Analysis of Geographic Areas
Cummins Inc. operates in 4 regions: United States; China; India; and Other international.
Area Asset Turnover
Cummins Inc., asset turnover by geographic area
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States | 3.85 | 3.30 | 3.14 | 2.81 | 3.80 |
| China | 3.02 | 2.27 | 2.79 | 2.80 | 2.61 |
| India | 2.46 | 2.09 | 1.98 | 1.14 | 1.38 |
| Other international | 3.61 | 3.72 | 4.49 | 3.68 | 4.49 |
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).
An analysis of geographic area asset turnover from 2019 to 2023 reveals varying levels of asset utilization efficiency across the primary operating regions. While most regions experienced a disruption in efficiency during 2020, the subsequent recovery paths differ significantly, with some regions demonstrating sustained growth in productivity and others exhibiting volatility.
- United States
- The asset turnover ratio in the United States experienced a notable decline from 3.80 in 2019 to 2.81 in 2020. However, a consistent upward trajectory followed, with the ratio increasing steadily to 3.14 in 2021 and 3.30 in 2022, eventually reaching a five-year peak of 3.85 by the end of 2023. This indicates a full recovery and slight improvement in the efficiency of asset deployment within the domestic market.
- China
- Efficiency in China remained relatively stable between 2019 and 2021, fluctuating between 2.61 and 2.80. A significant contraction occurred in 2022, where the ratio dropped to 2.27, marking the lowest point for this region. This was followed by a sharp recovery in 2023, with the ratio rising to 3.02, suggesting a strong rebound in asset productivity.
- India
- India demonstrates the most consistent growth trend in asset utilization. After a brief decline to 1.14 in 2020, the ratio entered a period of sustained acceleration, rising to 1.98 in 2021, 2.09 in 2022, and peaking at 2.46 in 2023. This represents a substantial increase in the ability to generate revenue from the assets based in this region compared to the 2019 baseline of 1.38.
- Other International
- The Other International segment exhibited the highest levels of asset turnover in 2019 and 2021, both reaching 4.49. However, this region also shows a general downward trend in recent years. Following the 2021 peak, the ratio declined to 3.72 in 2022 and further to 3.61 in 2023, indicating a decrease in the relative efficiency of assets in these diverse global markets.
AI Ask an analyst for more
Area Asset Turnover: United States
Cummins Inc.; United States; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net sales | 19,302) | 15,552) | 12,489) | 10,605) | 13,519) |
| Long-lived assets | 5,013) | 4,714) | 3,978) | 3,776) | 3,555) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 3.85 | 3.30 | 3.14 | 2.81 | 3.80 |
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 2023 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 19,302 ÷ 5,013 = 3.85
The financial performance in the United States geographic area reflects a V-shaped recovery in revenue generation and a subsequent improvement in asset utilization efficiency between 2019 and 2023. While there was a significant contraction in performance during 2020, the subsequent years demonstrate a strong upward trajectory in both top-line growth and operational productivity.
- Net Sales Trends
- A sharp decline in net sales occurred in 2020, falling from 13,519 million US$ to 10,605 million US$. However, a consistent growth phase followed, with sales accelerating annually to reach 19,302 million US$ by December 31, 2023. This represents a substantial increase over the 2019 baseline, indicating a robust expansion of market demand or pricing power in the domestic market.
- Long-lived Assets Growth
- Long-lived assets exhibited a steady and uninterrupted increase throughout the five-year period. The asset base grew from 3,555 million US$ in 2019 to 5,013 million US$ in 2023. This persistent investment in infrastructure and fixed assets suggests a strategic commitment to expanding capacity regardless of the short-term revenue volatility observed in 2020.
- Area Asset Turnover Efficiency
- The area asset turnover ratio experienced a significant drop to 2.81 in 2020, reflecting the mismatch between stagnant asset growth and declining sales. Following this low point, the ratio improved steadily each year, reaching 3.85 by 2023. The fact that the 2023 turnover ratio exceeds the 2019 level of 3.80 is particularly notable, as it demonstrates that the company is generating higher revenue per unit of long-lived asset despite a significantly larger asset base.
In summary, the data indicates that the initial shock to sales in 2020 was fully mitigated. The company successfully leveraged its increased investment in long-lived assets to drive a higher volume of sales, resulting in superior asset productivity by the end of 2023 compared to the start of the analyzed period.
AI Ask an analyst for more
Area Asset Turnover: China
Cummins Inc.; China; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net sales | 3,115) | 2,390) | 3,169) | 2,832) | 2,331) |
| Long-lived assets | 1,030) | 1,052) | 1,136) | 1,010) | 893) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 3.02 | 2.27 | 2.79 | 2.80 | 2.61 |
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 2023 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 3,115 ÷ 1,030 = 3.02
The financial performance in the China geographic area exhibits significant volatility in revenue generation and asset utilization between 2019 and 2023. While net sales experienced a sharp contraction in 2022, the subsequent recovery in 2023 led to a record high in asset efficiency for the period.
- Net Sales Trends
- Revenue grew consistently from US$ 2,331 million in 2019 to a peak of US$ 3,169 million in 2021. A substantial decline was observed in 2022, where sales fell to US$ 2,390 million, before rebounding strongly to US$ 3,115 million by the end of 2023.
- Long-lived Assets Management
- Investment in long-lived assets increased steadily from US$ 893 million in 2019 to a peak of US$ 1,136 million in 2021. Following this peak, assets decreased to US$ 1,030 million by 2023, indicating a period of asset reduction or depreciation that outpaced new capital investment.
- Area Asset Turnover Analysis
- The area asset turnover ratio reflects the volatility of the sales figures. The ratio improved from 2.61 in 2019 to 2.80 in 2020, remaining relatively stable in 2021 at 2.79. A significant drop to 2.27 occurred in 2022, coinciding with the decline in net sales. However, the ratio reached its highest point of 3.02 in 2023, demonstrating that the region achieved its most efficient conversion of long-lived assets into revenue over the five-year duration.
AI Ask an analyst for more
Area Asset Turnover: India
Cummins Inc.; India; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net sales | 1,678) | 1,392) | 1,133) | 680) | 848) |
| Long-lived assets | 681) | 665) | 573) | 595) | 616) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 2.46 | 2.09 | 1.98 | 1.14 | 1.38 |
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 2023 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 1,678 ÷ 681 = 2.46
The operational performance in India between 2019 and 2023 is characterized by a significant recovery in revenue generation and a marked improvement in the efficiency of long-lived asset utilization. Following a temporary contraction in 2020, the region experienced a sustained upward trajectory in net sales, which outpaced the growth of the asset base, leading to a substantial increase in the area asset turnover ratio.
- Net Sales Trends
- Net sales exhibited a V-shaped recovery pattern, declining from US$ 848 million in 2019 to a low of US$ 680 million in 2020. Subsequently, a strong growth phase began, with revenues rising to US$ 1,133 million in 2021 and continuing to climb steadily to US$ 1,678 million by December 31, 2023. This represents a significant expansion in market reach or demand within the region over the five-year period.
- Long-lived Assets Evolution
- The asset base remained relatively stable with a slight downward trend between 2019 and 2021, decreasing from US$ 616 million to US$ 573 million. A modest increase in investment followed in the latter two years, with long-lived assets rising to US$ 665 million in 2022 and US$ 681 million in 2023. The growth in assets was conservative compared to the rapid acceleration of sales.
- Area Asset Turnover Analysis
- The area asset turnover ratio reflects a substantial increase in operational efficiency. After dropping to 1.14 in 2020, the ratio climbed sharply to 1.98 in 2021 and reached 2.46 by the end of 2023. This progression indicates that the entity is generating significantly more revenue for every dollar invested in long-lived assets, suggesting optimized capacity utilization and improved asset productivity in the Indian market.
AI Ask an analyst for more
Area Asset Turnover: Other international
Cummins Inc.; Other international; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net sales | 9,970) | 8,740) | 7,230) | 5,694) | 6,873) |
| Long-lived assets | 2,760) | 2,349) | 1,610) | 1,546) | 1,532) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 3.61 | 3.72 | 4.49 | 3.68 | 4.49 |
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).
1 2023 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 9,970 ÷ 2,760 = 3.61
Between 2019 and 2023, the other international geographic segment experienced significant expansion in both revenue and capital investment, although efficiency in asset utilization has trended downward in the most recent periods.
- Net Sales Performance
- Revenue within the other international area exhibited a volatile but generally positive trajectory. Following a decline from 6,873 million USD in 2019 to 5,694 million USD in 2020, net sales recovered and grew consistently, reaching 9,970 million USD by December 31, 2023. This indicates a strong recovery and subsequent growth in market demand over the five-year span.
- Long-lived Asset Expansion
- Investment in long-lived assets remained relatively stable from 2019 through 2021, with values ranging between 1,532 million USD and 1,610 million USD. However, a substantial increase in capital allocation occurred starting in 2022, where assets rose to 2,349 million USD, followed by a further increase to 2,760 million USD in 2023. This trajectory suggests a strategic shift toward increasing physical capacity or infrastructure within these international markets.
- Area Asset Turnover Analysis
- The area asset turnover ratio, which measures the efficiency of generating revenue from long-lived assets, has shown a fluctuating and ultimately declining trend. After maintaining a peak ratio of 4.49 in 2019 and 2021, the ratio decreased to 3.72 in 2022 and further to 3.61 by the end of 2023. This decline is attributable to the fact that the growth rate of long-lived assets has outpaced the growth rate of net sales during the 2022-2023 period, indicating that recent capital investments have not yet yielded proportional increases in revenue efficiency.
AI Ask an analyst for more
Net sales
Cummins Inc., net sales by geographic area
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States | 19,302) | 15,552) | 12,489) | 10,605) | 13,519) |
| China | 3,115) | 2,390) | 3,169) | 2,832) | 2,331) |
| India | 1,678) | 1,392) | 1,133) | 680) | 848) |
| Other international | 9,970) | 8,740) | 7,230) | 5,694) | 6,873) |
| Total | 34,065) | 28,074) | 24,021) | 19,811) | 23,571) |
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 net sales exhibited a V-shaped recovery pattern between 2019 and 2023, characterized by a significant contraction in 2020 followed by four consecutive years of growth. Aggregate revenue increased from 23,571 million US dollars in 2019 to 34,065 million US dollars in 2023, representing an overall growth of approximately 44.5% over the five-year period. The most substantial acceleration occurred between 2022 and 2023, where total sales rose by approximately 21.3%.
- United States Market Performance
- The United States remains the primary revenue driver, consistently contributing the largest share of net sales. Following a decline to 10,605 million US dollars in 2020, the region experienced an aggressive growth trajectory, reaching 19,302 million US dollars by 2023. This represents a 42.5% increase relative to 2019 levels, indicating strong domestic demand and effective market penetration in the latter half of the period.
- China Market Volatility
- Revenue from China displayed a non-linear trend, peaking at 3,169 million US dollars in 2021 before experiencing a sharp decline to 2,390 million US dollars in 2022. While sales recovered to 3,115 million US dollars in 2023, the region shows higher volatility compared to other geographic areas, ending the period with a modest net increase from its 2019 baseline.
- India Market Expansion
- India demonstrated the most consistent relative growth among the tracked regions. After a temporary dip in 2020 to 680 million US dollars, sales grew steadily every year, reaching 1,678 million US dollars in 2023. This represents a nearly 98% increase over the five-year span, highlighting a significant expansion of the company's footprint in the Indian market.
- Other International Markets
- The combined other international segments showed a resilient recovery and steady expansion. After dropping to 5,694 million US dollars in 2020, sales climbed consistently to reach 9,970 million US dollars by 2023. This segment's growth trajectory mirrors the overall corporate trend, contributing steadily to the total revenue increase.
The geographic distribution of sales indicates a diversifying revenue stream, although the reliance on the United States market has intensified in absolute terms. The simultaneous growth in India and other international markets suggests a successful global scaling strategy, which has helped offset the regional volatility observed in China.
AI Ask an analyst for more
Long-lived assets
Cummins Inc., long-lived assets by geographic area
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| United States | 5,013) | 4,714) | 3,978) | 3,776) | 3,555) |
| China | 1,030) | 1,052) | 1,136) | 1,010) | 893) |
| India | 681) | 665) | 573) | 595) | 616) |
| Other international | 2,760) | 2,349) | 1,610) | 1,546) | 1,532) |
| Total | 9,484) | 8,780) | 7,297) | 6,927) | 6,596) |
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 long-lived assets demonstrate a consistent upward trajectory, increasing from US$ 6,596 million in 2019 to US$ 9,484 million by the end of 2023. This overall growth of approximately 43.8% indicates a sustained period of capital investment, with a significant acceleration in asset accumulation occurring between 2021 and 2023.
- United States Asset Expansion
- The United States represents the largest share of long-lived assets, exhibiting steady growth throughout the period. Assets rose from US$ 3,555 million in 2019 to US$ 5,013 million in 2023. By the end of the analyzed period, the United States accounted for approximately 52.8% of the total long-lived asset base, reflecting a prioritized investment strategy within the domestic market.
- Other International Growth
- The "Other international" category showed the most aggressive growth rate in the latter half of the period. After remaining relatively stable between 2019 and 2021, assets in this segment jumped from US$ 1,610 million in 2021 to US$ 2,760 million in 2023. This sharp increase suggests a strategic pivot or significant expansion into secondary international markets.
- China Market Volatility
- Assets in China followed a non-linear trend, peaking at US$ 1,136 million in 2021 before experiencing a gradual decline to US$ 1,030 million by 2023. This contraction suggests a potential reallocation of capital or a period where depreciation exceeded new capital expenditures within the region.
- India Market Recovery
- The asset base in India experienced an initial decline, dropping from US$ 616 million in 2019 to a low of US$ 573 million in 2021. However, a recovery phase followed, with assets increasing to US$ 681 million by 2023, indicating a renewed investment focus in the Indian market after 2021.
The distribution of assets reveals a shift toward a more diversified international footprint, characterized by the substantial growth in "Other international" territories, while the United States continues to serve as the primary anchor for the company's long-term capital investment.
AI Ask an analyst for more