Caterpillar Inc. (NYSE:CAT)

Inventory Turnover

The inventory turnover ratio has exhibited slight fluctuations over the observed periods, beginning at 2.46 in Q1 2021 and generally maintaining values around the mid-2.4 range. There is a mild downward trend in later periods, decreasing to approximately 2.16 by Q2 2025. This suggests a minor reduction in the rate at which inventory is sold and replenished.

Receivables Turnover

Receivables turnover has shown an overall positive trend, rising from 5.07 in Q1 2021 to a peak near 6.95 in Q3 2023, indicating increased efficiency in collecting receivables. However, following this peak, a gradual decline is observed through Q3 2025, ending around 6.02. This signals a slight easing in collection speed in more recent quarters.

Payables Turnover

The payables turnover ratio has generally increased from 4.46 in Q1 2021 to a high near 5.54 in Q3 2023, reflecting more frequent payments to suppliers. The latter periods show a moderate decrease to around 4.78 by Q3 2025, suggesting some extension in payment delays relative to earlier peaks.

Working Capital Turnover

Working capital turnover improved markedly from 2.52 in Q1 2021 up to a peak of 6.61 in Q2 2024, implying enhanced effectiveness in utilizing working capital to generate sales. After this peak, a decrease is noted with turnover declining to 4.42 by Q3 2025, indicating a reduction in operating efficiency related to working capital.

Average Inventory Processing Period

The average inventory processing period has fluctuated between approximately 140 to 165 days over the reviewed quarters. Initial periods saw relatively stable values near 145 days, but an increasing trend is evident starting around Q1 2024, culminating near 166 days by Q3 2025. This lengthening suggests slower inventory turnover.

Average Receivable Collection Period

The average time to collect receivables declined from 72 days in Q1 2021 to approximately 53 days by late 2023, showing improved collections efficiency. Following this, the receivables collection period slightly increased again to around 61 days by Q3 2025, indicating a modest reduction in collection speed.

Operating Cycle

The operating cycle, reflecting total days from inventory purchase to cash collection, ranged from a high of 228 days by Q2 2025 to a low of 194 days near Q4 2023. The cycle generally trended downward until late 2023, indicating shorter cash-to-cash cycles, but lengthened again in recent periods, reflecting potential operational delays.

Average Payables Payment Period

The average period for paying payables declined from 82 days in early 2021 to a low of 66 days in Q3 2023, suggesting quicker supplier payments. Post-Q3 2023, this period has extended again to roughly 76-78 days, indicating a return to longer payment durations.

Cash Conversion Cycle

The cash conversion cycle, which measures days between outlay and cash recovery, decreased from 139 days in Q1 2021 to a low near 124 days in late 2021 and late 2022, suggesting improved cash flow management at those times. However, there is a subsequent upward trend, reaching roughly 150 days by Q3 2025. This increase signifies a lengthening of the time taken to convert investments in inventory and receivables into cash.

Summary

Overall, the data reflects moderate variability within key efficiency ratios over time. There is evidence of initial improvements in receivables management, working capital utilization, and cash conversion efficiency during the early to mid-periods, followed by some reversal or declines in these efficiencies in more recent quarters. Inventory management appears to have slowed slightly, with increased processing periods. Payables turnover and payment periods suggest fluctuating payment behaviors, initially becoming more expedient then relaxing. The cash conversion cycle's recent lengthening indicates slightly less effective liquidity management towards the end of the observed timeframe.

The financial data reveals several notable patterns in the company's cost of goods sold (COGS), inventories, and inventory turnover ratio over multiple quarters commencing March 2021 through September 2025.

Cost of Goods Sold (COGS)

The COGS exhibit a fluctuating trend with periodic increases and decreases across the quarters. Starting at approximately $8.0 billion in March 2021, the figure rises generally towards the end of 2021, peaking at over $11.6 billion by December 2022. Subsequently, the COGS show some variability, with slight decreases and recoveries, culminating in a higher value of about $11.7 billion by September 2025. The data indicates overall growth in production or procurement costs, with intermittent quarters of contraction.

Inventories

The inventory levels demonstrate a clear upward trajectory over the analyzed period. Beginning near $12.1 billion in Q1 2021, inventories steadily increase, reaching nearly $18.9 billion by Q3 2025. While there are minor dips in some quarters, the general trend is increasing, indicating accumulation of stock on hand. This rise could reflect expectations of higher sales, production scaling, or potential challenges in inventory turnover efficiency.

Inventory Turnover Ratio

The inventory turnover ratio remains relatively stable but shows a slight declining tendency in later quarters. Starting around 2.46 in early 2021, the ratio fluctuates modestly between approximately 2.2 and 2.6 throughout the timeline. Notably, from mid-2024 onwards, there is a discernible decrease, with the ratio dropping towards 2.16 by mid-2025. This reduction suggests the company is selling or utilizing inventory at a slower pace relative to the inventory levels, which aligns with the reported increase in stock quantities.

In summary, the data points to increasing cost of goods sold and inventories over time, accompanied by a mild decline in inventory turnover efficiency. These elements suggest growth in operational scale but also potential challenges in inventory management or sales velocity, warranting further attention to maintain operational efficiency and working capital optimization.

Sales of Machinery, Energy & Transportation

Over the analyzed periods, sales exhibit a generally upward trajectory with some fluctuations. Starting from approximately 11.2 billion USD in early 2021, sales increased steadily, peaking at nearly 15.9 billion USD by the end of 2022. This growth phase was characterized by consistent quarterly increases, particularly notable in the second half of 2022.

Entering 2023, sales showed some volatility, with levels oscillating between approximately 15.1 billion and 16.5 billion USD, indicating a period of short-term variability. In 2024, there was a slight downward correction followed by a moderate recovery. However, by early 2025, sales again showed a rebound to about 16.7 billion USD, marking one of the highest points in this timeline.

Receivables, trade and other

Trade receivables reflected a generally increasing trend, rising from around 7.9 billion USD in Q1 2021 to surpass 10.1 billion USD in Q1 2025. This increase was not entirely smooth, showing periods of both declines and recoveries, especially noticeable around the mid to late 2023 timeframe.

Despite some fluctuations, receivables maintained higher absolute levels over time, suggesting either extended credit terms, increased sales on credit, or a combination of both factors affecting working capital requirements.

Receivables turnover ratio

The receivables turnover ratio demonstrated notable improvements in efficiency from early 2021, rising from approximately 5.07 to a peak of nearly 6.95 in late 2023. This indicates a more rapid collection of receivables relative to sales during that interval.

Following this peak, the turnover ratio experienced a gradual decline through 2024 and into early 2025, settling slightly above 6. This decline might imply a modest reduction in collection efficiency or an increase in credit terms.

Overall Insights

The company experienced solid growth in sales over the five-year span, though with varying degrees of quarterly volatility. The growth in receivables aligns broadly with sales increases, but the slightly decreasing turnover ratio in the latest periods suggests a minor easing in collection policies or an increase in outstanding credit balances.

These trends highlight the importance of careful working capital management to balance growth ambitions with liquidity and credit risk considerations. Monitoring and potentially enhancing credit management practices could be warranted as sales volumes continue to rise.

Cost of Goods Sold (COGS)

The cost of goods sold exhibited notable fluctuations over the analyzed periods. Starting in early 2021, COGS was at 8,012 million US dollars and generally trended upward through 2022, reaching a peak of 11,614 million US dollars by the end of 2022. This increase suggests rising production costs or increased sales volume during this period. However, beginning in 2023, COGS demonstrated variability, with some decreases to around 9,662 million US dollars in early 2024, followed by increases again toward the end of the data range, peaking at 11,673 million US dollars by late 2025. The overall pattern indicates cyclical cost pressures with intermittent periods of cost containment or lower sales impact.

Accounts Payable

Accounts payable showed a gradual increasing trend from 6,694 million US dollars at the start of 2021 to 8,689 million US dollars by the end of 2022. This increase aligns with the rising COGS during the same timeframe, consistent with larger procurement activities or extended credit terms. Throughout 2023 and into 2025, accounts payable fluctuated but remained within a generally narrow range between approximately 7,575 million and 8,729 million US dollars, suggesting some stabilization in supplier liabilities despite ongoing variability in costs and purchases.

Payables Turnover Ratio

The payables turnover ratio fluctuated moderately across the periods and ranged roughly between 4.36 and 5.54. The ratio initially decreased slightly by the end of 2021 but then increased in 2022 and peaked at 5.54 in the third quarter of 2023, indicating relatively faster payments to suppliers during this period. After this peak, the turnover ratio declined gradually through 2024 and 2025, falling back toward a ratio around 4.69 to 4.78. This decline may reflect lengthening payment cycles or altered credit terms with suppliers, perhaps as a response to cost variability or cash management strategies.

Summary Insights

The data indicates that cost pressures were elevated through 2022, with some easing or normalization occurring into 2024, although costs rose again late in the examined timeframe. Accounts payable levels increased in parallel with cost growth before settling into a stable range, implying effective management of supplier credit, even amid cost fluctuations. The payables turnover ratio’s rise and subsequent decline suggest adjustments in payment policies or supplier relationships, possibly to balance cash flow needs against cost and credit conditions. Overall, the trends reflect an environment of variable production costs and a responsive approach to managing payables and supplier financing over time.

Working Capital

The working capital value shows a general decline from March 2021 through June 2024, moving from 16,003 million USD to 9,532 million USD. This indicates a reduction in the short-term liquidity buffer over this period. However, starting in June 2024, the working capital begins to recover, reaching 13,827 million USD by September 2025. The fluctuations suggest periods of tightened liquidity followed by gradual replenishing.

Sales of Machinery, Energy & Transportation

Sales figures show an upward trend over the entire period, beginning at 11,191 million USD in March 2021 and rising to 16,726 million USD by September 2025. Despite some short-term fluctuations, the overall trajectory is positive, reflecting increasing demand or successful expansion in these sectors. Sales peak notably in the latter quarters of 2022 and maintain elevated levels through 2023 and 2024, despite seasonal variations.

Working Capital Turnover

The working capital turnover ratio steadily improves from 2.52 in March 2021 to a high of 6.61 in June 2024. This indicates increasingly efficient use of working capital to generate sales. After reaching this peak, the ratio exhibits variability but remains elevated relative to initial values, suggesting sustained operational efficiency. The ratio drops from the peak but remains above 4.0, highlighting continued strong turnover performance consistent with rising sales volumes.

Overall Analysis

There is a noteworthy inverse relationship between working capital and sales, where working capital decreases significantly while sales increase. This pattern, alongside the improving working capital turnover ratio, implies enhanced efficiency in asset utilization and inventory management. The company appears to be generating more sales per unit of working capital invested, which is a positive operational sign. However, the declining working capital for several consecutive quarters also indicates potential liquidity risks that are partially alleviated by the recovery in later periods.

The analysis of the inventory management metrics reveals notable trends in Caterpillar Inc.'s operational efficiency over the examined quarters.

Inventory Turnover Ratio

The inventory turnover ratio has exhibited relative stability around the mid-2.4 range throughout the time series, fluctuating between a low of 2.16 and a high of 2.58. Initially, ratios hovered near 2.46-2.53 from 2021 through early 2023, indicating a consistent ability to convert inventory into sales approximately 2.4 to 2.5 times per year. A slight improvement is observed towards the end of 2023 with the ratio peaking at 2.58, suggesting enhanced turnover efficiency. However, beginning in early 2025, this ratio declines to as low as 2.16 by mid-2025, which may point to slowing inventory movement or accumulation of stock relative to sales.

Average Inventory Processing Period

This metric, reflecting the average number of days inventory is held before sale, shows a generally inverse relationship with the inventory turnover ratio. The time period fluctuates mostly between 141 and 155 days through 2023 and 2024, with a slight trend towards elongation observed. Notably, from early 2025 onward, the processing period extends significantly to above 160 days, peaking at 169 days in mid-2025. This elongation suggests increased inventory holding times, potentially due to slower sales cycles, supply chain delays, or strategic stockpiling.

Overall, these trends indicate that the company's inventory efficiency was relatively stable over much of the historical period but began to deteriorate in 2025, with slower inventory turnover and longer holding periods. This shift may necessitate closer management focus on inventory controls, demand forecasting, and supply chain optimization to mitigate the risk of excess inventory and associated carrying costs.

Receivables Turnover Ratio

The receivables turnover ratio shows an overall upward trend from March 2021 through December 2024, increasing from 5.07 to a peak of approximately 6.95 in September 2023. This indicates an improvement in the efficiency of credit sales collection over this period. However, from late 2024 onwards, a slight decline is observed, with the ratio decreasing gradually to around 6.02 by September 2025. Despite this drop, the turnover ratio remains higher than the levels seen in early 2021.

Average Receivable Collection Period

The average receivable collection period decreases from 72 days in March 2021 to about 53 days in late 2023 and early 2024, reflecting faster collection of receivables. This shorter period aligns with the increased receivables turnover ratio during the same period, confirming improved liquidity management. From early 2024 onwards, the collection period slightly lengthens, rising to 61 days by September 2025. Although this represents a minor lengthening in days, the collection period remains below the initial level observed in 2021.

Summary of Trends and Insights

The data reflects a period of enhanced efficiency in receivables management, as evidenced by a strengthening turnover ratio and a decreasing collection period through 2023 and into 2024. This suggests improved credit control and cash flow performance. The subsequent modest deterioration in both metrics from 2024 to 2025 may point to emerging challenges in collection speed or changes in credit policy, yet the company's performance still surpasses earlier periods. Close monitoring is advisable to assess whether the recent declines represent a temporary fluctuation or a longer-term shift in receivables management efficiency.

The analysis of the recent quarterly financial trends reveals notable dynamics in inventory processing, receivable collection, and the overall operating cycle.

Inventory Processing Period

The average number of days to process inventory generally fluctuates within a range from approximately 144 to 169 days over the observed periods. Initially, there is a slight variation between quarters, with occasional decreases, such as from 155 days to 144 days at the end of 2022. However, starting from early 2024, a progressive upward trend is observable, culminating in the highest figures near 165 to 169 days during early to mid-2025. This suggests a gradual lengthening in the time the company holds inventory before processing, potentially indicating increased inventory levels or slower turnover.

Receivable Collection Period

The average receivable collection period shows a generally declining trend through 2021 into early 2022, sliding from the low 70s to slightly above 50 days by the end of 2022. During 2023 and into early 2024, the period stabilizes mostly in the low to mid-50s range, showing some consistency. However, from mid-2024 onwards, there is a mild upward movement, with collection days creeping back toward the high 50s and low 60s by 2025. This pattern may reflect improvements in collections efficiency initially, followed by a modest relaxation or increased credit terms in more recent quarters.

Operating Cycle

The combined operating cycle, which aggregates inventory processing and receivables collection periods, generally tracks the movements of its components. Over 2021, it remains relatively stable in the 200 to 221 day range, followed by a slight reduction into late 2022, reaching a low around 194 days. Subsequently, a gradual increase occurs throughout 2023 and 2024, with the operating cycle rising back up to approximately 227-228 days by early 2025. This suggests that the company's overall cash conversion cycle has lengthened recently, potentially indicating more capital tied up in working capital or changes in operating efficiency.

In summary, the company exhibits some variation in operational working capital metrics over the analyzed intervals. The increase in inventory processing time, along with a recent uptick in accounts receivable collection days, contributes to an extended operating cycle near the most recent periods. This may signal the need for close monitoring of inventory management and receivables to optimize cash flow efficiency going forward.

Payables Turnover Ratio

The payables turnover ratio demonstrates a generally increasing trend from March 2021 through September 2024, starting at 4.46 and peaking at 5.54 in September 2023. Following this peak, the ratio shows a gradual decline, reaching 4.78 by September 2025. This pattern indicates that the company was accelerating its payment to suppliers over the initial period, improving its turnover rate, before a slight deceleration in turnover during the latter quarters.

Average Payables Payment Period

The average payables payment period, measured in days, inversely complements the payables turnover ratio. It decreases from 82 days in March 2021 to a low of 66 days in September 2023, reflecting faster payment to suppliers. After this minimum, the payment period steadily lengthens again, reaching 78 days by September 2025. This trend suggests that the company initially improved its working capital management by settling payables quicker, but subsequently extended its payment terms or slowed payments towards the end of the analyzed period.

Overall Insights

The inverse relationship between payables turnover and average payment period is consistent throughout the timeframe, confirming the expected financial dynamic between these metrics. The company enhanced its payables management efficiency up to late 2023, possibly to optimize supplier relations or take advantage of early payment discounts. However, after this period, both indicators suggest a strategic shift, potentially reflecting changes in cash management, supplier negotiations, or external economic conditions influencing payment practices.

Average Inventory Processing Period

The average inventory processing period shows some variability over the reported quarters, generally fluctuating within a range from approximately 140 to 170 days. Beginning around 149 days in early 2021, it reached a peak near 155 days in late 2022 and again in 2024, before increasing further to values around 165 to 169 days by mid-2025. This indicates a gradual lengthening in the time inventory remains in the processing cycle towards the later periods, suggesting potential changes in inventory management or sales velocity.

Average Receivable Collection Period

The average receivable collection period demonstrated a downward trend during the initial quarters, declining from 72 days at the start of 2021 to a low near 53 days in late 2023 and early 2024. However, from that point, it tended to rise again, reaching approximately 59 to 61 days by the middle of 2025. This pattern suggests an initial improvement in collecting receivables more quickly, followed by a modest reversal where collection times lengthened slightly.

Average Payables Payment Period

The payables payment period exhibited moderate fluctuations, generally decreasing from a high of 84 days in late 2021 down to a low near 66 days in late 2023. From this low point, the period gradually extended again, reaching around 76 to 78 days by mid-2025. These shifts imply varying approaches to managing payment obligations, oscillating between longer and shorter payment cycles.

Cash Conversion Cycle

The cash conversion cycle remained relatively steady with some fluctuations. Starting around 139 days in early 2021, it reached a lower range around 124 days in late 2021 and late 2022, indicating improved cash flow efficiency during those periods. However, it increased again towards the later quarters, stabilizing roughly between 138 and 151 days by mid-2025. This suggests that despite efforts to optimize working capital, the overall cycle has lengthened somewhat in recent quarters, possibly influenced by the combined effects of longer inventory processing and payment periods.