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.

Return on Capital (ROC)

Microsoft Excel

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.


Return on Invested Capital (ROIC)

Cummins Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 1,014 2,348 2,585 2,018 2,609
Invested capital2 20,768 22,657 17,518 17,479 15,235
Performance Ratio
ROIC3 4.88% 10.36% 14.75% 11.55% 17.13%
Benchmarks
ROIC, Competitors4
Boeing Co. -0.17% -5.73% -5.36% -17.44% -3.49%
Caterpillar Inc. 17.41% 13.36% 12.38% 6.44% 11.83%
Eaton Corp. plc 10.48% 8.00% 7.84% 5.61% 7.87%
GE Aerospace 20.95% 2.73% -2.53% 5.22% 2.37%
Honeywell International Inc. 12.37% 11.54% 12.33% 10.85% 15.49%
Lockheed Martin Corp. 25.46% 21.60% 22.51% 25.67% 26.53%
RTX Corp. 3.68% 4.11% 4.41% -1.38% 7.00%

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 NOPAT. See details »

2 Invested capital. See details »

3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 1,014 ÷ 20,768 = 4.88%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Cummins Inc. ROIC deteriorated from 2021 to 2022 and from 2022 to 2023.

Decomposition of ROIC

Cummins Inc., decomposition of ROIC

Microsoft Excel
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 31, 2023 4.88% = 6.80% × 1.66 × 43.33%
Dec 31, 2022 10.36% = 11.71% × 1.25 × 71.07%
Dec 31, 2021 14.75% = 13.19% × 1.38 × 81.01%
Dec 31, 2020 11.55% = 12.82% × 1.14 × 78.76%
Dec 31, 2019 17.13% = 13.49% × 1.56 × 81.40%

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 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the decrease in return on invested capital (ROIC) over 2023 year is the decrease in profitability measured by operating profit margin (OPM) ratio.


Operating Profit Margin (OPM)

Cummins Inc., OPM calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 1,014 2,348 2,585 2,018 2,609
Add: Cash operating taxes2 1,326 956 606 544 596
Net operating profit before taxes (NOPBT) 2,341 3,304 3,191 2,562 3,206
 
Net sales 34,065 28,074 24,021 19,811 23,571
Add: Increase (decrease) in deferred revenue 338 143 174 177 198
Adjusted net sales 34,403 28,217 24,195 19,988 23,769
Profitability Ratio
OPM3 6.80% 11.71% 13.19% 12.82% 13.49%
Benchmarks
OPM, Competitors4
Boeing Co. 0.85% -3.49% -3.17% -20.02% -1.80%
Caterpillar Inc. 20.95% 17.38% 18.88% 11.93% 16.28%
Eaton Corp. plc 17.76% 14.81% 15.90% 11.40% 13.19%
GE Aerospace 17.53% 4.46% -2.35% 12.65% 6.66%
Honeywell International Inc. 20.28% 19.83% 21.58% 20.26% 21.22%
Lockheed Martin Corp. 13.04% 11.60% 11.85% 13.19% 12.87%
RTX Corp. 7.71% 10.88% 9.65% -1.08% 12.79%

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 NOPAT. See details »

2 Cash operating taxes. See details »

3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × 2,341 ÷ 34,403 = 6.80%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Cummins Inc. OPM deteriorated from 2021 to 2022 and from 2022 to 2023.

Turnover of Capital (TO)

Cummins Inc., TO calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Net sales 34,065 28,074 24,021 19,811 23,571
Add: Increase (decrease) in deferred revenue 338 143 174 177 198
Adjusted net sales 34,403 28,217 24,195 19,988 23,769
 
Invested capital1 20,768 22,657 17,518 17,479 15,235
Efficiency Ratio
TO2 1.66 1.25 1.38 1.14 1.56
Benchmarks
TO, Competitors3
Boeing Co. 1.73 1.31 1.26 1.22 2.15
Caterpillar Inc. 1.11 1.03 0.87 0.72 0.92
Eaton Corp. plc 0.74 0.67 0.67 0.65 0.73
GE Aerospace 1.29 1.10 0.99 0.63 0.67
Honeywell International Inc. 0.76 0.76 0.72 0.67 0.86
Lockheed Martin Corp. 2.46 2.48 2.34 2.33 2.33
RTX Corp. 0.62 0.59 0.56 0.49 0.75

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 Invested capital. See details »

2 2023 Calculation
TO = Adjusted net sales ÷ Invested capital
= 34,403 ÷ 20,768 = 1.66

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Cummins Inc. TO deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Effective Cash Tax Rate (CTR)

Cummins Inc., CTR calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 1,014 2,348 2,585 2,018 2,609
Add: Cash operating taxes2 1,326 956 606 544 596
Net operating profit before taxes (NOPBT) 2,341 3,304 3,191 2,562 3,206
Tax Rate
CTR3 56.67% 28.93% 18.99% 21.24% 18.60%
Benchmarks
CTR, Competitors4
Boeing Co. 111.76%
Caterpillar Inc. 25.26% 25.48% 24.33% 25.06% 21.38%
Eaton Corp. plc 20.06% 19.89% 26.02% 24.39% 17.70%
GE Aerospace 7.01% 44.47% 34.06% 47.14%
Honeywell International Inc. 19.41% 23.25% 20.13% 20.56% 15.05%
Lockheed Martin Corp. 20.72% 24.95% 18.89% 16.51% 11.49%
RTX Corp. 22.52% 36.10% 18.64% 26.56%

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 NOPAT. See details »

2 Cash operating taxes. See details »

3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,326 ÷ 2,341 = 56.67%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Cummins Inc. CTR increased from 2021 to 2022 and from 2022 to 2023.