Carrier Global Corp (CARR)

Short-term

Turnover ratios

Based on the data provided for Carrier Global Corp, let's analyze the activity ratios:

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory. The trend shows a slight decline from 1.83 in December 2020 to 1.01 in March 2023, followed by an increase to 2.00 in December 2023 and a significant spike to 9.15 in December 2024. This indicates a substantial improvement in managing inventory levels in the latter periods.

2. Receivables Turnover:
- The receivables turnover ratio reflects how efficiently a company collects its outstanding receivables. The ratio remained relatively stable, with fluctuations but generally staying within 6.20 to 10.46 range. The increase in turnover over time implies better collection practices or a more efficient credit policy.

3. Payables Turnover:
- The payables turnover ratio measures how quickly a company pays its suppliers. The trend shows fluctuation, with a notable increase in turnover from 0.94 in December 2022 to 8.56 in December 2024. This spike indicates that the company is taking longer to pay its suppliers in 2024 compared to earlier periods.

4. Working Capital Turnover:
- The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate sales. The ratio fluctuates significantly over time, with a sharp increase from 1.73 in December 2023 to 28.92 in September 2024. Such a substantial increase could indicate either better utilization of working capital or a rapid increase in sales.

In conclusion, Carrier Global Corp's activity ratios show various trends over the reported periods, including improvements in inventory turnover, stable receivables turnover, a notable increase in payables turnover, and significant fluctuations in working capital turnover. The company appears to have made progress in managing its inventory efficiently and collecting receivables promptly, although a closer look at the reasons behind the fluctuations in payables and working capital turnovers would be necessary to provide a more comprehensive analysis.

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Average number of days

The analysis of Carrier Global Corp's activity ratios reveals important insights into the management of its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- Carrier Global Corp's DOH has shown fluctuations over the years, ranging from a high of 360.76 days to a low of 39.88 days.
- A higher DOH indicates that the company is holding onto inventory for a longer period before selling, which can tie up capital and increase storage costs.
- The significant fluctuations in DOH suggest potential challenges in managing inventory levels efficiently, impacting the company's liquidity and profitability.

2. Days of Sales Outstanding (DSO):
- The DSO metric reflects the average number of days it takes for the company to collect payments from its customers.
- Carrier Global Corp's DSO has ranged from 34.90 days to 58.84 days.
- A lower DSO is preferable as it signifies quicker cash conversion and effective management of receivables.
- The decreasing trend in DSO indicates an improvement in the company's collection process and potential enhanced cash flows.

3. Number of Days of Payables:
- The days of payables metric represents the number of days the company takes to pay its suppliers.
- Carrier Global Corp's payables days have varied from 42.64 days to 387.14 days.
- A longer period of payables may indicate the company's ability to delay payments and conserve cash, but it could strain supplier relationships.
- The fluctuations in payables days suggest changes in the company's payment policies and relationships with suppliers, impacting its working capital management.

In summary, Carrier Global Corp's activity ratios highlight challenges in inventory management, improvements in receivables collection, and fluctuations in payables days. Effective management of these activity ratios is crucial for optimizing working capital, enhancing liquidity, and sustaining profitability.

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See also:

Carrier Global Corp Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

Fixed Asset Turnover:

Carrier Global Corp's fixed asset turnover has shown fluctuations over the years. The ratio increased gradually from 9.53 in December 2020 to a peak of 11.72 in March 2023, signaling improved efficiency in generating revenue from fixed assets. However, there was a decline in the ratio to 7.12 in March 2024, indicating a potential decrease in productivity and revenue generation from fixed assets. It then increased to 8.00 by December 2024, indicating a slight recovery but still below the previous peak levels.

Total Asset Turnover:

The total asset turnover ratio also exhibited variability, starting at 0.69 in December 2020 and reaching its highest point of 0.89 in June 2022. This shows an overall increase in revenue generated relative to total assets during this period. However, the ratio declined to 0.64 by December 2024, suggesting a decrease in the company's efficiency in utilizing its total assets to generate revenue.

In summary, Carrier Global Corp's long-term activity ratios indicate fluctuations in its efficiency in utilizing fixed and total assets to generate revenue over the years. The company should closely monitor these ratios to ensure optimal asset utilization and sustainable revenue generation.

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See also:

Carrier Global Corp Long-term (Investment) Activity Ratios (Quarterly Data)