Caterpillar Inc. (NYSE:CAT)

The financial metrics presented demonstrate varying trends between 2021 and 2025. Generally, adjusted ratios exhibit more stability than their reported counterparts, suggesting the adjustments mitigate some year-to-year volatility. Several key areas show notable shifts over the five-year period.

Asset Turnover

Both reported and adjusted total asset turnover initially increased from 2021 to 2023, peaking at 0.73 and 0.72 respectively, before declining slightly in 2024 and further in 2025. The adjusted ratio consistently remains marginally lower than the reported ratio, indicating the adjustments reduce the calculated efficiency of asset utilization.

Liquidity

The reported current ratio fluctuated modestly, ranging between 1.35 and 1.46. Conversely, the adjusted current ratio demonstrated a more consistent upward trend, increasing from 1.54 in 2021 to 1.55 in 2025. This suggests the adjustments enhance the perceived liquidity position.

Leverage

Reported debt to equity decreased from 2.29 in 2021 to 1.94 in 2023, then increased slightly to 2.03 in 2025. The adjusted debt to equity ratio mirrored this trend, but at lower levels, falling from 1.97 to 1.70 and rising to 1.76. A similar pattern is observed in debt to capital, with adjusted values consistently lower than reported values. Reported financial leverage followed a similar pattern to debt ratios, peaking in 2022 and declining in subsequent years, while adjusted financial leverage showed a more moderate decrease.

Profitability

Reported net profit margin experienced volatility, decreasing from 13.47% in 2021 to 11.85% in 2022, then increasing significantly to 17.59% in 2024 before declining to 13.89% in 2025. The adjusted net profit margin exhibited a similar trajectory, though generally lower than the reported margin. Both reported and adjusted return on equity (ROE) peaked in 2024, with the adjusted ROE consistently lower than the reported ROE. Return on assets (ROA) followed a comparable pattern, with adjusted ROA remaining below the reported ROA throughout the period.

In summary, the adjustments applied to these financial ratios generally result in lower, more stable values compared to the reported figures. This suggests the adjustments may be related to the removal of non-recurring items or the application of different accounting treatments, leading to a more conservative assessment of financial performance and position.

The period between December 31, 2021, and December 31, 2025, demonstrates fluctuating performance in asset utilization as measured by total asset turnover. Sales of Machinery, Power & Energy generally increased over the period, though a slight decrease occurred between 2022 and 2023. Total assets and adjusted total assets both exhibited an overall upward trend, with a more pronounced increase observed in the later years of the period.

Reported Total Asset Turnover

Reported total asset turnover initially increased from 0.58 in 2021 to 0.73 in 2023, indicating improved efficiency in generating sales from assets. However, this was followed by a decline to 0.70 in 2024 and further to 0.65 in 2025. This suggests a weakening ability to convert assets into sales in the latter part of the period, despite continued sales growth.

Adjusted Total Asset Turnover

The adjusted total asset turnover mirrors the trend observed in the reported ratio. It rose from 0.58 in 2021 to 0.72 in 2023, then decreased to 0.69 in 2024 and 0.64 in 2025. The adjusted ratio consistently remains very close to the reported ratio throughout the period, suggesting that the adjustments to total assets do not significantly alter the overall assessment of asset utilization efficiency.

Sales and Asset Relationship

Sales of Machinery, Power & Energy increased from US$48,188 million in 2021 to US$63,980 million in 2025, representing a substantial overall growth of approximately 32.8%. However, the growth in sales was not consistently matched by a proportional increase in asset turnover. The decline in both reported and adjusted total asset turnover in 2024 and 2025, despite rising sales, indicates that the company may be requiring increasingly larger asset bases to generate each dollar of revenue.

Asset Base Growth

Total assets grew from US$82,793 million in 2021 to US$98,585 million in 2025, an increase of approximately 19.1%. Adjusted total assets followed a similar pattern, increasing from US$83,723 million to US$100,133 million, representing a 19.7% increase. The faster growth of assets compared to sales in the final two years of the period likely contributed to the observed decrease in asset turnover ratios.

In conclusion, while the company experienced growth in sales, its efficiency in utilizing assets to generate those sales appears to have diminished in the latter years of the analyzed period. The consistent proximity of the reported and adjusted ratios suggests that the asset adjustments do not fundamentally change this assessment.

The adjusted current ratio exhibited a generally stable pattern over the five-year period, with some fluctuations. While the reported current ratio showed more variability, the adjusted metric provides a slightly more optimistic view of the company’s short-term liquidity position.

Adjusted Current Ratio Trend

The adjusted current ratio began at 1.54 in 2021, decreased to 1.49 in 2022, and then declined further to 1.45 in 2023. A subsequent increase was observed in 2024, reaching 1.54, and continued to rise to 1.55 in 2025. This indicates a strengthening short-term liquidity position in the latter two years of the observed period.

Comparison with Reported Current Ratio

The adjusted current ratio consistently exceeded the reported current ratio across all years. This suggests that the adjustments made to current assets positively impacted the liquidity assessment. The difference between the two ratios varied, but generally remained within a range of 0.08 to 0.11.

Underlying Asset and Liability Movements

Adjusted current assets increased from US$46,054 million in 2021 to US$56,790 million in 2025, demonstrating overall growth. Current liabilities also increased over the same period, rising from US$29,847 million to US$36,558 million. The growth in adjusted current assets outpaced the growth in current liabilities in the final two years, contributing to the improved adjusted current ratio.

Overall, the adjusted current ratio suggests a reasonably healthy short-term liquidity position, with a slight improvement observed in the most recent years of the period. The consistent difference between the adjusted and reported ratios highlights the significance of the adjustments made to current assets in evaluating the company’s ability to meet its short-term obligations.

The adjusted debt to equity ratio exhibited a generally decreasing trend over the five-year period, although with some fluctuation. Total debt demonstrated an overall increase, while equity attributable to common shareholders also increased, but at a varying pace. The adjustments made to both debt and equity figures resulted in a different ratio trajectory compared to the reported figures.

Adjusted Debt to Equity Ratio - Overall Trend

The adjusted debt to equity ratio decreased from 1.97 in 2021 to 1.76 in 2025. This indicates a strengthening of the equity position relative to debt when considering the adjustments made. The most significant decrease occurred between 2022 and 2023, falling from 1.94 to 1.70.

Adjusted Debt

Adjusted total debt remained relatively stable between 2021 and 2023, fluctuating around the US$38 billion mark. A more substantial increase is observed in 2024 and 2025, reaching US$39.011 billion and US$44.058 billion respectively. This suggests a more aggressive debt financing strategy in the later years of the period.

Adjusted Stockholders’ Equity

Adjusted total stockholders’ equity showed a consistent upward trend throughout the period. It increased from US$19.547 billion in 2021 to US$24.986 billion in 2025. The rate of increase appeared to accelerate between 2022 and 2024, contributing to the declining debt to equity ratio.

Comparison to Reported Debt to Equity

The reported debt to equity ratio showed less of a declining trend than the adjusted ratio. While the reported ratio also decreased initially, it experienced a slight increase in 2024 and 2025, ending at 2.03. This difference highlights the impact of the adjustments made to debt and equity in calculating the adjusted ratio.

The adjustments to debt and equity appear to have a material effect on the calculated ratio, resulting in a more favorable trend than indicated by the reported figures. The increasing debt levels in the final two years, coupled with continued equity growth, suggest a managed increase in leverage.

The information presents a five-year trend of debt and capital figures, culminating in adjusted debt-to-capital ratios. Total debt exhibited a generally stable pattern between 2021 and 2023, fluctuating around the US$37 billion mark, before increasing to US$38.409 billion in 2024 and further to US$43.330 billion in 2025. Total capital followed a similar trajectory, remaining relatively consistent between 2021 and 2023, then increasing to US$57.900 billion in 2024 and US$64.648 billion in 2025.

Reported Debt to Capital

The reported debt-to-capital ratio remained consistent at 0.70 for both 2021 and 2022. A slight decrease was observed in 2023 and 2024, with the ratio settling at 0.66 for both years. In 2025, the ratio increased marginally to 0.67.

Adjusted Total Debt

Adjusted total debt mirrored the trend of total debt, showing relative stability from 2021 to 2023. An increase is apparent in 2024, reaching US$39.011 billion, followed by a more substantial rise to US$44.058 billion in 2025. The adjustments made to total debt appear to moderate the overall debt figure compared to the reported values.

Adjusted Total Capital

Adjusted total capital also demonstrated a pattern of stability from 2021 to 2023, with a noticeable increase in 2024 to US$61.310 billion, and a further increase to US$69.044 billion in 2025. The adjustments to total capital resulted in a higher capital base than reported.

Adjusted Debt to Capital

The adjusted debt-to-capital ratio began at 0.66 in 2021 and remained at the same level in 2022. A downward trend was then observed, with the ratio decreasing to 0.63 in 2023. It experienced a slight increase to 0.64 in 2024 and remained at 0.64 in 2025. This suggests that, after adjustments, the company’s leverage has remained relatively stable, with a slight improvement in capital structure observed between 2021 and 2023, followed by stabilization.

The increases in both adjusted total debt and adjusted total capital in 2024 and 2025 suggest overall growth, while the consistent adjusted debt-to-capital ratio indicates a maintained balance between debt and equity financing during those periods.

An examination of the financial information reveals trends in adjusted financial leverage over a five-year period. Total assets exhibited a generally increasing pattern, moving from US$82,793 million in 2021 to US$98,585 million in 2025. Equity attributable to common shareholders also demonstrated an upward trajectory, rising from US$16,484 million in 2021 to US$21,318 million in 2025. Reported financial leverage fluctuated, initially increasing from 5.02 in 2021 to 5.16 in 2022, then decreasing to 4.49 in 2023 before stabilizing around 4.50-4.62 for 2024 and 2025.

Adjusted Total Assets

Adjusted total assets mirrored the trend of total assets, increasing from US$83,723 million in 2021 to US$100,133 million in 2025. The increase was consistent year-over-year, suggesting sustained growth in asset base.

Adjusted Total Stockholders’ Equity

Adjusted total stockholders’ equity also showed consistent growth, increasing from US$19,547 million in 2021 to US$24,986 million in 2025. The rate of increase appeared relatively stable throughout the period.

Adjusted Financial Leverage

Adjusted financial leverage demonstrated a decreasing trend over the five-year period. It began at 4.28 in 2021, decreased to 3.90 in 2023, and then stabilized around 3.97-4.01 for 2024 and 2025. This indicates a reduction in the proportion of assets financed by equity, or conversely, an increasing proportion financed by debt or other liabilities, although the rate of decrease slowed in the later years.

The convergence of increasing total assets and equity, coupled with the decreasing adjusted financial leverage, suggests a strengthening financial position. While assets and equity grew, the reliance on financial leverage, as measured by the adjusted ratio, diminished over time. The stabilization of the adjusted financial leverage in the final two years indicates a potential plateau in the company’s efforts to reduce its leveraged position.

The period under review demonstrates fluctuating performance in profitability metrics. Profit attributable to common stockholders increased from US$6,489 million in 2021 to US$6,705 million in 2022, then experienced substantial growth to US$10,335 million in 2023, followed by a slight increase to US$10,792 million in 2024, before decreasing to US$8,884 million in 2025. Sales of Machinery, Power & Energy mirrored this trend, rising from US$48,188 million in 2021 to US$56,574 million in 2022, continuing to US$63,869 million in 2023, a slight dip to US$61,363 million in 2024, and then increasing to US$63,980 million in 2025.

Reported Net Profit Margin

The reported net profit margin exhibited volatility throughout the period. It began at 13.47% in 2021, decreased to 11.85% in 2022, and then increased significantly to 16.18% in 2023. This upward trend continued to 17.59% in 2024, before declining to 13.89% in 2025. The margin generally tracked the fluctuations in profit attributable to common stockholders and sales, suggesting a correlation between these factors.

Adjusted Net Profit Margin

The adjusted net profit margin followed a similar pattern to the reported net profit margin, though with slightly different magnitudes. Starting at 12.43% in 2021, it decreased to 10.99% in 2022, then rose substantially to 16.62% in 2023. The margin decreased to 15.91% in 2024, and then increased to 16.28% in 2025. The adjusted profit of consolidated and affiliated companies increased from US$5,989 million in 2021 to US$6,217 million in 2022, then experienced substantial growth to US$10,612 million in 2023, followed by a decrease to US$9,763 million in 2024, before increasing to US$10,413 million in 2025. The consistency between the trends of adjusted profit and adjusted net profit margin indicates that adjustments to profit are a significant factor in overall profitability.

Overall, the period demonstrates a cyclical pattern of growth and decline in both profit and associated margins. The year 2023 appears to be a peak performance year, while 2025 shows a return towards levels closer to those observed in 2021 and 2022. The adjusted net profit margin remained consistently above the reported net profit margin throughout the period, suggesting that the adjustments made positively impact the reported profitability.

The period between 2021 and 2025 demonstrates fluctuating performance in profitability and equity, impacting both reported and adjusted return on equity. Profit attributable to common stockholders generally increased from 2021 to 2023, peaked in 2023, and then declined in 2024 and 2025. Equity attributable to common shareholders exhibited a more consistent upward trend throughout the entire period, though with some volatility.

Reported Return on Equity (ROE)

Reported ROE increased steadily from 39.37% in 2021 to a high of 55.37% in 2024. A subsequent decrease to 41.67% was observed in 2025. This movement largely mirrors the trend in profit attributable to common stockholders, indicating a strong correlation between net income and reported ROE.

Adjusted Return on Equity (ROE)

Adjusted ROE also showed an increasing trend from 2021 to 2023, rising from 30.64% to 46.87%. Similar to the reported ROE, adjusted ROE decreased in both 2024 (to 43.78%) and 2025 (to 41.68%). The adjusted ROE values are consistently lower than the reported ROE values across all years, suggesting that the adjustments made to profit and equity have a material downward impact on the calculated return.

Profit and Equity Adjustments

The adjusted profit figures are consistently lower than the reported profit attributable to common stockholders, indicating deductions are being made. The magnitude of these adjustments appears relatively stable across the period. Adjusted total stockholders’ equity is consistently higher than equity attributable to common shareholders, suggesting additions are being made to the equity base. The difference between adjusted and reported equity increased over the period.

The convergence of adjusted and reported ROE in 2025 suggests that the impact of adjustments on profitability is lessening, or that the underlying profitability is decreasing at a similar rate to the adjustments. The overall trend indicates a period of strong performance followed by a moderation in profitability, while equity continues to grow.

The period between 2021 and 2025 demonstrates fluctuating performance in profitability and asset utilization, as measured by adjusted return on assets. Profit attributable to common stockholders increased from US$6,489 million in 2021 to US$10,335 million in 2023, before declining to US$8,884 million in 2025. Total assets exhibited a similar pattern, rising from US$82,793 million in 2021 to US$98,585 million in 2025, with an interim peak in 2023. The adjusted figures for profit and total assets generally mirrored these trends, though with some differences in magnitude.

Adjusted Return on Assets (ROA) - Overall Trend

Adjusted ROA experienced an initial increase from 7.15% in 2021 to a peak of 12.02% in 2023. Subsequently, it decreased to 10.40% in 2025. This suggests a period of improving efficiency in asset utilization followed by a moderation in performance.

Adjusted ROA - Year-over-Year Changes

From 2021 to 2022, adjusted ROA increased by 0.32 percentage points, indicating a modest improvement in profitability relative to asset base. The most significant increase occurred between 2022 and 2023, with adjusted ROA rising by 4.55 percentage points. However, a decrease of 1.0 percentage points was observed between 2023 and 2024, and a further decline of 0.64 percentage points occurred between 2024 and 2025.

Relationship between Adjusted Profit and Adjusted Assets

The increase in adjusted ROA from 2021 to 2023 was driven by a combination of increased adjusted profit and adjusted total assets. While both increased, the adjusted profit grew at a faster rate, leading to the higher ROA. The subsequent decline in adjusted ROA from 2023 to 2025 appears to be attributable to a slower growth rate in adjusted profit compared to the continued increase in adjusted total assets.

The reported ROA generally tracked the adjusted ROA, though consistently reported higher values. The difference between reported and adjusted ROA suggests the presence of items impacting reported profit that are excluded in the adjusted calculation. The observed trends indicate a period of strong performance culminating in 2023, followed by a softening of profitability relative to the asset base in the subsequent two years.