Inventory Disclosure
Adjustment to Inventory: Conversion from LIFO to FIFO
Adjusted Financial Ratios: LIFO vs. FIFO (Summary)
Adjusted Current Ratio
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Cummins Inc., balance sheet: inventory

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Finished products	2,770)	2,917)	2,538)	2,216)	2,214)
Work-in-process and raw materials	3,156)	2,926)	2,009)	1,346)	1,395)
Inventories at FIFO cost	5,926)	5,843)	4,547)	3,562)	3,609)
Excess of FIFO over LIFO	(249)	(240)	(192)	(137)	(123)
Inventories	5,677)	5,603)	4,355)	3,425)	3,486)

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
Inventories	Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer.	Cummins Inc. inventories increased from 2021 to 2022 and from 2022 to 2023.

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Inventories
Inventories at LIFO (as reported)	5,677)	5,603)	4,355)	3,425)	3,486)
Add: Inventory LIFO reserve	249)	240)	192)	137)	123)
Inventories at FIFO (adjusted)	5,926)	5,843)	4,547)	3,562)	3,609)
Adjustment to Current Assets
Current assets (as reported)	15,198)	14,451)	12,309)	11,897)	9,387)
Add: Inventory LIFO reserve	249)	240)	192)	137)	123)
Current assets (adjusted)	15,447)	14,691)	12,501)	12,034)	9,510)
Adjustment to Total Assets
Total assets (as reported)	32,005)	30,299)	23,710)	22,624)	19,737)
Add: Inventory LIFO reserve	249)	240)	192)	137)	123)
Total assets (adjusted)	32,254)	30,539)	23,902)	22,761)	19,860)
Adjustment to Total Cummins Inc. Shareholders’ Equity
Total Cummins Inc. shareholders’ equity (as reported)	8,850)	8,975)	8,474)	8,062)	7,507)
Add: Inventory LIFO reserve	249)	240)	192)	137)	123)
Total Cummins Inc. shareholders’ equity (adjusted)	9,099)	9,215)	8,666)	8,199)	7,630)
Adjustment to Net Income Attributable To Cummins Inc.
Net income attributable to Cummins Inc. (as reported)	735)	2,151)	2,131)	1,789)	2,260)
Add: Increase (decrease) in inventory LIFO reserve	9)	48)	55)	14)	(10)
Net income attributable to Cummins Inc. (adjusted)	744)	2,199)	2,186)	1,803)	2,250)

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. inventory value on Dec 31, 2023 would be $5,926) (in millions) if the FIFO inventory method was used instead of LIFO. Cummins Inc. inventories, valued on a LIFO basis, on Dec 31, 2023 were $5,677). Cummins Inc. inventories would have been $249) higher than reported on Dec 31, 2023 if the FIFO method had been used instead.

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
Current Ratio
Reported current ratio (LIFO)	1.18	1.27	1.74	1.88	1.50
Adjusted current ratio (FIFO)	1.20	1.29	1.76	1.90	1.52
Net Profit Margin
Reported net profit margin (LIFO)	2.16%	7.66%	8.87%	9.03%	9.59%
Adjusted net profit margin (FIFO)	2.18%	7.83%	9.10%	9.10%	9.55%
Total Asset Turnover
Reported total asset turnover (LIFO)	1.06	0.93	1.01	0.88	1.19
Adjusted total asset turnover (FIFO)	1.06	0.92	1.00	0.87	1.19
Financial Leverage
Reported financial leverage (LIFO)	3.62	3.38	2.80	2.81	2.63
Adjusted financial leverage (FIFO)	3.54	3.31	2.76	2.78	2.60
Return on Equity (ROE)
Reported ROE (LIFO)	8.31%	23.97%	25.15%	22.19%	30.11%
Adjusted ROE (FIFO)	8.18%	23.86%	25.23%	21.99%	29.49%
Return on Assets (ROA)
Reported ROA (LIFO)	2.30%	7.10%	8.99%	7.91%	11.45%
Adjusted ROA (FIFO)	2.31%	7.20%	9.15%	7.92%	11.33%

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).

Financial ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	Cummins Inc. adjusted current ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Cummins Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
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 adjusted net income divided by adjusted shareholders’ equity.	Cummins Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as adjusted 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)
Current assets	15,198)	14,451)	12,309)	11,897)	9,387)
Current liabilities	12,903)	11,421)	7,084)	6,335)	6,260)
Liquidity Ratio
Current ratio¹	1.18	1.27	1.74	1.88	1.50
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets	15,447)	14,691)	12,501)	12,034)	9,510)
Current liabilities	12,903)	11,421)	7,084)	6,335)	6,260)
Liquidity Ratio
Adjusted current ratio²	1.20	1.29	1.76	1.90	1.52

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 Current ratio = Current assets ÷ Current liabilities
= 15,198 ÷ 12,903 = 1.18

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 15,447 ÷ 12,903 = 1.20

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Liquidity ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	Cummins Inc. adjusted current ratio deteriorated 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)
Net sales	34,065)	28,074)	24,021)	19,811)	23,571)
Profitability Ratio
Net profit margin¹	2.16%	7.66%	8.87%	9.03%	9.59%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Cummins Inc.	744)	2,199)	2,186)	1,803)	2,250)
Net sales	34,065)	28,074)	24,021)	19,811)	23,571)
Profitability Ratio
Adjusted net profit margin²	2.18%	7.83%	9.10%	9.10%	9.55%

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 Net profit margin = 100 × Net income attributable to Cummins Inc. ÷ Net sales
= 100 × 735 ÷ 34,065 = 2.16%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Cummins Inc. ÷ Net sales
= 100 × 744 ÷ 34,065 = 2.18%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Cummins Inc. adjusted net profit margin ratio deteriorated 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 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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Net sales	34,065)	28,074)	24,021)	19,811)	23,571)
Adjusted total assets	32,254)	30,539)	23,902)	22,761)	19,860)
Activity Ratio
Adjusted total asset turnover²	1.06	0.92	1.00	0.87	1.19

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 ÷ 32,254 = 1.06

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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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets	32,254)	30,539)	23,902)	22,761)	19,860)
Adjusted total Cummins Inc. shareholders’ equity	9,099)	9,215)	8,666)	8,199)	7,630)
Solvency Ratio
Adjusted financial leverage²	3.54	3.31	2.76	2.78	2.60

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
= 32,254 ÷ 9,099 = 3.54

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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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Cummins Inc.	744)	2,199)	2,186)	1,803)	2,250)
Adjusted total Cummins Inc. shareholders’ equity	9,099)	9,215)	8,666)	8,199)	7,630)
Profitability Ratio
Adjusted ROE²	8.18%	23.86%	25.23%	21.99%	29.49%

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 × Adjusted net income attributable to Cummins Inc. ÷ Adjusted total Cummins Inc. shareholders’ equity
= 100 × 744 ÷ 9,099 = 8.18%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Cummins Inc. adjusted ROE deteriorated 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 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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Cummins Inc.	744)	2,199)	2,186)	1,803)	2,250)
Adjusted total assets	32,254)	30,539)	23,902)	22,761)	19,860)
Profitability Ratio
Adjusted ROA²	2.31%	7.20%	9.15%	7.92%	11.33%

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

² Adjusted ROA = 100 × Adjusted net income attributable to Cummins Inc. ÷ Adjusted total assets
= 100 × 744 ÷ 32,254 = 2.31%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted 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 Inventory

Inventory Disclosure

Adjustment to Inventory: Conversion from LIFO to FIFO

Cummins Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

Cummins Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)