Carrier Global Corp. (NYSE:CARR)

The current ratio for the analyzed period demonstrates a generally stable liquidity position. Fluctuations are present, but the company consistently maintains a ratio above 1.60, suggesting a comfortable ability to cover short-term obligations with short-term assets.

Current Ratio Trend

The current ratio experienced a slight increase from 1.67 in 2020 to 1.72 in 2021. This indicates an improvement in the company’s ability to meet its short-term liabilities. However, the ratio decreased to 1.64 in 2022, representing a modest decline from the previous year’s level. Despite this decrease, the ratio remains within a similar range as observed in 2020.

Underlying Components

Current assets increased from US$8,524 million in 2020 to US$11,407 million in 2021, contributing to the initial rise in the current ratio. A subsequent decrease in current assets to US$9,879 million in 2022 partially offset this gain. Current liabilities also increased from US$5,110 million in 2020 to US$6,627 million in 2021, but decreased to US$6,032 million in 2022. The interplay between these changes in current assets and current liabilities influences the overall current ratio.

The observed fluctuations suggest a dynamic management of working capital. While the company has demonstrated an ability to increase its current asset base, the concurrent increase in current liabilities in 2021 warrants consideration. The reduction in both current assets and liabilities in 2022 resulted in a slight decrease in the current ratio, but the level remains indicative of adequate short-term liquidity.