Name: Cummins Inc. (NYSE:CMI) | Liabilities and Stockholders’ Equity
Creator: Stock Analysis on Net

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.

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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).

Total liabilities have experienced substantial growth over the five-year period, increasing from 11,272 million US dollars in 2019 to 22,101 million US dollars by the end of 2023. This expansion is driven by increases in both current and long-term obligations, with a notable acceleration in liability accumulation starting in 2022.

Current Liabilities and Short-Term Obligations: Current liabilities more than doubled from 6,260 million US dollars in 2019 to 12,903 million US dollars in 2023. A significant portion of this increase is attributed to accounts payable, which rose from 2,534 million US dollars to 4,260 million US dollars. Other accrued expenses showed a sharp spike in 2023, reaching 3,754 million US dollars compared to 1,465 million US dollars in the previous year. Additionally, a new obligation categorized as "Agreement in Principle" appeared in 2023, valued at 1,938 million US dollars, contributing to the overall rise in short-term commitments.
Long-Term Debt and Financial Leverage: Long-term debt increased significantly from 1,576 million US dollars in 2019 to 4,802 million US dollars in 2023. The most substantial increase occurred between 2019 and 2020, where debt jumped from 1,576 million to 3,610 million US dollars. Commercial paper usage has been volatile, peaking at 2,574 million US dollars in 2022 before declining to 1,496 million US dollars in 2023. Long-term liabilities overall grew from 5,012 million US dollars to 9,198 million US dollars over the period analyzed.
Shareholders' Equity and Capital Management: Total equity grew modestly from 8,465 million US dollars in 2019 to 9,904 million US dollars in 2023, though it peaked at 9,967 million US dollars in 2022. Retained earnings followed a general upward trajectory, rising from 14,416 million US dollars in 2019 to 17,851 million US dollars in 2023, indicating consistent profit accumulation. However, this growth was partially offset by an increase in treasury stock acquisitions, which rose from 7,225 million US dollars (at cost) in 2019 to 9,359 million US dollars in 2023, reflecting an aggressive share buyback strategy.
Other Balance Sheet Considerations: Accumulated other comprehensive loss remained a persistent negative factor, fluctuating between 1,571 million US dollars and 2,206 million US dollars across the five years. Pension obligations saw a gradual increase from 385 million US dollars in 2019 to 530 million US dollars in 2023. Deferred revenue, both current and long-term, has trended upward, with current deferred revenue increasing from 533 million US dollars to 1,220 million US dollars, suggesting growth in advance payments or subscription-based services.

The overall financial position reflects a shift toward higher leverage, as total liabilities grew at a much faster rate than total equity. While retained earnings have increased, the simultaneous increase in long-term debt and the utilization of treasury stock buybacks indicate a strategic pivot in the company's capital structure and financing approach.

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