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 Operating Leases

Microsoft Excel

Adjustments to Financial Statements for Operating Leases

Cummins Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported) 32,005 30,299 23,710 22,624 19,737
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1
Total assets (adjusted) 32,005 30,299 23,710 22,624 19,737
Adjustment to Total Debt
Total debt (as reported) 6,696 7,855 4,159 4,164 2,367
Add: Operating lease liability (before adoption of FASB Topic 842)2
Add: Current portion of operating lease liabilities 138 132 128 128 131
Add: Long-term portion of operating lease liabilities 374 368 326 325 370
Total debt (adjusted) 7,208 8,355 4,613 4,617 2,868

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).

1, 2 Equal to total present value of future operating lease payments.


Cummins Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Cummins Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Total Asset Turnover1
Reported total asset turnover 1.06 0.93 1.01 0.88 1.19
Adjusted total asset turnover 1.06 0.93 1.01 0.88 1.19
Debt to Equity2
Reported debt to equity 0.76 0.88 0.49 0.52 0.32
Adjusted debt to equity 0.81 0.93 0.54 0.57 0.38
Return on Assets3 (ROA)
Reported ROA 2.30% 7.10% 8.99% 7.91% 11.45%
Adjusted ROA 2.30% 7.10% 8.99% 7.91% 11.45%

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 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 debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Cummins Inc. adjusted debt to equity ratio deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as 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 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 for Operating Leases
Selected Financial Data (US$ in millions)
Net sales 34,065 28,074 24,021 19,811 23,571
Adjusted total assets 32,005 30,299 23,710 22,624 19,737
Activity Ratio
Adjusted total asset turnover2 1.06 0.93 1.01 0.88 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 ÷ 32,005 = 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 Debt to Equity

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 debt 6,696 7,855 4,159 4,164 2,367
Total Cummins Inc. shareholders’ equity 8,850 8,975 8,474 8,062 7,507
Solvency Ratio
Debt to equity1 0.76 0.88 0.49 0.52 0.32
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 7,208 8,355 4,613 4,617 2,868
Total Cummins Inc. shareholders’ equity 8,850 8,975 8,474 8,062 7,507
Solvency Ratio
Adjusted debt to equity2 0.81 0.93 0.54 0.57 0.38

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 Debt to equity = Total debt ÷ Total Cummins Inc. shareholders’ equity
= 6,696 ÷ 8,850 = 0.76

2 Adjusted debt to equity = Adjusted total debt ÷ Total Cummins Inc. shareholders’ equity
= 7,208 ÷ 8,850 = 0.81

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Cummins Inc. adjusted debt-to-equity ratio deteriorated from 2021 to 2022 but then slightly improved 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 for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc. 735 2,151 2,131 1,789 2,260
Adjusted total assets 32,005 30,299 23,710 22,624 19,737
Profitability Ratio
Adjusted ROA2 2.30% 7.10% 8.99% 7.91% 11.45%

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 × Net income attributable to Cummins Inc. ÷ Adjusted total assets
= 100 × 735 ÷ 32,005 = 2.30%

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