Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Cummins Inc., balance sheet: goodwill and intangible assets

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Goodwill	2,499)	2,343)	1,287)	1,293)	1,286)
Software	622)	679)	586)	661)	708)
Trademarks, patents, customer relationships and other	2,886)	2,858)	957)	959)	956)
Other intangible assets, gorss	3,508)	3,537)	1,543)	1,620)	1,664)
Accumulated amortization	(989)	(850)	(643)	(657)	(661)
Other intangible assets, net	2,519)	2,687)	900)	963)	1,003)
Goodwill and other intangible assets	5,018)	5,030)	2,187)	2,256)	2,289)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Cummins Inc. goodwill increased from 2021 to 2022 and from 2022 to 2023.
Other intangible assets, net	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Cummins Inc. other intangible assets, net increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.
Goodwill and other intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Cummins Inc. goodwill and other intangible assets increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Cummins Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	32,005)	30,299)	23,710)	22,624)	19,737)
Less: Goodwill	2,499)	2,343)	1,287)	1,293)	1,286)
Total assets (adjusted)	29,506)	27,956)	22,423)	21,331)	18,451)
Adjustment to Total Cummins Inc. Shareholders’ Equity
Total Cummins Inc. shareholders’ equity (as reported)	8,850)	8,975)	8,474)	8,062)	7,507)
Less: Goodwill	2,499)	2,343)	1,287)	1,293)	1,286)
Total Cummins Inc. shareholders’ equity (adjusted)	6,351)	6,632)	7,187)	6,769)	6,221)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Cummins Inc., Financial Data: Reported vs. Adjusted

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Cummins Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total Asset Turnover
Reported total asset turnover	1.06	0.93	1.01	0.88	1.19
Adjusted total asset turnover	1.15	1.00	1.07	0.93	1.28
Financial Leverage
Reported financial leverage	3.62	3.38	2.80	2.81	2.63
Adjusted financial leverage	4.65	4.22	3.12	3.15	2.97
Return on Equity (ROE)
Reported ROE	8.31%	23.97%	25.15%	22.19%	30.11%
Adjusted ROE	11.57%	32.43%	29.65%	26.43%	36.33%
Return on Assets (ROA)
Reported ROA	2.30%	7.10%	8.99%	7.91%	11.45%
Adjusted ROA	2.49%	7.69%	9.50%	8.39%	12.25%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Cummins Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Cummins Inc. adjusted financial leverage ratio increased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Cummins Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Cummins Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Cummins Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net sales	34,065)	28,074)	24,021)	19,811)	23,571)
Total assets	32,005)	30,299)	23,710)	22,624)	19,737)
Activity Ratio
Total asset turnover¹	1.06	0.93	1.01	0.88	1.19
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales	34,065)	28,074)	24,021)	19,811)	23,571)
Adjusted total assets	29,506)	27,956)	22,423)	21,331)	18,451)
Activity Ratio
Adjusted total asset turnover²	1.15	1.00	1.07	0.93	1.28

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 34,065 ÷ 32,005 = 1.06

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 34,065 ÷ 29,506 = 1.15

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Cummins Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	32,005)	30,299)	23,710)	22,624)	19,737)
Total Cummins Inc. shareholders’ equity	8,850)	8,975)	8,474)	8,062)	7,507)
Solvency Ratio
Financial leverage¹	3.62	3.38	2.80	2.81	2.63
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	29,506)	27,956)	22,423)	21,331)	18,451)
Adjusted total Cummins Inc. shareholders’ equity	6,351)	6,632)	7,187)	6,769)	6,221)
Solvency Ratio
Adjusted financial leverage²	4.65	4.22	3.12	3.15	2.97

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Total Cummins Inc. shareholders’ equity
= 32,005 ÷ 8,850 = 3.62

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Cummins Inc. shareholders’ equity
= 29,506 ÷ 6,351 = 4.65

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Cummins Inc. adjusted financial leverage ratio increased from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc.	735)	2,151)	2,131)	1,789)	2,260)
Total Cummins Inc. shareholders’ equity	8,850)	8,975)	8,474)	8,062)	7,507)
Profitability Ratio
ROE¹	8.31%	23.97%	25.15%	22.19%	30.11%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc.	735)	2,151)	2,131)	1,789)	2,260)
Adjusted total Cummins Inc. shareholders’ equity	6,351)	6,632)	7,187)	6,769)	6,221)
Profitability Ratio
Adjusted ROE²	11.57%	32.43%	29.65%	26.43%	36.33%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income attributable to Cummins Inc. ÷ Total Cummins Inc. shareholders’ equity
= 100 × 735 ÷ 8,850 = 8.31%

² Adjusted ROE = 100 × Net income attributable to Cummins Inc. ÷ Adjusted total Cummins Inc. shareholders’ equity
= 100 × 735 ÷ 6,351 = 11.57%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Cummins Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc.	735)	2,151)	2,131)	1,789)	2,260)
Total assets	32,005)	30,299)	23,710)	22,624)	19,737)
Profitability Ratio
ROA¹	2.30%	7.10%	8.99%	7.91%	11.45%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Cummins Inc.	735)	2,151)	2,131)	1,789)	2,260)
Adjusted total assets	29,506)	27,956)	22,423)	21,331)	18,451)
Profitability Ratio
Adjusted ROA²	2.49%	7.69%	9.50%	8.39%	12.25%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income attributable to Cummins Inc. ÷ Total assets
= 100 × 735 ÷ 32,005 = 2.30%

² Adjusted ROA = 100 × Net income attributable to Cummins Inc. ÷ Adjusted total assets
= 100 × 735 ÷ 29,506 = 2.49%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Cummins Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Cummins Inc. (NYSE:CMI)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Cummins Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Cummins Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)