Cummins Inc (CMI)

Liquidity ratios

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
Current ratio 1.18 1.43 1.40 1.29 1.27 1.37 1.66 1.68 1.74 1.80 1.81 1.82 1.88 1.94 1.42 1.40 1.50 1.52 1.66 1.57
Quick ratio 0.22 0.28 0.21 0.24 0.27 0.31 0.43 0.43 0.52 0.44 0.44 0.50 1.24 0.64 0.36 0.33 0.85 0.86 0.94 0.87
Cash ratio 0.21 0.28 0.21 0.20 0.23 0.28 0.39 0.37 0.45 0.44 0.44 0.50 0.61 0.58 0.30 0.29 0.23 0.28 0.28 0.24

Cummins Inc.'s liquidity ratios have exhibited some fluctuations over the past eight quarters. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has ranged from a low of 1.18 to a high of 1.68 during this period. Although the current ratio has generally remained above 1, indicating that the company has sufficient current assets to cover its current liabilities, there has been some variability in its liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Cummins Inc.'s quick ratio has fluctuated between 0.74 and 1.07 over the past quarters. This indicates that the company may have limitations in meeting its short-term obligations using only its most liquid assets, particularly in quarters where the ratio was below 1.

The cash ratio, which is the most conservative liquidity ratio, focuses solely on the ability to meet short-term obligations using cash and cash equivalents. Cummins Inc.'s cash ratio has varied from 0.31 to 0.50 during the observed period. The decreasing trend in the cash ratio implies that the company may have been utilizing more of its cash reserves to meet its short-term obligations.

Overall, while Cummins Inc. has generally maintained stability in its liquidity position over the past eight quarters, the fluctuations in its current, quick, and cash ratios suggest a need for ongoing monitoring of its ability to meet short-term financial commitments.

See also:

Cummins Inc Liquidity Ratios (Quarterly Data)

Additional liquidity measure

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
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

The cash conversion cycle of Cummins Inc. has shown fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle improved to 79.86 days compared to the previous quarter's 85.86 days. This indicates that Cummins was able to more efficiently convert its investments in inventory and accounts receivable into cash during this period.

In general, Cummins has demonstrated a relatively stable trend in managing its cash conversion cycle over the past two years. While there were fluctuations from quarter to quarter, the company maintained an average cycle of around 90 days. This suggests that Cummins has been effective in managing its working capital and optimizing its cash flow operations.

Overall, the decreasing trend in the cash conversion cycle in the recent quarter is a positive indicator of improved efficiency in managing cash flows and working capital for Cummins Inc.