Carrier Global Corp (CARR)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.25 | 1.08 | 1.08 | 1.36 | 2.80 | 1.66 | 1.63 | 1.70 | 1.64 | 1.62 | 1.67 | 1.74 | 1.72 | 1.86 | 1.56 | 1.62 | 1.67 |
| Quick ratio | 0.84 | 0.48 | 0.57 | 0.52 | 1.73 | 1.09 | 1.03 | 1.07 | 1.05 | 1.00 | 1.05 | 1.12 | 0.81 | 1.15 | 1.31 | 1.35 | 1.45 |
| Cash ratio | 0.50 | 0.21 | 0.27 | 0.15 | 1.43 | 0.61 | 0.51 | 0.56 | 0.58 | 0.50 | 0.54 | 0.65 | 0.45 | 0.71 | 0.75 | 0.80 | 0.91 |
Liquidity Ratios Analysis for Carrier Global Corp:
1. Current Ratio:
- The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets.
- Carrier Global Corp's current ratio fluctuated over the years, starting at 1.67 in December 2020, increasing to a peak of 2.80 in December 2023, and then declining to 1.25 by December 2024.
- Generally, a current ratio above 1 indicates that the company has more short-term assets than short-term liabilities, which is considered healthy. Carrier Global Corp mostly maintained a current ratio above 1 throughout the period.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent test of liquidity as it excludes inventory from current assets.
- Carrier Global Corp's quick ratio also showed fluctuations over the years, with a peak of 1.73 in December 2023 and a low of 0.48 in September 2024.
- A quick ratio above 1 is usually preferred as it indicates that the company can meet its short-term obligations without relying on selling inventory. Carrier Global Corp's quick ratio was mostly above 1, except for a few quarters where it dipped below 1.
3. Cash Ratio:
- The cash ratio is the strictest measure of liquidity, focusing only on the ability to cover current liabilities with cash and cash equivalents.
- Carrier Global Corp's cash ratio started at 0.91 in December 2020, peaked at 1.43 in December 2023, and decreased to 0.50 by December 2024.
- A cash ratio above 1 implies that a company can pay off all its current liabilities with its cash holdings alone. Carrier Global Corp maintained a cash ratio above 1 in most periods, indicating a strong ability to cover short-term obligations with cash.
In conclusion, Carrier Global Corp generally maintained healthy liquidity levels throughout the period under review, as indicated by its current, quick, and cash ratios remaining above 1 for the most part. However, there were fluctuations in these ratios, emphasizing the need for continuous monitoring of liquidity to ensure the company can meet its short-term obligations effectively.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The cash conversion cycle of Carrier Global Corp reflects the efficiency and effectiveness of its working capital management over time. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
Looking at the data provided, we observe fluctuations in the cash conversion cycle over the periods reported:
- In the initial period, from December 2020 to December 2021, there was a significant decrease in the cash conversion cycle from 21.27 days to 2.30 days, indicating an improvement in the company's ability to convert its resources into cash more efficiently.
- The cycle increased in the subsequent period, March 2022, but remained relatively stable in the following quarters until September 2023.
- From December 2023 to March 2024, there was a substantial negative cycle of -31.33 days, indicating that Carrier Global Corp was able to convert its resources into cash even before investing in them. This negative cycle suggests a potential issue with managing cash flows efficiently.
- The cash conversion cycle increased again in the subsequent periods, suggesting possible challenges in managing working capital effectively.
- The cycle peaked at 61.24 days in March 2024, which may indicate extended periods in converting resources into cash, impacting the company's liquidity position.
Overall, the trends in the cash conversion cycle of Carrier Global Corp highlight fluctuations in the company's working capital efficiency, with periods of improvement followed by challenges. This analysis underscores the importance for the company to continuously monitor and manage its working capital effectively to ensure optimal cash flow and liquidity positions.