Carrier Global Corp. (NYSE:CARR)

Current Ratio

The current ratio exhibited minor fluctuations over the three-year period. It increased slightly from 1.67 in 2020 to 1.72 in 2021, indicating a modest enhancement in short-term liquidity. However, it decreased marginally to 1.64 in 2022, suggesting a slight reduction in the company's ability to cover current liabilities with current assets compared to the previous year, though still remaining at a comfortable level above 1.

Quick Ratio

The quick ratio demonstrated more pronounced variability. It started at 1.15 in 2020, showing a solid ability to cover immediate liabilities without relying on inventory. In 2021, this ratio declined sharply to 0.81, indicating a reduction in liquid assets relative to current liabilities, which may reflect increased reliance on inventory or decreased liquid assets. By 2022, the quick ratio recovered to 1.05, suggesting an improvement in liquidity but still slightly below the 2020 level.

Cash Ratio

The cash ratio followed a similar pattern to the quick ratio but at lower values. It decreased from 0.61 in 2020 to 0.45 in 2021, signaling a diminished capacity to cover current liabilities using only cash and cash equivalents. In 2022, the ratio increased to 0.58, reflecting a partial restoration of cash reserves relative to short-term obligations, yet it remained below the initial 2020 level.

The financial data over the three-year period reveals several notable trends concerning the company's liquidity and short-term financial position.

Current Assets

Current assets increased significantly from US$8,524 million at the end of 2020 to US$11,407 million at the end of 2021, representing a growth of approximately 33.8%. However, this was followed by a decline of about 13.4% to US$9,879 million as of December 31, 2022. Despite the decline in 2022, current assets remained above the 2020 level, indicating a generally higher level of liquid resources compared to the start of the period.

Current Liabilities

Current liabilities showed a similar pattern, rising from US$5,110 million in 2020 to US$6,627 million in 2021, an increase of approximately 29.7%. In 2022, current liabilities decreased to US$6,032 million, a reduction of about 9%. This reduction in current liabilities partially offsets the decline in current assets during the same period.

Current Ratio

The current ratio, which measures the company’s ability to cover its short-term liabilities with its short-term assets, experienced only minor fluctuations. The ratio improved slightly from 1.67 in 2020 to 1.72 in 2021, indicating a modest strengthening of liquidity. However, this was followed by a slight decrease to 1.64 in 2022. Despite this decrease, the current ratio remains above 1.6, suggesting the company maintained a relatively stable liquidity position throughout the period.

Overall, the company showed growth in current assets and liabilities in 2021, followed by reductions in both in 2022. The liquidity position, as reflected by the current ratio, remained relatively stable with only marginal fluctuations, indicating consistent management of short-term financial obligations during the analyzed period.

Total quick assets

The total quick assets exhibited a decline from 5,896 million US dollars at the end of 2020 to 5,390 million US dollars at the end of 2021, representing a reduction in liquid assets during this period. However, this trend reversed in 2022, with quick assets increasing to 6,353 million US dollars, surpassing the 2020 level and indicating a restoration and growth of highly liquid assets.

Current liabilities

Current liabilities showed an increasing trend from 5,110 million US dollars at the end of 2020 to a peak of 6,627 million US dollars at the end of 2021. This increase suggests a rise in short-term obligations or payables. Subsequently, current liabilities decreased in 2022 to 6,032 million US dollars, indicating a partial reduction in short-term financial obligations compared to the previous year, though still above the 2020 level.

Quick ratio

The quick ratio, a key measure of short-term liquidity, declined significantly from 1.15 at the end of 2020 to 0.81 at the end of 2021. This drop reflects a deterioration in the company’s ability to cover its current liabilities with its most liquid assets during 2021. In 2022, the quick ratio improved to 1.05, moving closer to the 2020 level and indicating a recovery in liquidity, though not fully reaching the initial ratio observed in 2020.

Total Cash Assets

There was a decline in total cash assets from 3,115 million US dollars at the end of 2020 to 2,987 million US dollars at the end of 2021, representing a decrease. However, the figure increased significantly in 2022 to 3,520 million US dollars, surpassing the initial 2020 level. This indicates a recovery and growth in cash reserves during the latest period.

Current Liabilities

Current liabilities showed an upward trend from 5,110 million US dollars in 2020 to 6,627 million US dollars in 2021, marking a substantial increase. In 2022, current liabilities decreased to 6,032 million US dollars but remained higher than the 2020 level. This suggests some reduction in short-term obligations after a peak in 2021 but still reflects elevated current liabilities compared to the base year.

Cash Ratio

The cash ratio, measuring the ability to cover current liabilities with cash assets, declined from 0.61 in 2020 to 0.45 in 2021, indicating a weakened liquidity position. In 2022, the cash ratio improved to 0.58 but did not return to the 2020 level. This demonstrates a partial recovery in liquidity, suggesting the company improved its capacity to meet short-term liabilities with cash but has not fully restored prior liquidity strength.