Carrier Global Corp. (NYSE:CARR)

Inventory Turnover

The inventory turnover ratio showed a declining trend, decreasing from 7.58 in 2020 to 7.43 in 2021, and then more sharply to 5.67 in 2022. This suggests a slower rate of inventory movement over the analyzed period.

Receivables Turnover

Receivables turnover increased significantly from 6.28 in 2020 to 8.58 in 2021, indicating improved efficiency in collecting receivables; however, it declined to 7.21 in 2022, though still above the 2020 level.

Payables Turnover

The payables turnover ratio decreased gradually from 6.38 in 2020 to 6.27 in 2021 and further to 5.28 in 2022, pointing to a slower rate of payment to suppliers over time.

Working Capital Turnover

Working capital turnover declined from 5.11 in 2020 to 4.31 in 2021, indicating reduced efficiency in utilizing working capital, but rebounded to 5.31 in 2022, exceeding the 2020 figure.

Average Inventory Processing Period

There was an increase from 48 days in 2020 to 49 days in 2021 and a more notable rise to 64 days in 2022, consistent with the decreasing inventory turnover and suggesting longer inventory holding periods.

Average Receivable Collection Period

A decrease from 58 days in 2020 to 43 days in 2021 indicates faster collection of receivables; however, this metric rose again to 51 days in 2022, suggesting some reduction in collection efficiency relative to 2021.

Operating Cycle

The operating cycle shortened from 106 days in 2020 to 92 days in 2021, reflecting improved operational efficiency, but extended to 115 days in 2022, indicating lengthier cash-to-cash cycle time compared to both prior years.

Average Payables Payment Period

The average payables payment period lengthened progressively from 57 days in 2020 to 58 days in 2021, and further to 69 days in 2022, indicating a growing delay in payments to suppliers.

Cash Conversion Cycle

The cash conversion cycle decreased from 49 days in 2020 to 34 days in 2021, reflecting improved working capital management, but increased again to 46 days in 2022, nearing the 2020 level.

Cost of products and services sold

There is a consistent increase in the cost of products and services sold over the three-year period. The cost rose from $12,347 million in 2020 to $14,633 million in 2021, followed by a smaller increase to $14,957 million in 2022. This indicates rising expenses related to goods and services delivered, although the growth pace slowed in the last year.

Inventories, net

Inventories show a notable upward trend, increasing each year from $1,629 million in 2020 to $1,970 million in 2021, then accelerating to $2,640 million in 2022. The significant jump in inventory levels in 2022 may suggest increased stockpiling, either in anticipation of higher sales or due to slower inventory turnover.

Inventory turnover ratio

The inventory turnover ratio decreased steadily from 7.58 in 2020 to 7.43 in 2021, then sharply declined to 5.67 in 2022. This decline indicates that the company is selling and replenishing its inventory less frequently over time, which aligns with the rising inventory levels. A lower turnover ratio could reflect slower sales, changes in inventory management, or accumulation of stock.

Net Sales

Net sales increased from $17,456 million in 2020 to $20,613 million in 2021, representing significant growth. However, there was a slight decline in 2022 to $20,421 million compared to the prior year, indicating a modest decrease after the initial rise.

Accounts Receivable, Net

The net accounts receivable balance decreased from $2,781 million in 2020 to $2,403 million in 2021, suggesting improved collection efficiency or stricter credit policies. In 2022, accounts receivable increased to $2,833 million, surpassing the 2020 level and indicating either higher credit sales or potentially slower collections.

Receivables Turnover

The receivables turnover ratio improved notably from 6.28 in 2020 to 8.58 in 2021, reflecting faster collection of receivables relative to sales. In 2022, the ratio decreased to 7.21, which still represents better performance compared to 2020 but a weakening compared to the high turnover in 2021. This aligns with the increased accounts receivable balance observed in 2022.

Cost of products and services sold

The cost of products and services sold has shown a consistent upward trend over the three-year period. It increased from $12,347 million in 2020 to $14,633 million in 2021, and further to $14,957 million by the end of 2022. This reflects rising expenses directly related to production or service delivery.

Accounts payable

Accounts payable also increased steadily, from $1,936 million in 2020 to $2,334 million in 2021, reaching $2,833 million in 2022. This suggests that the company has been extending or utilizing more credit from its suppliers over time.

Payables turnover ratio

The payables turnover ratio declined across the period, moving from 6.38 in 2020 to 6.27 in 2021, and significantly dropping to 5.28 in 2022. A decreasing turnover ratio indicates that the company is taking longer to pay its suppliers, potentially reflecting changes in working capital management or extended payment terms.

The financial data reveals several notable trends over the three-year period ending December 31, 2022. Working capital experienced a rise from 3,414 million USD in 2020 to 4,780 million USD in 2021, followed by a decrease to 3,847 million USD in 2022. This indicates a peak in working capital during 2021 with a subsequent reduction in the following year.

Net sales showed consistent growth between 2020 and 2021, increasing from 17,456 million USD to 20,613 million USD. However, in 2022, net sales slightly declined to 20,421 million USD, representing a mild contraction compared to the previous year but still above the 2020 level. This suggests some stabilization or minor downturn after a period of expansion.

The working capital turnover ratio, which measures the efficiency with which working capital supports sales, declined from 5.11 in 2020 to 4.31 in 2021, indicating a reduction in turnover efficiency despite the growth in net sales. By 2022, this ratio improved significantly to 5.31, surpassing the 2020 level. This improvement was concurrent with the reduction in working capital and a slight decrease in net sales, reflecting increased efficiency in using working capital to generate sales.

Overall, the data reflects a period of growth in sales and working capital through 2021, followed by a recalibration in 2022 where working capital was reduced and turnover efficiency improved, despite a slight decline in sales. These patterns may indicate strategic adjustments aimed at optimizing working capital usage while maintaining sales volume close to recent highs.

Inventory Turnover

The inventory turnover ratio shows a declining trend over the three-year period. It decreased from 7.58 in 2020 to 7.43 in 2021, followed by a more significant drop to 5.67 in 2022. This indicates that the frequency at which inventory is sold and replaced has slowed down, suggesting potential issues with inventory management or slower sales in the most recent year.

Average Inventory Processing Period

The average inventory processing period has increased consistently throughout the examined years, moving from 48 days in 2020 to 49 days in 2021, then rising sharply to 64 days in 2022. This increase corresponds inversely with the declining inventory turnover ratio and implies that inventory is being held for longer periods before being sold or processed, which might tie up working capital and affect operational efficiency.

The analysis of the receivables turnover and average receivable collection period over the three years reveals notable trends in asset management efficiency.

Receivables Turnover

The receivables turnover ratio increased from 6.28 in 2020 to 8.58 in 2021, indicating a significant improvement in the frequency of collection of receivables during that year. However, in 2022, the ratio decreased to 7.21, which, while lower than the 2021 peak, remains above the 2020 level. This suggests that the company maintained a relatively good efficiency in collecting receivables compared to the initial year but experienced some easing in 2022.

Average Receivable Collection Period

The average collection period decreased substantially from 58 days in 2020 to 43 days in 2021, reflecting an acceleration in the time taken to collect receivables that correlates with the increase in turnover ratio. In 2022, the collection period rose again to 51 days, indicating a slight slowdown in receivables collection compared to 2021, yet still shorter than the duration in 2020.

Overall, the pattern reflects an improvement in receivables management efficiency in 2021 with faster collection cycles and higher turnover, followed by a moderate decline in performance in 2022, though remaining better than the baseline year of 2020. These fluctuations may point to changes in credit policy, customer payment behavior, or operational factors impacting collections.

Average Inventory Processing Period

The average inventory processing period shows a noticeable increase over the three-year span. It rose slightly from 48 days in 2020 to 49 days in 2021, followed by a substantial jump to 64 days in 2022. This trend indicates growing inventory holding times, which may suggest slower turnover or potential challenges in inventory management in the latest year.

Average Receivable Collection Period

The average receivable collection period experienced a decline from 58 days in 2020 to 43 days in 2021, indicating improved efficiency in collecting receivables during this period. However, in 2022, this period increased again to 51 days, suggesting some deterioration in collection efficiency compared to the previous year, although still better than 2020 levels.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, decreased from 106 days in 2020 to 92 days in 2021, reflecting an overall improvement in operational efficiency. However, it increased significantly to 115 days in 2022, surpassing the 2020 level, which implies a lengthening of the cash conversion cycle and possible operational inefficiencies or changes in working capital management during the latest year.

The analysis of the payables-related financial metrics over the three-year period reveals discernible trends in the company's management of its accounts payable.

Payables Turnover Ratio

The payables turnover ratio has gradually declined from 6.38 in 2020 to 6.27 in 2021, and more notably to 5.28 in 2022. This downward trend indicates that the company is turning over its payables less frequently each year, implying longer payment cycles to its creditors.

Average Payables Payment Period

Correspondingly, the average payables payment period has increased from 57 days in 2020 to 58 days in 2021, reaching 69 days in 2022. This increase aligns with the reduction in payables turnover and reflects extended average durations to settle outstanding payables.

Overall, these trends suggest that the company is adopting a slower payment pace towards its suppliers over the observed timeframe. Such a shift might be part of a strategic initiative to optimize cash flow, but it could also impact supplier relationships depending on context not provided here. The more pronounced changes between 2021 and 2022 highlight an acceleration in this trend, warranting further monitoring to understand implications on liquidity and operational efficiency.

Average Inventory Processing Period

The average inventory processing period increased from 48 days in 2020 to 49 days in 2021, followed by a more pronounced rise to 64 days in 2022. This indicates a lengthening in the time inventory remains within the company before being processed or sold, suggesting potential challenges in inventory turnover or changes in inventory management strategies.

Average Receivable Collection Period

The average receivable collection period showed a decline from 58 days in 2020 to 43 days in 2021, indicating improved efficiency in collecting payments from customers. However, this trend reversed somewhat in 2022, rising to 51 days, which could imply a slight slowdown in collection processes or changes in credit terms extended to customers.

Average Payables Payment Period

The average payables payment period exhibited a continual upward trajectory, increasing from 57 days in 2020 to 58 days in 2021 and significantly to 69 days in 2022. This suggests the company took longer to pay its suppliers over time, potentially as a cash management strategy to optimize liquidity or due to extended payment terms negotiated with suppliers.

Cash Conversion Cycle

The cash conversion cycle decreased from 49 days in 2020 to 34 days in 2021, reflecting improved operational efficiency by reducing the time between outlay of cash and recovery of that cash through sales. However, in 2022, the cycle increased again to 46 days, indicating a partial reversal of the previous efficiency gains and a longer period before cash is converted back from operations.