Carrier Global Corp (CARR)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 222.49 | 283.63 | 323.42 | 360.24 | 360.76 | 345.30 | 293.75 | 276.56 | 221.52 | 217.51 | 218.14 | 227.62 | 199.39 | |||
| Days of sales outstanding (DSO) | days | 41.63 | 50.76 | 54.51 | 53.40 | 48.69 | 51.53 | 48.69 | 44.35 | 43.23 | 48.53 | 58.12 | 57.11 | 58.84 | |||
| Number of days of payables | days | 275.18 | 319.61 | 354.22 | 376.05 | 387.14 | 365.13 | 300.38 | 295.45 | 262.45 | 243.71 | 273.34 | 267.03 | 236.97 | |||
| Cash conversion cycle | days | -11.06 | 14.78 | 23.72 | 37.59 | 22.31 | 31.70 | 42.07 | 25.46 | 2.30 | 22.33 | 2.92 | 17.70 | 21.27 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 222.49 + 41.63 – 275.18
= -11.06
The cash conversion cycle measures the time taken by Carrier Global Corp to convert its investments in inventory and accounts receivable into cash inflows from sales. A lower cash conversion cycle indicates more efficient management of working capital.
Based on the data provided, we observe fluctuations in Carrier Global Corp's cash conversion cycle over the past eight quarters. In Q1 2022, the company had a relatively efficient cash conversion cycle of 42.12 days, which increased to 49.34 days in Q2 2022 and further to 49.84 days in Q3 2022. In the subsequent quarters, the cycle improved to 45.93 days in Q4 2022 but increased again to 49.70 days in Q1 2023 and 47.85 days in Q2 2023.
The most recent data indicates a significant improvement in Carrier Global Corp's cash conversion cycle, reducing to 28.79 days in Q4 2023. This suggests that the company has been more effective in managing its inventory and accounts receivable, translating into quicker cash generation from sales.
Overall, despite fluctuations, the trend in recent quarters shows a positive trajectory in the management of working capital efficiency for Carrier Global Corp. It will be crucial for the company to sustain this improvement to enhance its financial health and performance in the future.
Peer comparison
Dec 31, 2023