SEC Filings


10-K
CUMMINS INC filed this Form 10-K on 02/11/2019
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
 
December 31,
2018
 
December 31,
2017
Working capital (1)
 
$
3,434

 
$
3,251

Current ratio
 
1.54

 
1.57

Accounts and notes receivable, net
 
$
3,866

 
$
3,618

Days' sales in receivables
 
57

 
59

Inventories
 
$
3,759

 
$
3,166

Inventory turnover
 
4.9

 
5.0

Accounts payable (principally trade)
 
$
2,822

 
$
2,579

Days' payable outstanding
 
56

 
53

Total debt
 
$
2,476

 
$
2,006

Total debt as a percent of total capital
 
23.1
%
 
19.7
%
____________________________________
(1) Working capital includes cash and cash equivalents.
Cash Flows
Cash and cash equivalents were impacted as follows:
 
 
Years ended December 31,
 
Change
In millions
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Net cash provided by operating activities
 
$
2,378

 
$
2,277

 
$
1,939

 
$
101

 
$
338

Net cash used in investing activities
 
(974
)
 
(1,052
)
 
(917
)
 
78

 
(135
)
Net cash used in financing activities
 
(1,400
)
 
(1,074
)
 
(1,413
)
 
(326
)
 
339

Effect of exchange rate changes on cash and cash equivalents
 
(70
)
 
98

 
(200
)
 
(168
)
 
298

Net (decrease) increase in cash and cash equivalents
 
$
(66
)
 
$
249

 
$
(591
)
 
$
(315
)
 
$
840

2018 vs. 2017
Net cash provided by operating activities increased $101 million, primarily due to higher earnings of $388 million, excluding the net change in the non-cash impact of 2017 Tax Legislation of $805 million, lower net pension contributions of $210 million, higher non-cash losses on corporate owned life insurance of $78 million and increased equity earnings (net of dividends) of $30 million, partially offset by higher working capital requirements of $575 million and a decrease in deferred tax expense of $43 million. During 2018, higher working capital requirements resulted in a cash outflow of $485 million compared to a cash inflow of $90 million in 2017, primarily due to higher accounts payable and inventory levels in 2018 to support business growth.
Net cash used in investing activities decreased $78 million, primarily due to the absence of the acquisition of Eaton Cummins Automated Transmission Technologies for $600 million in the third quarter of 2017, partially offset by higher capital expenditures of $203 million, lower cash flows from derivatives not designated as hedges of $178 million and higher net investments in marketable securities of $109 million.
Net cash used in financing activities increased $326 million, primarily due to higher repurchases of common stock of $689 million, partially offset by increased borrowings of commercial paper of $396 million.
The effect of exchange rate changes on cash and cash equivalents increased $168 million, primarily due to unfavorable fluctuations in the British pound of $123 million.

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