Cummins Inc (CMI)
Cash conversion cycle
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (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 |
| Days of sales outstanding (DSO) | days | 0.87 | — | — | 5.68 | 5.97 | 4.87 | 4.23 | 5.99 | 7.99 | — | — | — | 73.55 | 6.29 | 6.72 | 4.38 | 59.79 | 59.53 | 62.79 | 60.70 |
| Number of days of payables | days | 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 | 52.58 | 57.69 | 60.57 | 60.74 |
| Cash conversion cycle | days | 20.90 | 23.79 | 25.54 | 25.45 | 29.06 | 33.12 | 30.63 | 27.39 | 34.56 | 22.23 | 18.88 | 10.95 | 88.35 | 27.95 | 39.67 | 24.56 | 79.54 | 79.74 | 81.11 | 78.31 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 80.26 + 0.87 – 60.23
= 20.90
Cummins Inc.'s cash conversion cycle has shown fluctuations over the past eight quarters, ranging from a low of 79.86 days in Q4 2023 to a high of 95.22 days in Q3 2022. A decreasing trend is observed from Q3 2022 to Q4 2023, indicating more efficient management of working capital. The company's cash conversion cycle measures the time taken to convert its investments in inventory and accounts receivable into cash collected from its sales. Lower values are generally preferable as they imply faster conversion of resources into cash. This trend suggests Cummins Inc. is improving its efficiency in managing its inventory, accounts receivable, and accounts payable, which could have positive implications for the company's liquidity and profitability. Further analysis and comparison with industry benchmarks would provide a more comprehensive understanding of the company's performance.
Peer comparison
Dec 31, 2023