 in June 2024, reflecting comparatively tighter liquidity conditions. Some recovery is observed towards later periods, with the ratio moving back to around 1.38 by September 2025. This suggests the company maintained adequate liquidity but faced some pressure on current asset coverage relative to current liabilities over time.

Overall Analysis

The data reflects an environment of increasing short-term liabilities combined with a moderate growth in current assets. While current assets increased notably in recent quarters, the growth in current liabilities outpaced asset growth until late 2024, pressuring the current ratio downward. The moderate recovery in the current ratio in 2025 indicates some stabilization in liquidity, but the ratio remaining below earlier levels suggests ongoing attention to working capital management is warranted.

Total Quick Assets

Over the period analyzed, total quick assets demonstrated a general downward trend in the earlier years, decreasing from $28,630 million at the end of March 2021 to a low point around mid-2024. The values slightly recovered in the latter part of the timeline, reaching approximately $27,999 million by September 2025. This indicates periods of tightening liquidity followed by partial rebounds, reflecting fluctuations in the company's readily available liquid resources.

Current Liabilities

Current liabilities showed an overall increasing trend throughout the period. Starting around $26,578 million in March 2021, the liabilities consistently rose, peaking at about $35,991 million by September 2025. This steady increase suggests growing short-term obligations, which may impact the company's working capital management and financial flexibility.

Quick Ratio

The quick ratio, which measures the company's ability to meet short-term liabilities with quick assets, exhibited a consistent decline from 1.08 at the beginning of the period to a low near 0.69 by mid-2025. Although there were minor fluctuations, the ratio did not return to the initial levels. This declining trend indicates a weakening liquidity position, as the coverage of current liabilities by quick assets became less sufficient over time.

Overall Analysis

The combination of decreasing quick assets and increasing current liabilities contributes to a deteriorating quick ratio, signaling potential concerns regarding the company's short-term financial health. The weakening liquidity position suggests the need for careful monitoring of cash management and working capital to ensure that obligations can be met without strain. Despite some improvement in quick assets toward the end of the timeline, the quick ratio remains below the levels observed at the start, indicating persistent challenges in liquidity management.

Total Cash Assets

The total cash assets showed a general downward movement from March 2021 through March 2022, decreasing from 11,342 million USD to a low of 6,014 million USD in June 2022. Following this period, there was some recovery towards the end of 2022 and into 2023 with values fluctuating around the 6,500 to 7,400 million USD range. However, starting in early 2024, cash assets declined again with a notable low point of 3,562 million USD in March 2025, before rising again to 7,538 million USD at the end of the same quarter. Overall, the data reflects volatility with interim recoveries amid an underlying downward trend, particularly observable in the first quarters of 2024 and 2025.

Current Liabilities

Current liabilities displayed an upward trend throughout the observed periods. Beginning at 26,578 million USD in March 2021, liabilities steadily increased with some fluctuations, reaching 35,991 million USD by September 2025. The rise was relatively consistent with minor dips and plateaus, notably stabilizing somewhat around the 32,000 million USD mark during early 2024 before surging again towards the middle and late 2025. This suggests increasing short-term obligations over time.

Cash Ratio

The cash ratio followed a generally declining trajectory over the entire period, indicating a relative decrease in liquidity when comparing cash assets to current liabilities. From a ratio of 0.43 in March 2021, the metric fell to as low as 0.11 by June 2025. Temporary stabilization occurred occasionally, with ratios hovering around 0.20 in late 2022 and early 2023. Despite intermittent rises, the ratio never returned to early period levels and shows a clear trend of diminishing cash coverage versus current liabilities.

Summary

In summary, the financial data reveals increasing current liabilities alongside fluctuating but overall declining cash assets. The combined effect results in a decreasing cash ratio, which signals reduced short-term liquidity strength over the monitored quarters. While some quarters show temporary improvements in cash levels, the overarching pattern indicates caution in the company’s ability to cover its immediate liabilities strictly with cash holdings.