Carrier Global Corp. (NYSE:CARR)

Current Ratio

The current ratio exhibited fluctuations throughout the observed periods, starting at 1.62 and decreasing slightly to 1.56 in the second quarter of 2021. It then rose to a peak of 1.86 in the third quarter of 2021 before declining to 1.72 at the end of that year. In 2022, the ratio showed a gradual decrease from 1.74 in the first quarter to 1.62 in the third quarter, with a modest recovery to 1.64 in the fourth quarter. The latest figure for the first quarter of 2023 shows a slight improvement to 1.70. Overall, the current ratio has remained above 1.5, indicating a consistent ability to cover short-term liabilities with current assets, despite some variability.

Quick Ratio

The quick ratio demonstrated a downward trend in the first three quarters of 2021, moving from 1.06 to 0.81, signifying a reduction in the company's liquid assets relative to current liabilities. However, beginning in the first quarter of 2022, there was a notable recovery, with the ratio increasing to 1.12, followed by minor fluctuations but maintaining a level above 1.00 through the first quarter of 2023. This indicates an improved liquidity position and an ability to cover immediate liabilities without relying on inventory.

Cash Ratio

The cash ratio remained relatively stable but generally lower compared to the other liquidity ratios. It started at 0.51 in the first quarter of 2021 and decreased slightly to 0.44 in the third quarter, then stayed near that level for the remainder of the year. In 2022, the cash ratio improved significantly to 0.65 in the first quarter, indicating an increase in cash or cash equivalents relative to current liabilities. Although it decreased slightly during subsequent quarters, it stayed above the 0.50 level, with a small dip to 0.50 in the third quarter and a recovery to 0.56 by the first quarter of 2023. This pattern suggests a cautious but stable cash management strategy throughout the periods.

Current assets

Current assets showed an overall increasing trend from March 31, 2021, through March 31, 2023. Beginning at 8,328 million USD, current assets rose steadily, peaking at 11,407 million USD by December 31, 2021. After this high point, values declined somewhat during 2022, fluctuating between 9,276 million USD and 9,879 million USD, before edging upward again to 10,158 million USD in the first quarter of 2023.

Current liabilities

Current liabilities exhibited a consistent upward movement over the period, starting at 5,138 million USD at the end of March 2021 and increasing nearly every quarter through December 31, 2021, reaching 6,627 million USD. Following this peak, liabilities decreased somewhat during 2022 but remained relatively stable, fluctuating slightly around 5,500 to 6,000 million USD, finishing at 5,958 million USD in March 2023.

Current ratio

The current ratio, reflecting liquidity, initially declined from 1.62 in March 2021 to a low of 1.56 in June 2021, followed by a rise to a peak of 1.86 in September 2021. Subsequently, it decreased again to 1.62 by September 2022. Notably, the ratio then demonstrated modest improvement, reaching 1.7 by the end of the first quarter of 2023. Throughout the timeframe, the current ratio generally remained above 1.5, indicating a consistent ability to cover short-term obligations.

Analysis of Quick Assets and Current Liabilities

There was an overall upward trend in total quick assets over the observed periods. Starting at $5,430 million as of March 31, 2021, quick assets increased with some fluctuations, reaching $6,379 million by March 31, 2023. Notably, total quick assets experienced a decrease between June 30, 2021, and September 30, 2021, before steadily rising again towards the end of 2022 and into early 2023.

Current liabilities exhibited a somewhat cyclical pattern. After increasing from $5,138 million in March 2021 to peak at $6,627 million by December 31, 2021, liabilities decreased significantly to $5,531 million by March 31, 2022. Subsequently, current liabilities showed modest increases and fluctuations throughout 2022 and early 2023, ending slightly lower at $5,958 million as of March 31, 2023, compared to the peak in late 2021.

Quick Ratio Dynamics

The quick ratio mirrored the movements in quick assets relative to current liabilities. Initially, the ratio showed a gradual decline from 1.06 in March 2021 to a low of 0.81 by December 31, 2021, indicating a reduction in liquidity relative to short-term obligations during that period. This was followed by a pronounced improvement starting in the first quarter of 2022, with the ratio increasing to 1.12 as of March 31, 2022. The quick ratio remained around or above 1.00 in subsequent quarters, stabilizing near 1.07 by March 31, 2023. This suggests a restoration and maintenance of liquidity levels sufficient to cover current liabilities promptly.

Summary

The data reflects a recovery in liquidity after a period of decline through 2021, with total quick assets rising and current liabilities stabilizing at a lower level in 2022 and 2023. The quick ratio's rebound above 1.00 suggests improved short-term financial health, indicating that the company has regained its capacity to meet immediate liabilities without resorting to inventory liquidation.

The quarterly financial data exhibits several notable trends in key liquidity metrics over the observed periods.

Total Cash Assets

Total cash assets have generally increased from March 2021 through March 2023, rising from approximately $2.6 billion to around $3.3 billion. The data shows a steady upward trend with some fluctuations; a peak is observed at the end of Q1 2022 with $3.6 billion, followed by a modest decline in subsequent quarters but remaining consistently above $3 billion into early 2023.

Current Liabilities

Current liabilities have demonstrated a fluctuating pattern over the nine quarters. Starting at about $5.1 billion in March 2021, liabilities increased to a high of nearly $6.6 billion by the end of 2021. Throughout 2022 and into early 2023, these liabilities stabilized somewhat, remaining in the $5.5 billion to $6.0 billion range. The trend indicates a temporary increase toward the end of 2021, followed by relative stabilization.

Cash Ratio

The cash ratio, reflecting the company’s ability to cover current liabilities with cash assets, shows a significant improvement during the observed period. Initially declining from 0.51 to 0.44 in late 2021, the ratio reversed its trend in early 2022, rising sharply to 0.65 by March 2022. Although some fluctuation followed, the ratio maintained levels above 0.5 for the majority of 2022, ending at 0.56 in March 2023. This improvement signals enhanced liquidity and a stronger short-term financial position.

Overall, the analysis reveals that liquidity strengthened substantially starting in early 2022, supported by an increase in total cash assets and a relatively stable level of current liabilities. The cash ratio trend corroborates this improvement, indicating enhanced capacity to meet short-term obligations with available cash resources.