Cummins Inc. Equity Valuation and Analysis

Asset Turnover (Sales/Assets)
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2001 2002 2003 2004 2005
Cummins 1.32 1.21 1.23 1.30 1.44
Caterpillar 0.77 0.71 0.57 0.66 0.72
Asset turnover measures an entity’s capability to efficiently use assets to
accumulate sales. Cummins Inc. has had less fluctuation than Caterpillar and
more efficiently uses its assets to generate sales. Cummins Inc. asset turnover is
very high as it produced over $1.4 dollars in sales for every dollar of assets.
Caterpillar produced less than a dollar in sales for every dollar it holds as assets.
Cummins has a smaller asset base than Caterpillar, explaining why their sales are
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