Carrier Global Corp (CARR)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 10,015,000 | 3,520,000 | 2,987,000 | 3,115,000 |
| Short-term investments | US$ in thousands | — | — | — | 1,513,000 |
| Total current liabilities | US$ in thousands | 6,891,000 | 6,032,000 | 6,627,000 | 5,110,000 |
| Cash ratio | 1.45 | 0.58 | 0.45 | 0.91 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($10,015,000K
+ $—K)
÷ $6,891,000K
= 1.45
The cash ratio measures the ability of a company to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio indicates that the company has a stronger ability to meet its immediate obligations without relying on external sources.
Analyzing Carrier Global Corp's cash ratio over the past five years, we observe fluctuations in the ratio. In 2019, the cash ratio was relatively low at 0.43, indicating the company had limited cash on hand compared to its short-term liabilities. However, the ratio improved significantly in 2020 to 0.81, suggesting a better ability to meet short-term obligations.
The cash ratio further increased in 2021 to 0.58 and then substantially in 2022 to 0.73, indicating a steady improvement in the company's liquidity position. The cash ratio peaked in 2023 at 1.56, reflecting a substantial buildup of cash reserves relative to short-term liabilities.
Overall, the upward trend in Carrier Global Corp's cash ratio signifies a strengthening liquidity position and ability to meet short-term obligations. This improvement may indicate sound financial management practices and prudent cash management strategies within the company.
Peer comparison
Dec 31, 2023