Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2020
- Return on Equity (ROE) since 2020
- Current Ratio since 2020
- Debt to Equity since 2020
- Price to Sales (P/S) since 2020
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Liquidity Ratios (Summary)
Carrier Global Corp., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Current Ratio
- The current ratio shows a generally stable pattern with some fluctuations over the observed periods. Starting at 1.34 in March 2020, it increased to peak at 1.8 in September 2020, then slightly declined in the remaining months of 2020. In 2021, the ratio exhibited moderate volatility, ranging from 1.56 to 1.86, but consistently remained above the early 2020 levels. Throughout 2022 and into the first quarter of 2023, the ratio stabilized around 1.6 to 1.7, indicating a consistent ability to cover short-term liabilities with current assets.
- Quick Ratio
- The quick ratio displayed a more variable trend compared to the current ratio. It started at 0.77 in March 2020 and experienced a notable increase, peaking at 1.3 in September 2020. Following this peak, the ratio gradually declined during the end of 2020 and through 2021, reaching a low of 0.81 in December 2021. However, from early 2022 onwards, the quick ratio showed a recovery trend, rising to about 1.07 by March 2023. This reflects fluctuations in the company’s liquid assets excluding inventory, with recent quarters indicating a modest improvement in liquidity beyond immediate liabilities.
- Cash Ratio
- The cash ratio exhibited significant changes over the period. Beginning at a low 0.17 in March 2020, the ratio sharply increased, reaching 0.74 by September 2020, suggesting enhanced cash and cash equivalents relative to current liabilities during this time. Subsequent quarters saw some decline and variability, with the cash ratio fluctuating between 0.44 and 0.61 through the end of 2021. In 2022 and early 2023, the cash ratio again improved moderately, stabilizing around 0.5 to 0.58. Overall, the cash ratio indicates that while there were periods of strong immediate liquidity, the company maintained a moderate level of cash coverage relative to short-term obligations across the entire timeframe.
Current Ratio
Carrier Global Corp., current ratio calculation (quarterly data)
| 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 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||
| Current assets | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||
| Current ratio1 | ||||||||||||||||||
| Benchmarks | ||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||
| Boeing Co. | ||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||
| GE Aerospace | ||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||
| RTX Corp. | ||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets demonstrated a general upward trend from March 31, 2020, to March 31, 2023. Starting at $5,968 million in March 2020, current assets increased significantly, peaking at $11,407 million in December 2021. Following this peak, a slight decline was observed through mid-2022, reaching $9,276 million in June 2022, before stabilizing and increasing again to $10,158 million by March 31, 2023. This overall growth in current assets suggests improving liquidity or asset management over the periods examined.
- Current Liabilities
- Current liabilities generally rose throughout the period analyzed, starting from $4,451 million in March 2020 and increasing steadily to reach their highest level at $6,627 million in December 2021. Post this peak, the liabilities slightly decreased but remained elevated near $6,000 million, with $5,958 million recorded as of March 31, 2023. This upward trend in current liabilities indicates an increased short-term obligation load, which may imply greater operational scale or increased short-term financing.
- Current Ratio
- The current ratio fluctuated throughout the timeframe but mostly stayed above the benchmark of 1.5, reflecting a generally comfortable liquidity position. It began at 1.34 in March 2020, then improved steadily to a high of 1.86 in September 2021. Following that peak, the ratio slightly declined and oscillated between approximately 1.62 and 1.74 during 2022 and early 2023, ending at 1.7 in March 2023. This pattern indicates resilience in short-term financial health, with the company maintaining adequate current assets relative to current liabilities.
- Summary
- The overall analysis of current assets and liabilities reveals that the company increased its liquid resources substantially while also incurring higher short-term liabilities. The current ratio movement shows that despite rising liabilities, the company maintained a relatively strong liquidity position throughout the periods. The highest current assets and liabilities levels were seen in late 2021, after which current assets settled at a slightly lower but stable level, and current liabilities remained relatively high but stable. The liquidity ratios demonstrate prudent financial management maintaining adequate coverage of short-term obligations.
Quick Ratio
Carrier Global Corp., quick ratio calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||
| Accounts receivable, net | ||||||||||||||||||
| Total quick assets | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||
| Quick ratio1 | ||||||||||||||||||
| Benchmarks | ||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||
| Boeing Co. | ||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||
| GE Aerospace | ||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||
| RTX Corp. | ||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Quick Assets and Current Liabilities Trends
-
The total quick assets demonstrated a general upward trend over the reported periods. Starting at 3,442 million USD in March 2020, these assets increased markedly to a peak of 6,720 million USD by September 2020. Following this peak, there was a decline through December 2020, with some fluctuations noted throughout 2021. In 2022 and early 2023, quick assets stabilized around the 6,000 million USD range, ending at 6,379 million USD in March 2023.
Concurrently, current liabilities exhibited a rising trend initially, progressing from 4,451 million USD in March 2020 to a high of 6,627 million USD by December 2021. After this peak, liabilities decreased somewhat, settling around 5,958 million USD by March 2023. - Quick Ratio Analysis
-
The quick ratio reflected notable variability during the period under review. It started below 1 at 0.77 in March 2020, indicating a level of quick assets insufficient to cover short-term liabilities. The quick ratio then improved steadily throughout 2020, peaking at 1.30 in September 2020, thereby suggesting enhanced short-term liquidity.
In 2021, the quick ratio showed a declining trend, dropping below 1 from September 2021 through December 2021, reaching 0.81, indicating a potential weakening in the company's immediate liquidity position. However, the quick ratio recovered in 2022 and early 2023, maintaining values slightly above 1, peaking at 1.12 in March 2022, and stabilizing near 1.05 by March 2023. - Overall Insights
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The data indicate an overall improvement in quick assets and a strong recovery in liquidity ratios following the initial disruptions observed in early 2020. The fluctuations in current liabilities may have been managed effectively to maintain a quick ratio at or above 1 since early 2022, reflecting prudent financial management aimed at ensuring sufficient short-term financial stability.
Periods where the quick ratio fell below 1, particularly in late 2021, suggest potential challenges in liquidity which were subsequently addressed. The relative stabilization of quick assets and liabilities around consistent levels in recent quarters supports a balanced short-term financial position.
Cash Ratio
Carrier Global Corp., cash ratio calculation (quarterly data)
| 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 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||
| Total cash assets | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||
| Cash ratio1 | ||||||||||||||||||
| Benchmarks | ||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||
| Boeing Co. | ||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||
| GE Aerospace | ||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||
| RTX Corp. | ||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibited a notable increase from March 31, 2020, reaching a peak in September 30, 2020. Following this peak, there was a decline in December 31, 2020, and March 31, 2021. The cash assets then stabilized with minor fluctuations through the end of 2021. In 2022, total cash assets initially increased significantly by March 31, then showed a decreasing trend until September 30, before rising again by December 31, 2022, and slightly declining thereafter into March 31, 2023. Overall, cash assets demonstrate a pattern of volatility with cycles of significant increases followed by moderate declines.
- Current Liabilities
- Current liabilities increased steadily from March 31, 2020, through December 31, 2021, indicating a consistent upward trend over this period. This trend was temporarily interrupted by a decline starting in March 31, 2022, lasting until June 30, 2022. However, liabilities increased again slightly by September 30, 2022, before flattening out with minor fluctuations until March 31, 2023. The overall movement suggests increasing short-term obligations over time with a slight tapering or stabilization towards the recent periods.
- Cash Ratio
- The cash ratio showed a strong increase from March 31, 2020, through September 30, 2020, coinciding with the rise in total cash assets in the same period. This ratio declined gradually until December 31, 2021, reflecting diminishing liquidity relative to current liabilities. Starting from March 31, 2022, the cash ratio improved again, peaking by March 31, 2022, before undergoing a gradual downward trend until September 30, 2022. There was a subsequent modest recovery by December 31, 2022, and March 31, 2023. This indicates a fluctuating ability to cover current liabilities with available cash over the periods analyzed.
- Summary
- The financial data reflects fluctuating liquidity conditions, with cash holdings experiencing cycles of rapid growth and decline, while current liabilities generally trend upwards. The cash ratio, as a measure of liquidity, mirrors these changes and signals varying levels of short-term financial strength. Periods of increased cash reserves often correspond with improved cash ratios, whereas rising liabilities and diminishing cash supply contribute to weakening liquidity. This dynamic indicates a need to monitor cash management strategies and liability levels closely to maintain optimal liquidity.