Carrier Global Corp. (NYSE:CARR)

The period between 2020 and 2022 demonstrates significant fluctuation in net income attributable to common shareowners, which directly impacts the return on assets. Total assets remained relatively stable over the same timeframe.

Return on Assets (ROA)

The ROA exhibited a decreasing trend from 7.90% in 2020 to 6.36% in 2021. This decline coincided with a decrease in net income attributable to common shareowners. However, a substantial increase in ROA to 13.55% was observed in 2022. This improvement is attributable to a significant rise in net income, while total assets experienced only a minor decrease.

The considerable increase in ROA during 2022 suggests improved profitability relative to the asset base. The consistency in total assets across the three years indicates that changes in ROA are primarily driven by variations in net income, rather than shifts in the company’s investment in assets.

Net Income and ROA Relationship

A strong positive correlation exists between net income attributable to common shareowners and ROA. The 2021 decrease in net income directly resulted in a lower ROA, while the 2022 increase in net income led to a significantly higher ROA. This highlights the company’s sensitivity of asset utilization efficiency to bottom-line profitability.

Further investigation into the factors driving the substantial increase in net income during 2022 would be beneficial to assess the sustainability of the improved ROA.