Common-Size Income Statement
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- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
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Cummins Inc., common-size consolidated income statement
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).
- Gross Margin and Cost of Sales
- The gross margin as a percentage of net sales shows a decreasing trend from 25.37% in 2019 to a low of 23.71% in 2021, with a slight recovery to 24.22% by 2023. Correspondingly, the cost of sales remains consistently high, ranging between -74.63% and -76.29%, indicating persistent pressure on production or procurement costs relative to revenue.
- Operating Expenses
- Selling, general, and administrative expenses experienced modest fluctuations but generally decreased from -10.41% in 2019 to a low of -9.57% by 2022, before a mild increase to -9.78% in 2023. Research, development, and engineering expenses remained relatively stable, staying around -4.25% to -4.57% across the five years, with a slight decrease to -4.40% in 2023.
- Other Operating Items
- Equity, royalty, and interest income from investees peaked in 2020 at 2.28% but then declined to 1.24% in 2022 before slightly improving to 1.42% in 2023. Other operating expenses displayed significant volatility, notably worsening sharply in 2023 to -6.28% from a range of approximately -0.13% to -0.62% in earlier years, which contributed materially to increased operating expenses for that year.
- Operating Income and Margin
- Operating income as a percentage of net sales remained steady at around 11.45% in 2019 and 2020, then gradually trended downward to 5.17% by 2023. This decline aligns with the rise in other operating expenses and interest expenses, which moved from -0.46% in 2019 to -1.10% in 2023, reflecting increased financial costs.
- Income Before Taxes and Net Income
- Income before income taxes generally declined from 12.02% in 2019 to 4.77% in 2023, mirroring operating income trends and increased interest expenses. Income tax expense remained relatively stable in proportion to net sales, around -2.3%, suggesting a consistent effective tax rate over the period.
- Net Income Attributable to Cummins Inc.
- Net income attributable to the company showed a continuous decline from 9.59% in 2019 to a notably lower 2.16% in 2023. The decrease is driven by reduced operating income and increased other operating losses, compounded by a stable but insufficient offset from other income sources. Additionally, net income attributable to noncontrolling interests increased in relative importance, from -0.03% in 2019 to -0.31% in 2023, slightly impacting the available net income to the company.
- Summary
- Overall, the financial data reveal a gradual compression of profitability margins over the five-year period, stemming from rising costs, especially within other operating expenses, and heightened interest expense. While some expense categories, such as selling and administrative expenses, have been managed downward, they have not fully offset adverse trends in cost of sales and other operational losses. The significant drop in net income margin by 2023 emphasizes challenges in maintaining profitability amid these dynamics.