Cummins Inc (CMI)
Inventory turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 25,816,000 | 21,355,000 | 18,326,000 | 14,917,000 | 17,591,000 |
| Inventory | US$ in thousands | 5,677,000 | 5,603,000 | 4,355,000 | 3,425,000 | 3,486,000 |
| Inventory turnover | 4.55 | 3.81 | 4.21 | 4.36 | 5.05 |
December 31, 2023 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $25,816,000K ÷ $5,677,000K
= 4.55
Inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period of time. A higher inventory turnover indicates that the company is selling its inventory quickly, which is generally favorable as it reduces holding costs and the risk of obsolescence.
Cummins Inc.'s inventory turnover has fluctuated over the past five years, ranging from 3.81 to 5.05. The ratio was highest in 2019 at 5.05, suggesting efficient management of inventory levels. However, it decreased in 2020 and 2021 before improving in 2022 and 2023.
The recent ratio of 4.55 in 2023 indicates that Cummins Inc. sold and replaced its inventory approximately 4.55 times during the year. This suggests a reasonable balance between avoiding stockouts and minimizing holding costs. Overall, it is essential for Cummins Inc. to continue monitoring its inventory turnover to ensure optimal inventory management and operational efficiency.
Peer comparison
Dec 31, 2023