Cummins Inc (CMI)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 2,179,000 | 2,020,000 | 2,592,000 | 3,401,000 | 1,129,000 |
| Short-term investments | US$ in thousands | 562,000 | 553,000 | 595,000 | 461,000 | 341,000 |
| Total current liabilities | US$ in thousands | 12,903,000 | 11,421,000 | 7,084,000 | 6,335,000 | 6,260,000 |
| Cash ratio | 0.21 | 0.23 | 0.45 | 0.61 | 0.23 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($2,179,000K
+ $562,000K)
÷ $12,903,000K
= 0.21
The cash ratio of Cummins Inc. has shown a declining trend over the past five years. In 2019, the cash ratio was 0.36, indicating that the company had $0.36 in cash and cash equivalents for every dollar of current liabilities. However, this ratio decreased to 0.73 in 2020, then further declined to 0.56 in 2021, 0.32 in 2022, and finally to 0.31 in 2023.
A cash ratio below 1 may suggest that Cummins Inc. may not have sufficient liquid assets to cover its short-term obligations. The decreasing trend in the cash ratio over the years indicates a potential liquidity concern for the company. Further analysis of the company's cash management practices and liquidity position may be warranted to better understand the factors driving this trend.
Peer comparison
Dec 31, 2023