Cummins Inc (CMI)
Return on total capital
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,750,000 | 1,806,000 | 1,706,000 | 1,658,000 | 1,761,000 | 3,775,000 | 3,451,000 | 3,351,000 | 2,929,000 | 2,622,000 | 2,662,000 | 2,500,000 | 2,706,000 | 2,840,000 | 2,844,000 | 2,445,000 | 2,269,000 | 1,994,000 | 2,023,000 | 2,535,000 |
| Long-term debt | US$ in thousands | 6,651,000 | 7,426,000 | 7,070,000 | 6,491,000 | 6,375,000 | 6,939,000 | 7,280,000 | 7,386,000 | 7,400,000 | 7,635,000 | 4,109,000 | 4,060,000 | 4,461,000 | 4,285,000 | 4,304,000 | 4,338,000 | 4,665,000 | 4,532,000 | 4,241,000 | 3,661,000 |
| Total stockholders’ equity | US$ in thousands | 10,271,000 | 10,315,000 | 9,551,000 | 9,067,000 | 8,850,000 | 10,658,000 | 10,337,000 | 9,623,000 | 8,975,000 | 8,380,000 | 8,738,000 | 8,436,000 | 8,146,000 | 8,082,000 | 7,866,000 | 8,109,000 | 8,062,000 | 7,700,000 | 7,192,000 | 7,068,000 |
| Return on total capital | 22.16% | 10.18% | 10.26% | 10.66% | 11.57% | 21.45% | 19.59% | 19.70% | 17.89% | 16.37% | 20.72% | 20.01% | 21.46% | 22.96% | 23.37% | 19.64% | 17.83% | 16.30% | 17.69% | 23.63% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $3,750,000K ÷ ($6,651,000K + $10,271,000K)
= 22.16%
Cummins Inc's return on total capital has exhibited some fluctuations over the period ranging from March 31, 2020, to December 31, 2024. The ratio started strong at 23.63% in March 2020, declined to 16.30% by September 2020, and then gradually improved to reach a peak of 23.37% by June 2021. However, the ratio decreased again to 16.37% by September 2022 before showing a slight recovery.
Despite some variability, the return on total capital generally remained above 15% during most periods, indicating efficient use of both debt and equity capital to generate profits. The ratio closed at a healthy 22.16% by December 31, 2024, showcasing the company's ability to generate earnings relative to the total amount of capital invested. It is crucial for Cummins Inc to continue monitoring and effectively managing its return on total capital to ensure sustainable financial performance and value creation for its stakeholders.
Peer comparison
Dec 31, 2024