Cummins Inc (CMI)
Return on equity (ROE)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 735,000 | 2,151,000 | 2,131,000 | 1,789,000 | 2,260,000 |
| Total stockholders’ equity | US$ in thousands | 8,850,000 | 8,975,000 | 8,146,000 | 8,062,000 | 7,507,000 |
| ROE | 8.31% | 23.97% | 26.16% | 22.19% | 30.11% |
December 31, 2023 calculation
ROE = Net income ÷ Total stockholders’ equity
= $735,000K ÷ $8,850,000K
= 8.31%
Cummins Inc.'s return on equity (ROE) has experienced fluctuations over the past five years. In 2023, the ROE decreased to 8.31% from 23.97% in 2022. This decline indicates a lower profitability relative to the company's equity compared to the previous year.
When compared to 2021, where the ROE was 25.15%, the 2023 ROE also shows a significant decrease. This implies a weaker performance in generating profits from shareholders' equity.
Looking further back, in 2020, Cummins Inc. had an ROE of 22.19%, which also exceeds the 2023 performance. The most profitable year in terms of ROE was 2019, with a value of 30.11%.
Overall, the fluctuation in ROE indicates varying levels of efficiency in utilizing shareholders' equity to generate profits. It suggests that Cummins Inc. may need to focus on strategies to improve profitability and enhance shareholder value in the future.
Peer comparison
Dec 31, 2023