Carrier Global Corp (CARR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.98 | 2.00 | 1.01 | 1.65 | 1.83 |
| Receivables turnover | 8.63 | 10.32 | 7.76 | 8.44 | 6.57 |
| Payables turnover | 8.40 | 1.46 | 0.94 | 1.39 | 1.54 |
| Working capital turnover | 11.45 | 1.70 | 5.71 | 4.25 | 5.35 |
Based on the provided data, let's analyze the activity ratios of Carrier Global Corp:
1. Inventory Turnover:
- The inventory turnover ratio indicates how efficiently the company is managing its inventory. A higher ratio suggests faster inventory turnover.
- Carrier Global's inventory turnover has fluctuated over the years, with a significant increase from 1.01 in 2022 to 8.98 in 2024. This indicates a substantial improvement in managing and selling inventory efficiently.
2. Receivables Turnover:
- The receivables turnover ratio measures how effectively a company is collecting its accounts receivable. A higher ratio implies quicker collection.
- Carrier Global's receivables turnover has shown variability, with the highest turnover of 10.32 in 2023. This suggests that the company improved its accounts receivable collection efficiency during that period.
3. Payables Turnover:
- The payables turnover ratio reflects how quickly a company pays its suppliers. A higher ratio can indicate more efficient management of payables.
- Carrier Global's payables turnover has been inconsistent, with a notable increase from 0.94 in 2022 to 8.40 in 2024. This substantial increase may indicate changes in payment practices or negotiating better terms with suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate revenue. A higher ratio implies better utilization of resources.
- Carrier Global's working capital turnover has shown fluctuations, with a considerable increase from 1.70 in 2023 to 11.45 in 2024. This steep rise suggests significant improvements in utilizing working capital efficiently to generate sales.
In summary, Carrier Global Corp has exhibited varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the years. The company's improving inventory turnover, receivables turnover, and working capital turnover ratios indicate enhanced operational efficiency and effective resource management. However, the fluctuations in payables turnover may necessitate a closer examination of the company's payment practices and supplier relationships.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 40.63 | 182.95 | 360.76 | 221.38 | 199.32 |
| Days of sales outstanding (DSO) | days | 42.27 | 35.38 | 47.07 | 43.22 | 55.53 |
| Number of days of payables | days | 43.44 | 249.19 | 387.14 | 262.29 | 236.89 |
To analyze Carrier Global Corp's activity ratios based on the provided data:
1. Days of Inventory on Hand (DOH):
- The company's DOH increased significantly from 199.32 days in 2020 to 360.76 days in 2022 before decreasing to 40.63 days in 2024.
- The upward trend in DOH from 2020 to 2022 suggests that Carrier Global Corp was carrying excess inventory, which was significantly reduced by 2024.
- A lower DOH indicates that the company is managing its inventory efficiently by turning over its stock faster.
2. Days of Sales Outstanding (DSO):
- DSO decreased from 55.53 days in 2020 to 35.38 days in 2023 but slightly increased to 42.27 days in 2024.
- The decreasing trend in DSO reflects that Carrier Global Corp improved its collections process, reducing the time taken to collect receivables.
- The slight increase in DSO in 2024 may indicate a longer collection period for sales, which could impact the company's cash flow.
3. Number of Days of Payables:
- The number of days of payables increased from 236.89 days in 2020 to 387.14 days in 2022 before decreasing sharply to 43.44 days in 2024.
- The significant increase in payables days in 2022 suggests that Carrier Global Corp was taking longer to pay its suppliers.
- The sharp decrease in payable days in 2024 indicates that the company may be leveraging its supplier relationships more efficiently or negotiating better payment terms.
Overall, the analysis of activity ratios for Carrier Global Corp reveals fluctuations in inventory management, receivables collection, and payables management over the years. The company's ability to optimize these ratios can impact its working capital position, cash flow, and overall operational efficiency.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.63 | 9.93 | 9.80 | 11.11 | 10.10 |
| Total asset turnover | 0.61 | 0.65 | 0.84 | 0.78 | 0.73 |
The Fixed Asset Turnover ratio for Carrier Global Corp has shown a generally positive trend over the years, increasing from 10.10 in 2020 to 11.11 in 2021, indicating that the company generated $11.11 in sales for each dollar invested in fixed assets. However, there was a slight decline to 9.80 in 2022 and a subsequent increase to 9.93 in 2023, followed by a more significant drop to 7.63 in 2024, suggesting that the efficiency of utilizing fixed assets to generate sales decreased that year.
In terms of Total Asset Turnover, the ratio fluctuated over the period. It started at 0.73 in 2020, improved to 0.78 in 2021, and further increased to 0.84 in 2022, indicating that the company generated $0.84 in sales for every dollar of total assets in that year. However, the ratio then dropped to 0.65 in 2023 and declined further to 0.61 in 2024, potentially signaling a decrease in the overall efficiency of utilizing total assets to generate revenue.
These ratios reflect how effectively Carrier Global Corp is utilizing its assets to generate sales and can provide insights into the company's operational efficiency and performance in the long term.