Balance Sheet: Liabilities and Stockholders’ Equity

The balance sheet provides creditors, investors, and analysts with information on company resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company assets as well as an indication of cash flows that may come from receivables and inventories.

Liabilities represents obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity.

Cummins Inc., consolidated balance sheet: liabilities and stockholders’ equity

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Accounts payable, principally trade	4,260)	4,252)	3,021)	2,820)	2,534)
Loans payable	280)	210)	208)	169)	100)
Commercial paper	1,496)	2,574)	313)	323)	660)
Current maturities of long-term debt	118)	573)	59)	62)	31)
Accrued compensation, benefits and retirement costs	1,108)	617)	683)	484)	560)
Current portion of accrued product warranty	667)	726)	755)	674)	803)
Current portion of deferred revenue	1,220)	1,004)	855)	691)	533)
Agreement in Principle	1,938)	—)	—)	—)	—)
Marketing accruals	399)	316)	303)	242)	176)
Other taxes payable	296)	224)	234)	256)	228)
Income taxes payable	242)	173)	107)	82)	52)
Current portion of operating lease liabilities	138)	132)	128)	128)	131)
Other	741)	620)	418)	404)	452)
Other accrued expenses	3,754)	1,465)	1,190)	1,112)	1,039)
Current liabilities	12,903)	11,421)	7,084)	6,335)	6,260)
Long-term debt	4,802)	4,498)	3,579)	3,610)	1,576)
Deferred revenue	966)	844)	850)	840)	821)
Accrued product warranty	777)	744)	684)	672)	645)
Pensions	530)	445)	431)	431)	385)
Deferred income taxes	530)	649)	403)	325)	306)
Long-term portion of operating lease liabilities	374)	368)	326)	325)	370)
Accrued compensation	213)	184)	177)	203)	206)
Other postretirement benefits	131)	141)	173)	199)	206)
Mark-to-market valuation on interest rate derivatives	117)	151)	19)	41)	12)
Long-term income taxes	111)	192)	263)	289)	293)
Other long-term liabilities	647)	437)	320)	365)	192)
Other liabilities	3,430)	3,311)	2,796)	2,850)	2,615)
Long-term liabilities	9,198)	8,653)	7,225)	7,300)	5,012)
Total liabilities	22,101)	20,074)	14,309)	13,635)	11,272)
Redeemable noncontrolling interests	—)	258)	—)	—)	—)
Common stock, $2.50 par value	2,564)	2,243)	2,427)	2,404)	2,346)
Retained earnings	17,851)	18,037)	16,741)	15,419)	14,416)
Treasury stock, at cost	(9,359)	(9,415)	(9,123)	(7,779)	(7,225)
Common stock held by employee benefits trust, at cost	—)	—)	—)	—)	(2)
Accumulated other comprehensive loss	(2,206)	(1,890)	(1,571)	(1,982)	(2,028)
Total Cummins Inc. shareholders’ equity	8,850)	8,975)	8,474)	8,062)	7,507)
Noncontrolling interests	1,054)	992)	927)	927)	958)
Total equity	9,904)	9,967)	9,401)	8,989)	8,465)
Total liabilities, redeemable noncontrolling interests and equity	32,005)	30,299)	23,710)	22,624)	19,737)

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).

The financial data exhibits several noteworthy trends across the periods analyzed.

Current Liabilities: Current liabilities demonstrate a significant increase from US$6,260 million in 2019 to US$12,903 million in 2023, more than doubling over five years. Major contributors to this growth include accounts payable, primarily trade, which rose steadily from US$2,534 million to US$4,260 million. Commercial paper showed volatility, declining from US$660 million in 2019 to a low of US$313 million in 2021, then sharply increasing to US$2,574 million in 2022 before settling at US$1,496 million in 2023. Loans payable also increased, albeit at a slower rate, reaching US$280 million in 2023 from US$100 million in 2019.
Accrued Expenses and Related Items: Other accrued expenses experienced a marked escalation from US$1,039 million in 2019 to US$3,754 million in 2023, indicating growing short-term obligations. Accrued compensation and benefits fluctuated but showed a notable increase in 2023 at US$1,108 million after a dip in previous years. Income taxes payable rose steadily, more than quadrupling from US$52 million to US$242 million.
Long-Term Liabilities: Long-term debt more than tripled, increasing from US$1,576 million in 2019 to US$4,802 million in 2023. Deferred income taxes peaked in 2022 at US$649 million before declining to US$530 million in 2023. Other long-term liabilities nearly tripled from US$192 million to US$647 million. The total long-term liabilities increased steadily from US$5,012 million to US$9,198 million, reflecting increased borrowing and deferred obligations.
Total Liabilities: Total liabilities escalated substantially from US$11,272 million in 2019 to US$22,101 million in 2023, essentially doubling over the period. This reflects increased short-term and long-term debt and other accrued obligations. The presence of "Agreement in Principle" with a value of US$1,938 million in 2023 appears as a new item, contributing to the liabilities increase.
Equity Components: Common stock values fluctuated slightly, ending at US$2,564 million in 2023, up from US$2,346 million in 2019. Retained earnings consistently increased to US$17,851 million in 2023, indicative of accumulated profits; however, the growth slowed down between 2022 and 2023. Treasury stock, representing stock repurchases, increased in absolute magnitude (negative values) from -US$7,225 million to approximately -US$9,359 million, suggesting significant share buybacks or holdings.
Accumulated Other Comprehensive Loss and Total Equity: Accumulated other comprehensive loss deepened from -US$2,028 million to -US$2,206 million, indicating worsening unrealized losses or adjustments. Despite increases in retained earnings and common stock, total shareholder equity rose modestly from US$7,507 million to US$8,850 million in 2023. Total equity, including noncontrolling interests, increased slightly from US$8,465 million to US$9,904 million.
Overall Balance Sheet: The total sum of liabilities, redeemable noncontrolling interests, and equity expanded significantly from US$19,737 million in 2019 to US$32,005 million in 2023, highlighting overall growth in the company's balance sheet size. This expansion is primarily driven by increases in liabilities rather than proportional growth in equity.

In summary, the financial data reveals substantial growth in liabilities, both current and long-term, alongside moderate increases in equity. The company appears to be leveraging more debt financing, as evidenced by marked rises in loans payable, long-term debt, and commercial paper. Shareholder equity growth is positive but moderate, with retained earnings contributing substantially. The increased treasury stock suggests ongoing repurchase activities. Elevated accrued expenses and other short-term liabilities may warrant monitoring to assess liquidity risk. Overall, the balance sheet growth reflects an expanding financial structure with increased financial obligations.

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Cummins Inc. (NYSE:CMI)

Balance Sheet: Liabilities and Stockholders’ Equity