Carrier Global Corp (CARR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Inventory turnover | 1.64 | 1.01 | 1.65 | 1.83 |
| Receivables turnover | 8.65 | 7.76 | 8.44 | 6.57 |
| Payables turnover | 1.33 | 0.94 | 1.39 | 1.54 |
| Working capital turnover | 1.80 | 5.71 | 4.25 | 5.35 |
Inventory turnover measures how effectively a company manages its inventory by indicating how many times inventory is sold and replaced in a given period. Carrier Global Corp's inventory turnover has fluctuated over the past five years, ranging from a low of 5.67 in 2022 to a high of 9.90 in 2019. The overall trend has been moderately positive, with the company showing improvement in managing its inventory more efficiently.
Receivables turnover reflects how quickly a company collects cash from its credit sales. Carrier Global Corp's receivables turnover has generally been on an upward trend, increasing from 6.83 in 2019 to 8.91 in 2023. This indicates that the company has been collecting its receivables faster over the years, which is a positive sign of effective credit management.
Payables turnover measures how quickly a company pays its suppliers. Carrier Global Corp's payables turnover has varied over the years but has generally remained within a relatively stable range. The company's payables turnover ratio was highest in 2019 at 7.75 and has since fluctuated between 5.28 and 6.38. This suggests that the company has been managing its payables in a consistent manner.
Working capital turnover indicates how effectively a company utilizes its working capital to generate revenue. Carrier Global Corp's working capital turnover has shown fluctuations, ranging from a low of 1.86 in 2023 to a high of 12.18 in 2019. The significant decrease in the working capital turnover ratio in recent years may suggest a decline in the company's efficiency in generating revenue from its working capital.
Overall, Carrier Global Corp's activity ratios demonstrate varying levels of efficiency in managing its inventory, receivables, payables, and working capital. While improvements have been observed in inventory and receivables turnover, the company may need to focus on optimizing its working capital turnover to enhance its overall operational efficiency.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 222.49 | 360.76 | 221.38 | 199.32 |
| Days of sales outstanding (DSO) | days | 42.20 | 47.07 | 43.22 | 55.53 |
| Number of days of payables | days | 275.18 | 387.14 | 262.29 | 236.89 |
Activity ratios provide insight into how efficiently a company manages its assets and operations. Let's analyze the activity ratios of Carrier Global Corp:
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an increase from 36.86 days in 2019 to 51.49 days in 2023, indicating that the company is holding inventory for a longer period.
- A higher DOH can suggest inefficiencies in inventory management, such as overstocking or slow-moving inventory.
2. Days of Sales Outstanding (DSO):
- The DSO trend fluctuates over the years, with a peak of 58.15 days in 2020 and a lower value of 40.98 days in 2023.
- A lower DSO indicates that the company is collecting receivables more quickly, which can be a positive sign of effective credit management and timely collections.
3. Number of Days of Payables:
- The trend in the number of days of payables has been increasing steadily over the years, from 47.07 days in 2019 to 63.69 days in 2023.
- A longer payment period to suppliers may indicate a strategy to manage cash flow or negotiate favorable credit terms, but it can also signal a potential strain on supplier relationships.
Overall, while a decreasing DSO and increasing payables period can be beneficial, the rising DOH suggests a need for Carrier Global Corp to focus on optimizing inventory levels to improve efficiency in its operations.
See also:
Carrier Global Corp Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Fixed asset turnover | 9.36 | 9.80 | 11.11 | 10.10 |
| Total asset turnover | 0.65 | 0.84 | 0.78 | 0.73 |
The long-term activity ratios of Carrier Global Corp provide insight into how effectively the company is utilizing its fixed assets and total assets to generate revenue over the years.
1. Fixed Asset Turnover: This ratio indicates the efficiency of a company in generating sales from its investment in fixed assets. Carrier Global Corp's fixed asset turnover has shown some fluctuations over the past five years, ranging from 9.11 to 11.29. The higher the fixed asset turnover, the better the company is utilizing its fixed assets to generate revenue. Therefore, an increasing trend in this ratio indicates improving efficiency in the utilization of fixed assets.
2. Total Asset Turnover: This ratio measures how efficiently a company is using its total assets to generate revenue. Carrier Global Corp's total asset turnover has fluctuated between 0.67 and 0.83 over the same period. A higher total asset turnover ratio implies that the company is generating more revenue per dollar of assets employed, indicating better asset utilization. Therefore, an increasing trend in total asset turnover reflects improved efficiency in utilizing total assets to generate revenue.
Overall, based on the trends observed in both fixed asset turnover and total asset turnover ratios over the years, Carrier Global Corp appears to have effectively managed its assets to generate revenue, with some fluctuations but an overall positive indication of asset utilization efficiency.