Carrier Global Corp (CARR)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.43 | 0.33 | 0.36 | 0.40 |
| Debt-to-capital ratio | 0.00 | 0.61 | 0.52 | 0.57 | 0.60 |
| Debt-to-equity ratio | 0.00 | 1.58 | 1.08 | 1.34 | 1.53 |
| Financial leverage ratio | 2.60 | 3.64 | 3.23 | 3.69 | 3.81 |
The solvency ratios of Carrier Global Corp provide insights into the company's long-term financial stability and ability to meet its debt obligations.
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. A lower debt-to-assets ratio indicates a lower reliance on debt financing. Carrier Global's debt-to-assets ratio has shown a decreasing trend from 0.40 in 2020 to 0.33 in 2022, but increased in 2023 to 0.43. A sudden drop to 0.00 in 2024 may indicate a significant reduction in debt or a change in the company's capital structure.
2. Debt-to-capital ratio: This ratio indicates the proportion of a company's capital that comes from debt. A lower debt-to-capital ratio signifies a lower level of financial risk. Carrier Global's debt-to-capital ratio has been decreasing from 0.60 in 2020 to 0.52 in 2022, but then increased in 2023 to 0.61. A sudden drop to 0.00 in 2024 suggests a possible shift in the company's capital structure.
3. Debt-to-equity ratio: This ratio compares a company's total debt to its total equity, reflecting the level of financial leverage. A lower debt-to-equity ratio implies less reliance on debt financing. Carrier Global's debt-to-equity ratio decreased from 1.53 in 2020 to 1.08 in 2022 but rose in 2023 to 1.58. The drop to 0.00 in 2024 could indicate a significant decrease in debt relative to equity.
4. Financial leverage ratio: This ratio measures the extent to which a company uses debt to finance its operations. A lower financial leverage ratio indicates less financial risk. Carrier Global's financial leverage ratio decreased from 3.81 in 2020 to 3.23 in 2022 but increased in 2023 to 3.64. A sharp decrease to 2.60 in 2024 suggests a potential reduction in financial risk and debt dependency.
Overall, the decreasing trend in debt ratios until 2022, followed by fluctuations in 2023, and a sharp drop in 2024, indicate changes in Carrier Global's capital structure and financial risk profile, potentially signaling improved solvency and reduced reliance on debt financing.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 4.56 | 6.34 | 14.95 | 8.29 | 10.35 |
The interest coverage ratio is a financial metric that indicates a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense.
Analyzing the interest coverage ratios of Carrier Global Corp from 2020 to 2024 reveals the following trends:
1. December 31, 2020: The interest coverage ratio was 10.35, indicating that Carrier Global Corp generated 10.35 times the earnings needed to cover its interest expenses. This level reflects a strong ability to meet interest obligations.
2. December 31, 2021: The interest coverage ratio decreased to 8.29, suggesting a slight decline in the company's ability to cover its interest payments. It is important to monitor such decreases to ensure the company remains financially stable.
3. December 31, 2022: The interest coverage ratio significantly improved to 14.95, indicating a robust increase in the company's ability to cover interest expenses. This level signals a healthy financial position.
4. December 31, 2023: The interest coverage ratio declined to 6.34, indicating a decrease in the company's ability to meet its interest obligations. This decrease may raise concerns about the company's financial health and debt servicing capability.
5. December 31, 2024: The interest coverage ratio further decreased to 4.56, suggesting a continued decline in the company's ability to cover interest payments. A low interest coverage ratio may indicate higher financial risk and potential difficulties in servicing debt.
In summary, the interest coverage ratios of Carrier Global Corp fluctuated over the years, showing both improvements and declines in the company's ability to meet its interest obligations. It is crucial for investors and stakeholders to closely monitor these ratios to assess the company's financial health and debt repayment capacity.