Cummins Inc (CMI)
Debt-to-capital ratio
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 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 | 2,706,000 | 3,031,000 | 2,535,000 | 2,688,000 |
| Total stockholders’ equity | US$ in thousands | 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 | 7,507,000 | 7,810,000 | 8,278,000 | 7,820,000 |
| Debt-to-capital ratio | 0.42 | 0.39 | 0.41 | 0.43 | 0.45 | 0.48 | 0.32 | 0.32 | 0.35 | 0.35 | 0.35 | 0.35 | 0.37 | 0.37 | 0.37 | 0.34 | 0.26 | 0.28 | 0.23 | 0.26 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $6,375,000K ÷ ($6,375,000K + $8,850,000K)
= 0.42
The debt-to-capital ratio of Cummins Inc. has been fluctuating over the past eight quarters, ranging from 0.33 to 0.49. The ratio represents the proportion of the company's total debt to its total capital, which includes both debt and equity. A higher debt-to-capital ratio indicates greater financial leverage and risk, as a larger portion of the company's capital structure is composed of debt.
It can be observed that the ratio has generally been trending downwards since Q4 2022, when it peaked at 0.49. This decline suggests that Cummins Inc. has been reducing its reliance on debt as a source of financing relative to its total capital. A decrease in the debt-to-capital ratio can be a positive sign, indicating improved financial health and reduced financial risk for the company.
However, it is important to note that the ratio increased slightly in Q3 and Q4 of 2023, reaching 0.41 and 0.43 respectively. This uptick may indicate a recent increase in debt relative to capital, which could potentially raise concerns about the company's financial stability and ability to meet its debt obligations.
Overall, a comprehensive analysis of Cummins Inc.'s debt-to-capital ratio suggests that the company has made progress in managing its debt levels over the past year, but recent increases in the ratio warrant further monitoring to assess the company's ongoing financial strategy and risk management practices.
Peer comparison
Dec 31, 2023