Caterpillar Inc. (NYSE:CAT)

Debt to Equity Ratio

The debt to equity ratio exhibited a gradual decline from 2.61 in the first quarter of 2020 to a low near 1.81 in the third quarter of 2023, indicating a steady reduction in reliance on debt relative to equity over this period. However, from late 2023 through mid-2025, the ratio fluctuated moderately between approximately 1.81 and 2.18, suggesting a stabilization with some variability rather than a continuous trend.

Debt to Capital Ratio

This ratio showed a mild downward trend, starting at 0.72 in early 2020 and reaching about 0.64 by the third quarter of 2023, which may reflect improved capital structure with a somewhat lower proportion of debt. Subsequently, the ratio moved upward slightly, fluctuating near 0.66 to 0.69 through mid-2025, again indicating a relatively stable capital composition with marginal increases in debt proportion.

Debt to Assets Ratio

The debt to assets ratio remained fairly stable over the observed period, predominantly ranging between 0.43 and 0.50. A slight decline was noticeable from 0.49 in early 2020 to around 0.43 by late 2023, reflecting a modest decrease in leverage relative to total assets. From late 2023 to mid-2025, the ratio hovered around 0.44 to 0.45, showing no significant shifts.

Financial Leverage

Financial leverage decreased from 5.35 in the first quarter of 2020 to a trough near 4.24 by the third quarter of 2023, consistent with the trends observed in debt-related ratios. Following this period, the leverage measure increased moderately, oscillating between 4.24 and 4.86 through mid-2025, suggesting some renewed use of leverage or changes in equity levels.

Interest Coverage Ratio

Interest coverage improved markedly from 8.8 in the third quarter of 2020 to a peak exceeding 27 by the third quarter of 2024, denoting a significant strengthening in the company’s ability to cover interest expenses from operating earnings. This ratio maintained relatively high levels through mid-2025, slightly decreasing but remaining well above historical levels, indicating sustained strong financial health regarding interest obligations.

An analysis of the quarterly financial data reveals evolving trends in the company's debt, equity, and leverage ratios over the given periods.

Total Debt

The total debt fluctuated moderately throughout the reported quarters. Initially, it showed a slightly increasing trend from approximately $37.1 billion at the end of Q1 2020 to a peak around $38.6 billion by Q2 2020. Subsequently, debt levels generally remained in a band between $36.5 billion and $38.0 billion through 2020 and 2021, with some quarterly variations. Notably, in the more recent periods beginning in 2024, there is a discernible upward movement, with debt increasing and reaching over $40.7 billion by Q2 2025, marking the highest level across the presented timeline.

Shareholders’ Equity Attributable to Common Shareholders

Equity demonstrated an overall growth trajectory from Q1 2020 through Q4 2023, rising from approximately $14.2 billion to a peak of nearly $20.5 billion in Q3 2023. However, in the subsequent quarters starting late 2023 and into 2024, equity values experienced a decline with some volatility, falling to about $18.7 billion by Q2 2025. This indicates a period of equity contraction after a sustained upward trend.

Debt to Equity Ratio

The debt to equity ratio displayed a downward trend from Q1 2020 through Q3 2023, decreasing from a high ratio of 2.81 down to a low of approximately 1.81 in Q3 2023. This suggests an improvement in capital structure with relatively less leverage during this period. However, from Q4 2023 onward, the ratio reversed course and began climbing again, reaching about 2.18 by Q2 2025. This increase corresponds with the observed rise in total debt and decline in equity, reflecting a shift toward higher leverage and potentially greater financial risk.

Overall, the company demonstrated a pattern of reducing leverage and strengthening equity through much of the 2020 to 2023 timeframe. The recent quarters indicate a reversal to increased indebtedness accompanied by declining equity, driving a higher debt to equity ratio. This shift suggests a strategic or market-driven change in the capital structure that may warrant monitoring for its impact on financial stability and risk profile.

Total Debt

The total debt figures show a fluctuating pattern over the reported periods. Initially, total debt increased slightly from US$37,093 million in March 2020 to US$38,622 million in June 2020, followed by a modest decrease and relative stabilization around the US$37,000 million mark through the end of 2021. From early 2022 to late 2023, total debt remained generally steady, fluctuating slightly between approximately US$36,500 million and US$37,700 million. However, starting from early 2024, total debt exhibited an upward trend, rising from US$37,853 million in March 2024 to US$40,748 million in June 2025. This indicates increased indebtedness in the most recent periods.

Total Capital

Total capital steadily increased over the time frame analyzed. Beginning at US$51,290 million in March 2020, the metric rose consistently with minor fluctuations, reaching US$57,628 million by September 2023. Though some periods such as mid-2022 and mid-2024 experienced slight declines, the overall trend was upward. By June 2025, total capital peaked at US$59,409 million. This steady growth may suggest ongoing investment or accumulation of equity and liabilities supporting the company’s operations and assets.

Debt to Capital Ratio

The debt to capital ratio displayed a gradual decline over the period from March 2020 through September 2023, decreasing from 0.72 to 0.64. This downward trend indicates a relative reduction in the proportion of debt within the overall capital structure, suggesting an improved balance between debt and equity or a diversification of financing sources. However, after September 2023, the ratio reversed its course, gradually increasing to 0.69 by June 2025. This change implies a renewed emphasis on leveraging debt financing or a comparatively slower growth in capital, contributing to a higher leverage ratio near the end of the analyzed period.

Overall Observations

The data reveals an initial phase (2020 to late 2023) characterized by manageable debt levels with increasing total capital and a decreasing debt to capital ratio, signaling strengthening capital structure and reduced financial risk. In the subsequent period beginning in early 2024, the company appears to have increased its debt position significantly alongside continued growth in total capital, resulting in a rising debt to capital ratio. This shift suggests a more leveraged capital structure possibly aimed at funding expansion, acquisitions, or other capital-intensive activities. Stakeholders may consider monitoring the implications of this increased leverage on financial stability and cost of capital going forward.

The financial data reveals several notable trends in the company's debt and asset management over the analyzed quarterly periods.

Total Debt

The total debt showed fluctuations throughout the period. Initially, it increased modestly from approximately 37,093 million USD in March 2020 to a peak near 38,622 million USD in June 2020. Following this peak, total debt generally declined through 2021 and remained relatively stable around the 36,000 to 38,000 million USD mark until early 2024. However, in the last observed quarters, there is a noticeable upward trajectory, with debt reaching approximately 40,748 million USD by June 2025, suggesting an increase in leverage or borrowing activity towards the end of the period.

Total Assets

Total assets increased overall during the timeframe. Starting at about 75,894 million USD in March 2020, assets gradually increased, peaking near 87,476 million USD by December 2023. Despite some fluctuations, the asset base remained relatively stable around the mid-80,000 million USD range through early 2024. There was some volatility afterward, with assets declining to approximately 84,974 million USD by June 2025 before rising again to 90,325 million USD in the last period, which may reflect asset acquisitions or revaluation.

Debt to Assets Ratio

The debt to assets ratio displayed a general downward trend from 0.49 at the beginning of 2020 to around 0.43 in late 2023, indicating an improvement in the company's capital structure with a gradual reduction in leverage relative to assets. However, this ratio ascended slightly to around 0.45 by mid-2025, consistent with the increase in total debt observed in the same period. Overall, the ratio remained in a narrow band between 0.43 and 0.5, suggesting a stable borrowing level relative to asset size with minor variations.

In summary, the company maintained a relatively stable asset base and managed its total debt with moderate fluctuations, leading to a mostly stable debt to assets ratio over the years. The recent rise in total debt alongside increasing assets has caused a slight uptick in the leverage ratio, which may merit further monitoring to assess its impact on financial risk and capital structure.

Total Assets

Total assets exhibit a fluctuating upward trend over the observed periods. Beginning at approximately 75.9 billion USD in March 2020, assets steadily increased until the end of 2021, reaching about 82.8 billion USD. Subsequently, assets experience oscillations with minor declines in mid-2022 and early 2024, but generally maintain a range between 81 billion and 90.3 billion USD. The highest recorded value is in June 2025 at approximately 90.3 billion USD, indicating overall asset growth of nearly 19% over the five-year span.

Shareholders’ Equity Attributable to Common Shareholders

Shareholders’ equity shows a variable but broadly upward progression. Initial equity stood near 14.2 billion USD in March 2020, followed by moderate increases and some declines during 2020 through mid-2022. A significant rise is observed from late 2022 through late 2023, peaking around 20.5 billion USD in September 2023. Following this peak, equity decreased slightly but remains elevated compared to the early periods, ending around 18.7 billion USD in June 2025. This pattern suggests strengthened equity capital with periods of consolidation.

Financial Leverage (Ratio)

Financial leverage ratios fluctuate within a range from about 4.2 to 5.6 over the quarters. Starting at a high of 5.35 in March 2020, the ratio peaks further at 5.57 in June 2020, indicating elevated use of debt relative to equity during this initial phase. A downward trend emerges through 2021, reaching levels near 4.2 to 4.5 by late 2023, implying a reduction in leverage and potentially increased financial stability. However, from early 2024 onward, leverage increments are noted again, rising close to 4.8 by mid-2025. This suggests a cyclical pattern in the company's debt usage relative to equity, with phases of both deleveraging and moderate re-leveraging.

Earnings before interest and tax (EBIT)

The EBIT figures experienced significant fluctuation in the initial quarters, with a low point of 821 million in June 2020 following a higher 1631 million in March 2020. Thereafter, there was a steady upward trend through 2021, peaking notably at 3803 million in June 2023. Post this peak, EBIT saw a moderate decline and some volatility but generally remained above 2600 million in most quarters of 2023 and early 2024. The most recent data shows EBIT figures declining again to 2693 million in March 2025, indicating a possible downward trend or increased volatility towards the end of the period observed.

Interest expense excluding Financial Products

Interest expense remained relatively stable throughout the period, oscillating in a narrow range mostly between 107 million and 143 million. The expenses showed little correlation with the sharp fluctuations in EBIT. There was a slight peak observed at 143 million in March 2024, but overall the interest expense exhibited a consistent pattern without significant spikes or declines.

Interest coverage ratio

Interest coverage, which reflects the firm's ability to cover interest expenses with EBIT, was not reported in the earliest quarters but started showing high values from June 2020 onward. The ratio indicated a marked improvement in the company’s capacity to meet interest obligations, rising from 8.8 to a peak of 27.68 in June 2024. Following this peak, the ratio experienced a minor decline but remained robust, above 25 through March 2025. This sustained high performance in interest coverage suggests strong earnings relative to interest costs over the latter part of the timeline.