Cummins Inc (CMI)
Days of inventory on hand (DOH)
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 4.55 | 4.27 | 4.08 | 3.90 | 3.81 | 3.60 | 3.95 | 4.05 | 4.21 | 4.23 | 4.29 | 4.21 | 4.36 | 4.24 | 4.16 | 4.70 | 5.05 | 4.69 | 4.63 | 4.66 | |
| DOH | days | 80.26 | 85.46 | 89.57 | 93.58 | 95.77 | 101.48 | 92.51 | 90.12 | 86.74 | 86.38 | 85.13 | 86.67 | 83.81 | 86.08 | 87.66 | 77.59 | 72.33 | 77.89 | 78.90 | 78.35 |
December 31, 2023 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 4.55
= 80.26
To analyze Cummins Inc.'s days of inventory on hand (DOH) over the past eight quarters, we observe a trend of fluctuation. The DOH metric indicates the number of days a company holds its average inventory before selling it. A lower DOH value generally suggests efficient inventory management, while a higher DOH value may indicate excess inventory or slow sales.
From Q1 2022 to Q2 2023, Cummins Inc.'s DOH has shown a general increasing trend, reaching a peak of 93.58 days in Q1 2023. The highest DOH value was recorded in Q3 2022 at 101.48 days. This increase in DOH may suggest potential inventory management challenges or slowing sales during these periods.
While there was a slight decrease in DOH in Q4 2023 compared to the previous period, it is essential to monitor this metric closely to ensure efficient inventory turnover. High inventory levels tie up working capital and can lead to increased carrying costs and risks of obsolescence.
Cummins Inc. should continue to evaluate its inventory management practices to optimize working capital efficiency and maintain a balance between meeting customer demand and controlling inventory levels effectively. Further analysis of underlying factors affecting inventory levels, such as demand fluctuations, production delays, or supply chain disruptions, can provide valuable insights for strategic decision-making.
Peer comparison
Dec 31, 2023
See also:
Cummins Inc Average Inventory Processing Period (Quarterly Data)