Cummins Inc (CMI)
Financial leverage 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 32,005,000 | 32,097,000 | 31,735,000 | 31,433,000 | 30,299,000 | 29,769,000 | 24,477,000 | 24,122,000 | 23,710,000 | 23,063,000 | 22,608,000 | 22,962,000 | 22,624,000 | 21,568,000 | 20,314,000 | 20,076,000 | 19,737,000 | 20,346,000 | 20,254,000 | 19,846,000 |
| 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 |
| Financial leverage ratio | 3.62 | 3.01 | 3.07 | 3.27 | 3.38 | 3.55 | 2.80 | 2.86 | 2.91 | 2.85 | 2.87 | 2.83 | 2.81 | 2.80 | 2.82 | 2.84 | 2.63 | 2.61 | 2.45 | 2.54 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $32,005,000K ÷ $8,850,000K
= 3.62
Cummins Inc.'s financial leverage ratio has been fluctuating over the past eight quarters, ranging from a low of 2.80 in Q2 2022 to a high of 3.62 in Q4 2023. The financial leverage ratio measures the extent to which a company is using debt to fund its operations and growth. A higher ratio indicates that the company relies more on debt financing, which can increase financial risk but also potentially lead to higher returns for shareholders.
The increasing trend in the financial leverage ratio from Q2 2022 to Q4 2023 suggests that Cummins Inc. has been taking on more debt relative to its equity, possibly to support its operations or expansion efforts. This could be a strategic move to capitalize on growth opportunities or invest in new projects. However, a higher financial leverage ratio also means the company is more vulnerable to economic downturns or changes in interest rates, as debt obligations must be met regardless of business performance.
It is important for investors and analysts to closely monitor Cummins Inc.'s financial leverage ratio, along with other key financial metrics, to assess the company's overall financial health and risk profile. A thorough understanding of the balance between debt and equity financing is crucial in evaluating the sustainability and long-term viability of the company.
Peer comparison
Dec 31, 2023