Cummins Inc., FCFF calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income attributable to Cummins Inc.	735)	2,151)	2,131)	1,789)	2,260)
Net income attributable to noncontrolling interests	105)	32)	33)	22)	8)
Net noncash charges	708)	784)	451)	546)	944)
Changes in current assets and liabilities, net of acquisitions	2,418)	(1,005)	(359)	365)	(31)
Net cash provided by operating activities	3,966)	1,962)	2,256)	2,722)	3,181)
Cash payments for interest, net of capitalized interest, net of tax¹	193)	142)	87)	68)	87)
Interest capitalized, net of tax²	4)	4)	2)	2)	2)
Capital expenditures	(1,213)	(916)	(734)	(528)	(700)
Right-of-use assets obtained in exchange for lease obligations, finance leases	(12)	(29)	(13)	(19)	(5)
Free cash flow to the firm (FCFF)	2,938)	1,163)	1,598)	2,245)	2,566)

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
FCFF	Free cash flow to the firm is the cash flow available to the Cummins Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Cummins Inc. FCFF decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Cummins Inc., interest paid, net of tax calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Effective Income Tax Rate (EITR)
EITR¹	48.30%	22.60%	21.30%	22.50%	20.00%
Interest Paid, Net of Tax
Cash payments for interest, net of capitalized interest, before tax	374)	184)	111)	88)	109)
Less: Cash payments for interest, net of capitalized interest, tax²	181)	42)	24)	20)	22)
Cash payments for interest, net of capitalized interest, net of tax	193)	142)	87)	68)	87)
Interest Costs Capitalized, Net of Tax
Interest capitalized, before tax	8)	5)	2)	2)	3)
Less: Interest capitalized, tax³	4)	1)	—)	—)	1)
Interest capitalized, net of tax	4)	4)	2)	2)	2)

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).

¹ See details »

² 2023 Calculation
Cash payments for interest, net of capitalized interest, tax = Cash payments for interest, net of capitalized interest × EITR
= 374 × 48.30% = 181

³ 2023 Calculation
Interest capitalized, tax = Interest capitalized × EITR
= 8 × 48.30% = 4

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Cummins Inc., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	43,347)
Free cash flow to the firm (FCFF)	2,938)
Valuation Ratio
EV/FCFF	14.75
Benchmarks
EV/FCFF, Competitors¹
Boeing Co.	22.77
Caterpillar Inc.	16.41
Eaton Corp. plc	42.48
General Electric Co.	35.76
Honeywell International Inc.	28.91
Lockheed Martin Corp.	18.28
RTX Corp.	25.70
EV/FCFF, Sector
Capital Goods	24.35
EV/FCFF, Industry
Industrials	26.13

Based on: 10-K (reporting date: 2023-12-31).

¹ Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Cummins Inc., historical EV/FCFF calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	41,445)	41,393)	33,733)	37,421)	26,544)
Free cash flow to the firm (FCFF)²	2,938)	1,163)	1,598)	2,245)	2,566)
Valuation Ratio
EV/FCFF³	14.10	35.58	21.11	16.67	10.35
Benchmarks
EV/FCFF, Competitors⁴
Boeing Co.	25.63	37.53	—	—	—
Caterpillar Inc.	16.08	23.54	20.50	23.83	16.84
Eaton Corp. plc	38.49	33.44	38.16	21.94	15.50
General Electric Co.	29.56	17.29	56.53	32.34	15.85
Honeywell International Inc.	29.13	29.82	25.22	26.49	21.13
Lockheed Martin Corp.	17.62	19.69	13.92	14.64	21.21
RTX Corp.	23.86	28.45	27.29	35.26	21.94
EV/FCFF, Sector
Capital Goods	23.34	25.87	32.16	74.97	24.73
EV/FCFF, Industry
Industrials	25.89	24.29	28.77	189.30	30.14

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).

¹ See details »

² See details »

³ 2023 Calculation
EV/FCFF = EV ÷ FCFF
= 41,445 ÷ 2,938 = 14.10

⁴ Click competitor name to see calculations.

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Valuation ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Cummins Inc. EV/FCFF ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Cummins Inc. (NYSE:CMI)

Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Interest Paid, Net of Tax

Enterprise Value to FCFF Ratio, Current

Enterprise Value to FCFF Ratio, Historical