Cummins Inc (CMI)
Days of inventory on hand (DOH)
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Inventory turnover | 4.47 | 4.55 | 3.81 | 4.21 | 4.36 | |
| DOH | days | 81.67 | 80.26 | 95.77 | 86.74 | 83.81 |
December 31, 2024 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 4.47
= 81.67
The days of inventory on hand (DOH) for Cummins Inc has shown some fluctuations over the past five years. The trend indicates an increase in DOH from 83.81 days as of December 31, 2020, to 86.74 days by December 31, 2021. Thereafter, a notable spike is observed with DOH reaching 95.77 days by December 31, 2022. Subsequently, there is a decrease in the metric to 80.26 days by December 31, 2023, followed by a slight increase to 81.67 days by December 31, 2024.
The increasing trend from 2020 to 2022 suggests that Cummins Inc may be carrying excess inventory relative to its sales levels during those years, which can tie up capital and impact profitability. However, the decrease in DOH in 2023 and a small increase in 2024 could indicate efforts to optimize inventory levels and improve efficiency.
It is essential for Cummins Inc to continue monitoring and managing its inventory levels effectively to strike a balance between avoiding stockouts and minimizing the costs associated with carrying excess inventory. Further analysis of inventory turnover ratios and comparison with industry benchmarks can provide additional insights into the efficiency of Cummins Inc's inventory management practices.
Peer comparison
Dec 31, 2024