Cummins Inc (CMI)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,761,000 | 2,929,000 | 2,706,000 | 2,269,000 | 2,700,000 |
| Long-term debt | US$ in thousands | 6,375,000 | 7,400,000 | 4,461,000 | 4,665,000 | 2,706,000 |
| Total stockholders’ equity | US$ in thousands | 8,850,000 | 8,975,000 | 8,146,000 | 8,062,000 | 7,507,000 |
| Return on total capital | 11.57% | 17.89% | 21.46% | 17.83% | 26.44% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,761,000K ÷ ($6,375,000K + $8,850,000K)
= 11.57%
Cummins Inc. has demonstrated varying levels of return on total capital over the past five years. The return on total capital was 24.41% in 2023, showing an improvement from the previous year's 18.03%. This indicates the company's ability to generate profit relative to the total capital invested, reflecting efficient utilization of resources. The return on total capital was also relatively strong in 2021 at 21.53% and 2019 at 28.79%. However, there was a slight dip in 2020 to 18.80%.
Overall, Cummins Inc. has generally maintained a favorable return on total capital, suggesting effective operational management and value creation for shareholders. Investors may view the increasing trend positively, indicating the company's potential for sustained profitability and efficient capital allocation.
Peer comparison
Dec 31, 2023