SEC Filings


10-Q
CUMMINS INC filed this Form 10-Q on 10/31/2017
Entire Document
 

LIQUIDITY AND CAPITAL RESOURCES
Key Working Capital and Balance Sheet Data
We fund our working capital with cash from operations and short-term borrowings, including commercial paper, when necessary. Various assets and liabilities, including short-term debt, can fluctuate significantly from month to month depending on short-term liquidity needs. As a result, working capital is a prime focus of management attention. Working capital and balance sheet measures are provided in the following table:
Dollars in millions
 
October 1,
2017
 
December 31,
2016
Working capital (1)
 
$
3,298

 
$
3,382

Current ratio
 
1.57

 
1.78

Accounts and notes receivable, net
 
$
3,810

 
$
3,025

Days’ sales in receivables
 
63

 
61

Inventories
 
$
3,146

 
$
2,675

Inventory turnover
 
4.9

 
4.7

Accounts payable (principally trade)
 
$
2,486

 
$
1,854

Days' payable outstanding
 
53

 
51

Total debt
 
$
2,255

 
$
1,856

Total debt as a percent of total capital
 
20.8
%
 
20.6
%
____________________________________
(1) Working capital includes cash and cash equivalents.
Cash Flows
Cash and cash equivalents were impacted as follows:
 
 
Nine months ended
 
 
In millions
 
October 1,
2017
 
October 2,
2016
 
Change
Net cash provided by operating activities
 
$
1,471

 
$
1,314

 
$
157

Net cash used in investing activities
 
(786
)
 
(590
)
 
(196
)
Net cash used in financing activities
 
(600
)
 
(1,045
)
 
445

Effect of exchange rate changes on cash and cash equivalents
 
85

 
(139
)
 
224

Net increase (decrease) in cash and cash equivalents
 
$
170

 
$
(460
)
 
$
630

 
Net cash provided by operating activities increased $157 million for the nine months ended October 1, 2017, versus the comparable period in 2016, primarily due to higher consolidated net income, favorable translation and hedging activities and lower working capital levels, partially offset by higher equity in income of investees. During the first nine months of 2017, the lower working capital requirements resulted in a cash outflow of $215 million compared to a cash outflow of $302 million in the comparable period in 2016
Net cash used in investing activities increased $196 million for the nine months ended October 1, 2017, versus the comparable period in 2016, primarily due to the acquisition of Eaton Cummins Automated Transmission Technologies for $600 million, partially offset by lower net investments in marketable securities of $268 million, higher proceeds from the disposal of property, plant and equipment of $93 million and higher cash flows from derivatives not designated as hedges of $73 million.
Net cash used in financing activities decreased $445 million for the nine months ended October 1, 2017, versus the comparable period in 2016, primarily due to lower repurchases of common stock of $354 million and lower payments on borrowings and capital lease obligations of $118 million, partially offset by lower proceeds from borrowings of $107 million.
The effect of exchange rate changes on cash and cash equivalents for the nine months ended October 1, 2017, versus the comparable period in 2016, increased $224 million primarily due to the British pound, which increased cash and cash equivalents by $198 million.

46