Carrier Global Corp. (NYSE:CARR)

The financial data reveals a consistent improvement in leverage and coverage ratios over the three-year period. There is a clear downward trend in debt-related ratios, indicating enhanced financial stability and reduced reliance on debt financing.

Debt to equity ratio

This ratio decreased steadily from 1.64 in 2020 to 1.43 in 2021, and further to 1.14 in 2022, showing a significant reduction in the proportion of debt compared to shareholders' equity.

Debt to equity including operating lease liability

Following the same pattern, this ratio decreased from 1.76 in 2020 to 1.53 in 2021, and further to 1.22 in 2022, reflecting the company's improved management of lease liabilities in relation to equity.

Debt to capital ratio

There was a decline from 0.62 in 2020 to 0.59 in 2021, and continuing to 0.53 in 2022, indicating a lower portion of capital financed through debt.

Debt to capital including operating lease liability

This ratio also decreased from 0.64 in 2020 to 0.60 in 2021, and then to 0.55 in 2022, underscoring the reduction in total liabilities relative to total capital.

Debt to assets ratio

The ratio declined from 0.41 in 2020 to 0.37 in 2021, and to 0.34 in 2022, suggesting improved asset financing through equity rather than debt.

Debt to assets including operating lease liability

Similarly, this ratio decreased from 0.44 in 2020 to 0.40 in 2021 and then to 0.36 in 2022, demonstrating a consistent reduction in debt burden on total assets.

Financial leverage

Financial leverage ratio showed a downward trend from 4.01 in 2020 to 3.87 in 2021, and further reduced to 3.36 in 2022, indicating a lower level of assets held per unit of equity and a potentially lower risk profile.

Interest coverage ratio

This ratio initially decreased from 10.58 in 2020 to 8.52 in 2021 but then significantly increased to 15.21 in 2022. The sharp improvement in 2022 suggests enhanced ability to meet interest expenses, possibly due to higher operating income or lower interest costs.

Fixed charge coverage ratio

Similar to interest coverage, it declined from 6.77 in 2020 to 5.62 in 2021 and then increased notably to 10.54 in 2022, indicating improved capacity to cover fixed financial obligations beyond interest expenses.

Overall, the data reflects a favorable financial trend characterized by reduced debt levels relative to equity and capital, and enhanced coverage ratios in the latest year, suggesting stronger operational performance and improved financial risk management.

Total Debt

There is a consistent decreasing trend in total debt over the three-year period. Total debt declined from $10,227 million at the end of 2020 to $9,696 million in 2021, followed by a further reduction to $8,842 million in 2022. This indicates a deliberate effort to reduce leverage and strengthen the balance sheet.

Equity Attributable to Common Shareowners

Equity attributable to common shareowners shows a steady increase across the period. It grew from $6,252 million in 2020 to $6,767 million in 2021, and further increased to $7,758 million in 2022. This positive growth reflects retained earnings, potential capital infusions, or positive valuation changes contributing to shareholder value.

Debt to Equity Ratio

The debt-to-equity ratio exhibits a notable downward trend, decreasing from 1.64 in 2020 to 1.43 in 2021, and further to 1.14 in 2022. This decline demonstrates improved financial leverage and a stronger equity base relative to debt. The company appears to be moving towards a more conservative capital structure, reducing financial risk by lowering reliance on debt financing.

The financial data indicates a consistent improvement in the company's leverage position over the three-year period from 2020 to 2022. Total debt, inclusive of operating lease liabilities, exhibits a decreasing trend, declining from $11,030 million at the end of 2020 to $9,503 million by the end of 2022. This reduction in debt suggests a deliberate effort to deleverage, enhancing the company's financial stability.

Simultaneously, equity attributable to common shareowners has increased steadily, moving from $6,252 million in 2020 to $7,758 million in 2022. This growth in equity reflects positive retained earnings or capital injections, which strengthen the company's net worth and provide a solid foundation for future operations.

As a result of the combined effect of declining debt and rising equity, the debt-to-equity ratio, including operating lease liabilities, has shown a marked decrease. The ratio declined from 1.76 in 2020 to 1.22 in 2022, indicating a more conservative capital structure with less reliance on debt financing relative to equity. This improvement in the leverage ratio is generally favorable from a risk perspective, suggesting enhanced solvency and potentially greater financial flexibility.

Total Debt (including operating lease liability)

Decreased steadily from $11,030 million in 2020 to $9,503 million in 2022, signaling reduced reliance on debt financing.

Equity Attributable to Common Shareowners

Increased from $6,252 million in 2020 to $7,758 million in 2022, indicating growth in net assets and financial strength.

Debt to Equity Ratio (including operating lease liability)

Declined from 1.76 in 2020 to 1.22 in 2022, reflecting improved leverage and a more balanced capital structure.

Total Debt

The total debt of the company exhibits a consistent downward trend over the observed period. From December 31, 2020 to December 31, 2022, total debt decreased from 10,227 million US dollars to 8,842 million US dollars. This represents a reduction of approximately 13.5% over the two-year span, indicating a deliberate effort to lower financial leverage or improve the debt structure.

Total Capital

Total capital remained relatively stable across the three years, rising slightly from 16,479 million US dollars in 2020 to 16,600 million US dollars in 2022. This minor increase of roughly 0.7% suggests that the company's combined equity and debt base has been effectively maintained without significant dilution or increase in capital base.

Debt to Capital Ratio

The debt to capital ratio declined steadily, moving from 0.62 in 2020 to 0.53 in 2022. This downward shift reflects the reduction in total debt relative to total capital. The ratio decrease substantively indicates a strengthening of the company’s capital structure, with lower reliance on debt financing over the two years. Such a trend is generally favorable as it implies potentially lower financial risk and improved solvency.

Total Debt (including operating lease liability)

The total debt has demonstrated a consistent downward trend over the three-year period, decreasing from $11,030 million at the end of 2020 to $10,353 million at the end of 2021, and further to $9,503 million by the end of 2022. This reduction suggests a strategic effort to deleverage and improve the company’s financial stability.

Total Capital (including operating lease liability)

Total capital has remained relatively stable throughout the period, with values close to $17,282 million, $17,120 million, and $17,261 million at the end of 2020, 2021, and 2022 respectively. The minor fluctuations imply the company has maintained a steady capital base despite the changes in debt levels.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio has declined progressively from 0.64 in 2020 to 0.60 in 2021, and further to 0.55 in 2022. This decreasing ratio aligns with the reduction in total debt and the stable capital structure, indicating an improvement in the company's leverage position and potentially lower financial risk.

Total debt

The total debt shows a consistent downward trend over the three-year period. It decreased from $10,227 million at the end of 2020 to $9,696 million in 2021, followed by a further decline to $8,842 million in 2022. This indicates a reduction in leverage or active debt repayment by the entity.

Total assets

Total assets increased from $25,093 million at the end of 2020 to $26,172 million in 2021. However, the asset base slightly decreased to $26,086 million in 2022, showing a modest contraction after initial growth. Overall, the asset size remained relatively stable with minor fluctuations.

Debt to assets ratio

The debt to assets ratio declined steadily from 0.41 in 2020 to 0.37 in 2021 and further to 0.34 in 2022. This trend reflects the company's improving capital structure, with a lower proportion of debt relative to its total assets over time, suggesting enhanced financial stability and reduced leverage risk.

Total Debt (Including Operating Lease Liability)

The total debt showed a consistent decline over the three-year period. It decreased from $11,030 million at the end of 2020 to $10,353 million in 2021, and further down to $9,503 million by the end of 2022. This indicates a deliberate reduction of leverage or debt obligations over time.

Total Assets

Total assets experienced a slight increase from $25,093 million in 2020 to $26,172 million in 2021, followed by a very marginal decrease to $26,086 million in 2022. Overall, the asset base remained relatively stable with minor fluctuations.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio shows a clear decreasing trend from 0.44 in 2020 down to 0.40 in 2021 and further to 0.36 in 2022. This decreasing ratio signals an improvement in the company's financial leverage position, reflecting reduced reliance on debt relative to its asset base.

The analysis of the annual financial data over the three-year period reveals several notable trends and changes in the company's financial position and structure.

Total Assets

Total assets showed a slight increase from US$ 25,093 million at the end of 2020 to US$ 26,172 million at the end of 2021. However, in 2022, total assets slightly decreased to US$ 26,086 million. This indicates relative stability in asset base size, with a minor fluctuation occurring in the last reported year.

Equity Attributable to Common Shareowners

Equity attributable to common shareowners consistently increased throughout the period. Starting at US$ 6,252 million in 2020, it rose to US$ 6,767 million in 2021 and further to US$ 7,758 million in 2022. This upward trend suggests an improvement in the company's net worth and a strengthening equity position.

Financial Leverage Ratio

The financial leverage ratio demonstrated a meaningful decline over the three years, moving from 4.01 in 2020 to 3.87 in 2021 and further down to 3.36 in 2022. This reduction indicates a lower reliance on debt relative to equity, suggesting a stronger capitalization and potentially lower financial risk.

Overall, the data reflects a relatively stable asset base with a positive trend in equity growth and a reduction in financial leverage. These changes may indicate improved financial health and prudence in the company’s capital structure management over the analyzed period.

Earnings before interest and tax (EBIT)

EBIT demonstrated a significant upward trend over the observed three-year period. It declined from 3,153 million US dollars in 2020 to 2,719 million US dollars in 2021, indicating a downturn. However, in 2022, EBIT recovered strongly, reaching 4,594 million US dollars, which represents a substantial increase compared to both previous years.

Interest expense

Interest expense showed relative stability throughout the period. It increased slightly from 298 million US dollars in 2020 to 319 million US dollars in 2021, then slightly decreased to 302 million US dollars in 2022. Overall, the fluctuations were modest and do not suggest significant changes in financing costs or debt levels.

Interest coverage ratio

The interest coverage ratio experienced notable variation. Starting at a high level of 10.58 in 2020, it decreased to 8.52 in 2021, reflecting the lower EBIT impacting the ability to cover interest expenses. In 2022, the ratio improved markedly to 15.21, driven by the sharp increase in EBIT, indicating a stronger position to meet interest obligations.

The financial data reveals significant movement in earnings before fixed charges and tax, fixed charges, and fixed charge coverage over the three-year period ending December 31, 2022.

Earnings before Fixed Charges and Tax

This metric experienced a decrease from 3,350 million US dollars in 2020 to 2,919 million US dollars in 2021, marking a decline. However, it then increased sharply to 4,742 million US dollars in 2022, indicating a strong recovery and substantial growth beyond prior levels.

Fixed Charges

Fixed charges showed a slight increase from 495 million US dollars in 2020 to 519 million US dollars in 2021, reflecting a moderate rise in obligations. Subsequently, fixed charges decreased to 450 million US dollars in 2022, suggesting some reduction in fixed financial commitments.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio, which measures the ability to meet fixed financial obligations, declined from 6.77 times in 2020 to 5.62 times in 2021. This decrease corresponds with the drop in earnings and the increase in fixed charges during that period, implying reduced coverage ability. By 2022, the ratio more than doubled to 10.54 times, driven primarily by the sharp rise in earnings and simultaneous decrease in fixed charges, indicating a markedly improved capacity to cover fixed charges.

Overall, the period witnessed an initial weakening in operating earnings and coverage ability in 2021, followed by strong recovery and substantial improvement in financial flexibility in 2022. The reduction in fixed charges in the final year additionally contributed to enhanced coverage, reflecting a more favorable financial position for meeting fixed obligations.