Cummins Inc (CMI)
Debt-to-assets ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 6,375,000 | 7,400,000 | 4,461,000 | 4,665,000 | 2,706,000 |
| Total assets | US$ in thousands | 32,005,000 | 30,299,000 | 23,710,000 | 22,624,000 | 19,737,000 |
| Debt-to-assets ratio | 0.20 | 0.24 | 0.19 | 0.21 | 0.14 |
December 31, 2023 calculation
Debt-to-assets ratio = Long-term debt ÷ Total assets
= $6,375,000K ÷ $32,005,000K
= 0.20
Cummins Inc.'s debt-to-assets ratio has fluctuated over the past five years, ranging from 0.12 in 2019 to 0.26 in 2022. The ratio indicates the proportion of the company's assets that are financed through debt. A lower ratio is generally considered favorable as it suggests lower financial risk and greater financial stability.
In 2023, Cummins Inc.'s debt-to-assets ratio decreased to 0.21 from 0.26 in 2022, indicating a reduction in the proportion of debt used to finance its assets. This may imply that the company has been able to manage its debt levels more effectively or increase its asset base without significantly increasing its debt.
Overall, a declining trend in the debt-to-assets ratio can be seen as a positive sign, reflecting a strengthening financial position and healthier balance sheet for Cummins Inc. However, it is important to monitor this ratio along with other financial metrics to get a comprehensive view of the company's financial health.
Peer comparison
Dec 31, 2023