Stock Analysis on Net

Cummins Inc. (NYSE:CMI)

This company has been moved to the archive! The financial data has not been updated since May 2, 2024.

Analysis of Inventory

Microsoft Excel

Inventory Disclosure

Cummins Inc., balance sheet: inventory

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Finished products 2,770 2,917 2,538 2,216 2,214
Work-in-process and raw materials 3,156 2,926 2,009 1,346 1,395
Inventories at FIFO cost 5,926 5,843 4,547 3,562 3,609
Excess of FIFO over LIFO (249) (240) (192) (137) (123)
Inventories 5,677 5,603 4,355 3,425 3,486

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Cummins Inc. inventories increased from 2021 to 2022 and from 2022 to 2023.

Adjustment to Inventory: Conversion from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Inventories
Inventories at LIFO (as reported) 5,677 5,603 4,355 3,425 3,486
Add: Inventory LIFO reserve 249 240 192 137 123
Inventories at FIFO (adjusted) 5,926 5,843 4,547 3,562 3,609
Adjustment to Current Assets
Current assets (as reported) 15,198 14,451 12,309 11,897 9,387
Add: Inventory LIFO reserve 249 240 192 137 123
Current assets (adjusted) 15,447 14,691 12,501 12,034 9,510
Adjustment to Total Assets
Total assets (as reported) 32,005 30,299 23,710 22,624 19,737
Add: Inventory LIFO reserve 249 240 192 137 123
Total assets (adjusted) 32,254 30,539 23,902 22,761 19,860
Adjustment to Total Cummins Inc. Shareholders’ Equity
Total Cummins Inc. shareholders’ equity (as reported) 8,850 8,975 8,474 8,062 7,507
Add: Inventory LIFO reserve 249 240 192 137 123
Total Cummins Inc. shareholders’ equity (adjusted) 9,099 9,215 8,666 8,199 7,630
Adjustment to Net Income Attributable To Cummins Inc.
Net income attributable to Cummins Inc. (as reported) 735 2,151 2,131 1,789 2,260
Add: Increase (decrease) in inventory LIFO reserve 9 48 55 14 (10)
Net income attributable to Cummins Inc. (adjusted) 744 2,199 2,186 1,803 2,250

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Cummins Inc. inventory value on Dec 31, 2023 would be $5,926 (in millions) if the FIFO inventory method was used instead of LIFO. Cummins Inc. inventories, valued on a LIFO basis, on Dec 31, 2023 were $5,677. Cummins Inc. inventories would have been $249 higher than reported on Dec 31, 2023 if the FIFO method had been used instead.


Cummins Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

Cummins Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current Ratio
Reported current ratio (LIFO) 1.18 1.27 1.74 1.88 1.50
Adjusted current ratio (FIFO) 1.20 1.29 1.76 1.90 1.52
Net Profit Margin
Reported net profit margin (LIFO) 2.16% 7.66% 8.87% 9.03% 9.59%
Adjusted net profit margin (FIFO) 2.18% 7.83% 9.10% 9.10% 9.55%
Total Asset Turnover
Reported total asset turnover (LIFO) 1.06 0.93 1.01 0.88 1.19
Adjusted total asset turnover (FIFO) 1.06 0.92 1.00 0.87 1.19
Financial Leverage
Reported financial leverage (LIFO) 3.62 3.38 2.80 2.81 2.63
Adjusted financial leverage (FIFO) 3.54 3.31 2.76 2.78 2.60
Return on Equity (ROE)
Reported ROE (LIFO) 8.31% 23.97% 25.15% 22.19% 30.11%
Adjusted ROE (FIFO) 8.18% 23.86% 25.23% 21.99% 29.49%
Return on Assets (ROA)
Reported ROA (LIFO) 2.30% 7.10% 8.99% 7.91% 11.45%
Adjusted ROA (FIFO) 2.31% 7.20% 9.15% 7.92% 11.33%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Cummins Inc. adjusted current ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Cummins Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Cummins Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Cummins Inc. adjusted financial leverage ratio increased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Cummins Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Cummins Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Cummins Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Current assets 15,198 14,451 12,309 11,897 9,387
Current liabilities 12,903 11,421 7,084 6,335 6,260
Liquidity Ratio
Current ratio1 1.18 1.27 1.74 1.88 1.50
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets 15,447 14,691 12,501 12,034 9,510
Current liabilities 12,903 11,421 7,084 6,335 6,260
Liquidity Ratio
Adjusted current ratio2 1.20 1.29 1.76 1.90 1.52

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 15,198 ÷ 12,903 = 1.18

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 15,447 ÷ 12,903 = 1.20

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Cummins Inc. adjusted current ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc. 735 2,151 2,131 1,789 2,260
Net sales 34,065 28,074 24,021 19,811 23,571
Profitability Ratio
Net profit margin1 2.16% 7.66% 8.87% 9.03% 9.59%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Cummins Inc. 744 2,199 2,186 1,803 2,250
Net sales 34,065 28,074 24,021 19,811 23,571
Profitability Ratio
Adjusted net profit margin2 2.18% 7.83% 9.10% 9.10% 9.55%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Net profit margin = 100 × Net income attributable to Cummins Inc. ÷ Net sales
= 100 × 735 ÷ 34,065 = 2.16%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Cummins Inc. ÷ Net sales
= 100 × 744 ÷ 34,065 = 2.18%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Cummins Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net sales 34,065 28,074 24,021 19,811 23,571
Total assets 32,005 30,299 23,710 22,624 19,737
Activity Ratio
Total asset turnover1 1.06 0.93 1.01 0.88 1.19
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Net sales 34,065 28,074 24,021 19,811 23,571
Adjusted total assets 32,254 30,539 23,902 22,761 19,860
Activity Ratio
Adjusted total asset turnover2 1.06 0.92 1.00 0.87 1.19

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 34,065 ÷ 32,005 = 1.06

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 34,065 ÷ 32,254 = 1.06

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Cummins Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets 32,005 30,299 23,710 22,624 19,737
Total Cummins Inc. shareholders’ equity 8,850 8,975 8,474 8,062 7,507
Solvency Ratio
Financial leverage1 3.62 3.38 2.80 2.81 2.63
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets 32,254 30,539 23,902 22,761 19,860
Adjusted total Cummins Inc. shareholders’ equity 9,099 9,215 8,666 8,199 7,630
Solvency Ratio
Adjusted financial leverage2 3.54 3.31 2.76 2.78 2.60

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Financial leverage = Total assets ÷ Total Cummins Inc. shareholders’ equity
= 32,005 ÷ 8,850 = 3.62

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Cummins Inc. shareholders’ equity
= 32,254 ÷ 9,099 = 3.54

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Cummins Inc. adjusted financial leverage ratio increased from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc. 735 2,151 2,131 1,789 2,260
Total Cummins Inc. shareholders’ equity 8,850 8,975 8,474 8,062 7,507
Profitability Ratio
ROE1 8.31% 23.97% 25.15% 22.19% 30.11%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Cummins Inc. 744 2,199 2,186 1,803 2,250
Adjusted total Cummins Inc. shareholders’ equity 9,099 9,215 8,666 8,199 7,630
Profitability Ratio
Adjusted ROE2 8.18% 23.86% 25.23% 21.99% 29.49%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROE = 100 × Net income attributable to Cummins Inc. ÷ Total Cummins Inc. shareholders’ equity
= 100 × 735 ÷ 8,850 = 8.31%

2 Adjusted ROE = 100 × Adjusted net income attributable to Cummins Inc. ÷ Adjusted total Cummins Inc. shareholders’ equity
= 100 × 744 ÷ 9,099 = 8.18%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Cummins Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc. 735 2,151 2,131 1,789 2,260
Total assets 32,005 30,299 23,710 22,624 19,737
Profitability Ratio
ROA1 2.30% 7.10% 8.99% 7.91% 11.45%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Cummins Inc. 744 2,199 2,186 1,803 2,250
Adjusted total assets 32,254 30,539 23,902 22,761 19,860
Profitability Ratio
Adjusted ROA2 2.31% 7.20% 9.15% 7.92% 11.33%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROA = 100 × Net income attributable to Cummins Inc. ÷ Total assets
= 100 × 735 ÷ 32,005 = 2.30%

2 Adjusted ROA = 100 × Adjusted net income attributable to Cummins Inc. ÷ Adjusted total assets
= 100 × 744 ÷ 32,254 = 2.31%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Cummins Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.