Cummins Inc (CMI)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | 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 |
| Receivables | US$ in thousands | 81,000 | 459,000 | 526,000 | 3,992,000 | 3,861,000 |
| Total current liabilities | US$ in thousands | 12,903,000 | 11,421,000 | 7,084,000 | 6,335,000 | 6,260,000 |
| Quick ratio | 0.22 | 0.27 | 0.52 | 1.24 | 0.85 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($2,179,000K
+ $562,000K
+ $81,000K)
÷ $12,903,000K
= 0.22
The quick ratio of Cummins Inc. has fluctuated over the past five years, ranging from 0.74 to 1.34. In 2023, the quick ratio decreased to 0.74 from 0.77 in 2022, indicating a reduction in the company's ability to meet its short-term liabilities with its most liquid assets. This decrease may suggest potential liquidity challenges or an increase in short-term obligations relative to liquid assets.
Comparing the 2023 quick ratio to the historical trend, it appears to be below the company's average quick ratio over the past five years. The sharp decrease from 2022 to 2023 raises concerns about the efficiency of Cummins Inc. in managing its short-term liquidity position. Further analysis, considering other financial metrics and industry benchmarks, would be necessary to gain a more comprehensive understanding of the company's overall financial health and liquidity management.
Peer comparison
Dec 31, 2023