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).
- United States
- The asset turnover ratio in the United States started at 3.8 in 2019 and declined to 2.81 in 2020. Following this dip, the ratio showed gradual improvement, increasing to 3.14 in 2021 and 3.3 in 2022, finally reaching 3.85 in 2023. This indicates a recovery and growth trend after a setback in 2020, ultimately surpassing the initial 2019 level by the end of 2023.
- China
- The asset turnover ratio in China experienced slight fluctuations over the period. It began at 2.61 in 2019 and rose modestly to 2.8 in 2020, remaining stable at 2.79 in 2021. However, there was a decline to 2.27 in 2022, followed by a rebound to 3.02 in 2023. The data suggests some volatility with a notable dip in 2022 but a strong recovery in the most recent year.
- India
- India’s asset turnover ratio revealed an overall upward trend with some fluctuations. Starting at a relatively low 1.38 in 2019, it declined to 1.14 in 2020 before increasing sharply to 1.98 in 2021. The upward momentum continued more moderately with 2.09 in 2022 and 2.46 in 2023. This pattern indicates initial challenges followed by consistent improvement and increasing efficiency in asset usage over the period.
- Other international
- The "Other international" category saw a decrease in asset turnover ratio from 4.49 in 2019 to 3.68 in 2020. It then bounced back to 4.49 in 2021, matching the initial 2019 value, but declined again to 3.72 in 2022 and further to 3.61 in 2023. Despite the fluctuations, the general trend is a reduction in asset turnover efficiency in recent years compared to 2019 and 2021 peak.
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
- Net Sales
- The net sales figures exhibit a fluctuating yet overall upward trend across the analyzed periods. After experiencing a noticeable decline from 13,519 million US dollars in 2019 to 10,605 million in 2020, sales rebounded strongly in subsequent years, reaching 19,302 million by the end of 2023. This represents a substantial recovery and growth, particularly marked by a sharp increase from 2021 onward.
- Long-Lived Assets
- Long-lived assets show a consistent and steady increase during the period under review. Starting at 3,555 million US dollars in 2019, these assets rose gradually each year, reaching 5,013 million by 2023. This growth indicates continued investment or capital expenditure in assets expected to have a useful life extending beyond one year.
- Area Asset Turnover
- The area asset turnover ratio, which measures the efficiency of asset use in generating sales, exhibits a declining trend from 3.8 in 2019 to a low of 2.81 in 2020. This decline corresponds with the drop in net sales during that year. Subsequently, the ratio improved steadily, reaching 3.85 in 2023, surpassing the initial 2019 level. This recovery suggests an enhanced utilization of assets in driving sales over the latter years.
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
- Net Sales
- The net sales values for the China geographic area exhibit a fluctuating trend over the five-year period. From 2019 to 2021, there is a steady increase, rising from 2,331 million USD to 3,169 million USD. However, in 2022, a significant decline occurs, with net sales dropping to 2,390 million USD. The year 2023 shows a recovery, with net sales increasing again to 3,115 million USD, nearly reaching the 2021 peak.
- Long-lived Assets
- Long-lived assets demonstrate a generally upward pattern from 2019 through 2021, increasing from 893 million USD to a high of 1,136 million USD. This upward momentum slows and reverses slightly over the next two years, with assets decreasing to 1,052 million USD in 2022 and further to 1,030 million USD in 2023, indicating some level of asset reduction or depreciation after initial growth.
- Area Asset Turnover
- The area asset turnover ratio, which measures the efficiency of asset use in generating sales, follows a somewhat variable pattern. It increases from 2.61 in 2019 to 2.8 in 2020 and remains nearly stable at 2.79 in 2021. A marked decline to 2.27 occurs in 2022, paralleling the drop in net sales. By 2023, the ratio recovers significantly to 3.02, the highest in the period observed, indicating enhanced asset use efficiency despite the reduced asset base compared to 2021.
- Summary
- Overall, the data suggest that the China area experienced growth in sales and assets through 2021, followed by a downturn in 2022 affecting both sales and asset efficiency. The rebound in 2023 sales and asset turnover ratio reflects operational recovery and improved asset utilization, even though the asset base decreased following its peak in 2021. This highlights a period of volatility, with recent improvements likely driven by strategic adjustments or market conditions favoring sales generation relative to asset levels.
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
- Net Sales
- The net sales in the India geographic area exhibit a fluctuating yet overall upward trend over the five-year period. Beginning at $848 million in 2019, there was a decline to $680 million in 2020, likely reflecting external market disruptions. Subsequently, net sales rebounded significantly, reaching $1,133 million in 2021 and continuing to grow to $1,392 million in 2022 and $1,678 million in 2023. The consistent increase from 2020 onwards suggests a strong recovery and expanding market presence.
- Long-lived Assets
- Long-lived assets show a slight decline initially, from $616 million in 2019 to $595 million in 2020, followed by a continued decrease to $573 million in 2021. However, from 2021, asset values increased to $665 million in 2022 and further to $681 million in 2023. This pattern indicates a period of asset reduction or divestment during 2019-2021, followed by reinvestment or asset acquisition in the latter years, supporting business growth.
- Area Asset Turnover
- The area asset turnover ratio demonstrates progressive improvement throughout the five years. The ratio starts at 1.38 in 2019, decreases to 1.14 in 2020, then sharply rises to 1.98 in 2021, followed by steady increases to 2.09 in 2022 and 2.46 in 2023. This trend suggests enhanced efficiency in utilizing long-lived assets to generate sales, especially notable after 2020 when the company appears to have optimized asset use significantly.
- Summary
- Overall, the data for the India geographic area reflects a recovery and expansion phase after an initial drop in 2020. Net sales growth is robust, particularly post-2020, supported by increasing long-lived assets, which may underpin production or operational capacity. The marked improvement in asset turnover ratio indicates a growing efficiency in leveraging assets to drive sales, highlighting positive operational improvements and possibly effective management strategies in the recent years.
Area Asset Turnover: Other international
Cummins Inc.; Other international; area asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ 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
- Net Sales
- The net sales demonstrated a fluctuating yet overall increasing trend over the analyzed period. Starting at 6,873 million US dollars in 2019, sales declined to 5,694 million in 2020, which likely reflects external economic challenges during that year. Subsequently, sales recovered strongly, rising to 7,230 million in 2021, further increasing to 8,740 million in 2022, and reaching 9,970 million in 2023. This indicates a robust market rebound and consistent growth in the segment across the latter years.
- Long-Lived Assets
- Long-lived assets showed a steady increase throughout the entire period. From 1,532 million US dollars in 2019, assets marginally increased to 1,546 million in 2020 and 1,610 million in 2021, before experiencing a more significant rise in 2022 to 2,349 million and further to 2,760 million in 2023. This growth suggests substantial investments or capital expenditures, possibly aimed at supporting increasing sales and expanding operational capacity.
- Area Asset Turnover
- The area asset turnover ratio, which measures the efficiency of asset use to generate sales, displayed variability over the five years. Initially high at 4.49 in 2019, it dropped to 3.68 in 2020, indicating less efficient use of assets during that year. The ratio rebounded to 4.49 in 2021, matching the initial level, but then declined again in the subsequent years to 3.72 in 2022 and 3.61 in 2023. The downward trend in asset turnover in the last two years, despite growing sales, may reflect the rapid increase in long-lived assets, resulting in lower efficiency in asset utilization relative to sales growth.
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).
The net sales data across geographic regions reveal several notable trends over the five-year period ending in 2023. The overall total net sales show a consistent upward trajectory, increasing from $23,571 million in 2019 to $34,065 million in 2023, indicating substantial growth in the company's global sales.
- United States
- Net sales in the United States experienced a decline from 2019 to 2020, dropping from $13,519 million to $10,605 million, likely reflecting an economic downturn or external disruptions during that period. However, sales rebounded strongly after 2020, with steady growth year-over-year reaching $19,302 million in 2023. This represents a significant recovery and expansion, positioning the United States as a major contributor to total sales growth.
- China
- Sales in China followed a somewhat volatile pattern. After increasing from $2,331 million in 2019 to $3,169 million in 2021, the figures fell to $2,390 million in 2022 before rising again to $3,115 million in 2023. This fluctuation suggests external factors affecting sales performance, but the general trend is growth with a temporary setback in 2022.
- India
- India showed a marked increase in net sales across the period, despite a dip in 2020 from $848 million to $680 million. From 2020 onward, sales steadily increased to $1,678 million in 2023. The growth rate in India appears robust, more than doubling sales from 2019 to 2023, indicating expanding market presence or demand.
- Other International
- The "Other international" category experienced a decline in 2020, dropping from $6,873 million to $5,694 million. From 2020, sales rebounded and continued to increase each year, reaching $9,970 million in 2023. This segment shows consistent recovery and growth, contributing significantly to overall sales increases.
- Overall trends and insights
- The total net sales growth is primarily driven by recovery post-2020, with all regions except China showing strong upward trends after the initial decline during the 2020 period. The United States remains the largest market in absolute terms, but strong growth rates in India and steady recovery in Other International markets enhance geographic diversification. China presents the most variability, potentially indicating market or geopolitical challenges.
Long-lived assets
Cummins Inc., long-lived assets by geographic area
US$ 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).
- United States
- The value of long-lived assets in the United States exhibited a consistent upward trend over the five-year period. Beginning at 3,555 million US dollars at the end of 2019, the amount increased each year, reaching 5,013 million US dollars by the end of 2023. This reflects a cumulative growth of approximately 41%, indicating significant ongoing investment or asset retention in this geographic area.
- China
- Long-lived assets in China showed growth during the first three years, rising from 893 million US dollars at the end of 2019 to a peak of 1,136 million US dollars at the end of 2021. However, this was followed by a decline in the subsequent two years, with assets falling to 1,030 million US dollars by the end of 2023. This suggests some retrenchment or asset reallocation within this geographic market after initial expansion.
- India
- India's long-lived assets displayed a moderately fluctuating pattern over the period. Starting at 616 million US dollars in 2019, the asset value decreased slightly in 2020 and 2021, reaching a low of 573 million US dollars. From 2021 onwards, there was a recovery with asset values increasing to 681 million US dollars by the end of 2023, indicating renewed investment or asset growth in recent years.
- Other International
- The "Other international" category experienced notable growth throughout the period. Asset values rose steadily from 1,532 million US dollars in 2019 to 1,610 million in 2021, followed by accelerated increases in 2022 and 2023, reaching 2,760 million US dollars. This represents an overall increase of approximately 80%, highlighting significant expansion or acquisition efforts outside the primary listed countries.
- Total
- The total long-lived assets across all geographic areas showed a strong upward trajectory over the five years. Beginning at 6,596 million US dollars in 2019, the total asset base increased consistently each year, culminating in 9,484 million US dollars in 2023. This amount reflects an overall growth rate of approximately 44%, underscoring sustained asset growth and capital investment across the company's global operations.