Carrier Global Corp (CARR)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 39.88 | 211.24 | 251.57 | 287.62 | 182.95 | 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 | 40.31 | 42.17 | 49.84 | 50.87 | 34.90 | 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 | 42.64 | 225.85 | 262.80 | 277.24 | 249.19 | 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 | 37.55 | 27.56 | 38.60 | 61.24 | -31.33 | 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, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 39.88 + 40.31 – 42.64
= 37.55
The cash conversion cycle is a measure of how long it takes a company to convert its investments in inventory and other resources into cash flows from sales. Analyzing the historical data of Carrier Global Corp's cash conversion cycle from December 31, 2020, to December 31, 2024, provides insights into its efficiency in managing its working capital.
The trend of Carrier Global Corp's cash conversion cycle fluctuates significantly over the period under review. It started at 21.27 days on December 31, 2020, decreased to 2.92 days by June 30, 2021, indicating a rapid conversion of inventory and receivables into cash during this period.
Subsequently, the cash conversion cycle increased to 42.07 days by June 30, 2022, signaling a potential lag in converting investments into cash flows. This trend continued with fluctuations, reaching a peak of 61.24 days on March 31, 2024, which could suggest inefficiencies in managing working capital.
However, there was a notable improvement as of December 31, 2024, where the cash conversion cycle decreased to 37.55 days, indicating an enhanced ability to convert assets into cash.
Overall, the analysis of Carrier Global Corp's cash conversion cycle highlights varying efficiency levels in managing working capital over the period, with fluctuations indicating potential areas for improvement. It is essential for the company to focus on optimizing inventory management, accounts receivable collections, and accounts payable to ensure a shorter cash conversion cycle and improved liquidity position.
Peer comparison
Dec 31, 2024