Cummins Inc (CMI)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Inventory turnover	4.47	4.20	4.42	4.47	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
Receivables turnover	281.83	—	—	—	420.56	—	—	64.27	61.16	74.94	86.37	60.94	45.67	—	—	—	4.96	58.04	54.33	83.31
Payables turnover	6.50	6.13	5.87	5.75	6.06	5.92	5.70	4.95	5.02	4.98	5.52	5.31	6.07	5.69	5.51	4.82	5.29	5.67	6.67	6.36
Working capital turnover	9.69	9.21	8.95	8.65	14.84	6.96	7.38	8.75	9.27	6.76	4.87	4.78	4.60	4.40	4.35	3.82	3.56	3.65	6.93	8.04

Cummins Inc's inventory turnover has shown a decreasing trend over the past years, moving from 4.70 in March 2020 to 4.47 in June 2024. This indicates that the company is selling its inventory at a slightly slower pace than before.

The receivables turnover ratio fluctuated significantly during the period. It dropped sharply in December 2020 to 4.96 before showing improvements in subsequent periods. However, there were missing values in some quarters, particularly in the first half of 2021 and 2024, making it difficult to assess the trend accurately.

The payables turnover ratio remained relatively stable, fluctuating between 4.82 and 6.50 over the period. This suggests that the company is effectively managing its accounts payable and maintaining a consistent rate of payment to suppliers.

The working capital turnover ratio exhibited a varying pattern, reaching its peak in December 2023 at 14.84 and experiencing fluctuations in other quarters. This could indicate changes in the company's efficiency in utilizing its working capital to generate sales during different periods.

In conclusion, Cummins Inc's activity ratios reflect mixed performance in managing its inventory, receivables, payables, and working capital over the analyzed period. A more in-depth analysis would be needed to understand the underlying factors driving these fluctuations and to assess the company's overall operational efficiency.

Average number of days

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	81.67	86.81	82.65	81.61	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
Days of sales outstanding (DSO)	days	1.30	—	—	—	0.87	—	—	5.68	5.97	4.87	4.23	5.99	7.99	—	—	—	73.55	6.29	6.72	4.38
Number of days of payables	days	56.19	59.52	62.16	63.44	60.23	61.67	64.03	73.81	72.68	73.23	66.11	68.72	60.17	64.16	66.25	75.72	69.00	64.43	54.71	57.41

To analyze Cummins Inc's activity ratios, we will look at the following ratios:

1. Days of Inventory on Hand (DOH): This ratio measures how many days on average it takes for Cummins Inc to sell its inventory. The trend shows an increase in DOH from 77.59 days as of March 31, 2020, to 81.67 days as of December 31, 2024, with some fluctuations in between. This suggests that inventory turnover has slightly decreased over the years.

2. Days of Sales Outstanding (DSO): DSO indicates how long it takes for Cummins Inc to collect payments from its customers. The DSO trend fluctuates significantly, with the highest value of 73.55 days as of December 31, 2020, and lower values in subsequent periods. The company improved its collection efficiency over time, with DSO generally declining.

3. Number of Days of Payables: This ratio reflects how long Cummins Inc takes to pay its suppliers. The trend shows some fluctuations but generally indicates a decrease in the number of days of payables from 57.41 days as of March 31, 2020, to 56.19 days as of December 31, 2024. This suggests that the company is managing its payables efficiently.

Overall, the analysis of these activity ratios for Cummins Inc indicates a relatively stable inventory management, improved collection efficiency, and effective management of payables over the years.

Long-term

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Fixed asset turnover	5.37	5.54	5.65	5.66	5.45	5.74	5.63	5.39	5.08	5.03	5.65	5.55	5.43	5.74	5.55	4.98	4.66	4.79	4.97	5.47
Total asset turnover	1.08	1.07	1.09	1.07	1.06	1.04	1.01	0.96	0.93	0.88	1.01	1.01	1.01	1.04	1.02	0.91	0.88	0.91	0.99	1.12

Cummins Inc's Fixed Asset Turnover ratio has shown a generally increasing trend over the period from March 31, 2020, to December 31, 2024, ranging between 4.66 and 5.74. This indicates that the company generated more revenue relative to its fixed assets during this time frame. Specifically, the ratio improved from 4.66 on December 31, 2020, to 5.74 on September 30, 2023, before slightly decreasing to 5.37 on December 31, 2024.

In terms of Total Asset Turnover, Cummins Inc's ratio fluctuated over the same period, varying from 0.88 to 1.09. The company experienced a significant increase in total asset turnover from 0.88 on September 30, 2020, to 1.09 on June 30, 2024, suggesting improved efficiency in generating sales from its total assets. Notably, the ratio surpassed 1.0 during the second half of the analyzed period, indicating that Cummins Inc generated more revenue per dollar of total assets.

Overall, both the Fixed Asset Turnover and Total Asset Turnover ratios suggest that Cummins Inc effectively utilized its assets to generate revenue, with the Total Asset Turnover ratio showing a more pronounced improvement over the period.