Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Carrier Global Corp., short-term (operating) activity 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).
The analysis of the quarterly financial ratios reveals several notable trends in the company's operational efficiency and working capital management over the observed periods.
- Inventory Turnover
- The inventory turnover ratio demonstrates a declining trend from 6.95 at the beginning of the period to 5.53 in the most recent quarter. This decrease suggests a slower rate of inventory movement, potentially indicating either increased inventory levels or reduced sales velocity.
- Receivables Turnover
- Receivables turnover shows some fluctuations, peaking at 8.58 in the fourth quarter of 2021 before gradually declining to 6.94 by the latest quarter. This pattern indicates that the company was able to collect its receivables faster in late 2021 but has experienced a moderation in collection efficiency since then.
- Payables Turnover
- The payables turnover ratio remains relatively stable with slight fluctuations between 5.83 and 6.57, dropping towards the end to around 5.29. This suggests the company has consistently maintained its payment pace to suppliers, with some slowing in the most recent periods.
- Working Capital Turnover
- Working capital turnover exhibits variability with a notable drop to 3.84 in the third quarter of 2021, followed by recovery and stabilization around the mid-five range in recent quarters. This volatility could reflect changes in working capital levels relative to sales activity, impacting operational leverage.
- Average Inventory Processing Period
- The average inventory processing period increased from 49-50 days in early 2021 to approximately 66 days in the most recent quarter. This elongation aligns with the declining inventory turnover, indicating slower inventory conversion into sales.
- Average Receivable Collection Period
- Receivable collection days decreased sharply through 2021 to a low of 43 days in the fourth quarter but then rose again to 53 days in the current quarter. This reflects initial improvement in credit management followed by a moderate extension in the collection timeframe.
- Operating Cycle
- The operating cycle shows a downward trend through 2021, reaching its shortest duration of 92 days, but then reverses course, increasing to 119 days most recently. The longer operating cycle suggests an overall slowing in the conversion of inventory and receivables into cash.
- Average Payables Payment Period
- The average period for paying suppliers oscillates moderately, with values ranging from 56 to 69 days, widening slightly towards the later periods. The extended payment period near the end could imply strategic delay in cash outflows.
- Cash Conversion Cycle
- The cash conversion cycle shows an initial improvement, falling from 48 days to 34 days by year-end 2021, indicating efficient cash management. However, it extended again to 50 days recently, signifying a reversal in cash flow velocity primarily driven by slower inventory turnover and longer receivable periods.
In summary, while the company showed improvements in operational efficiency and cash management during 2021, these gains have somewhat eroded in subsequent quarters. The lengthening of inventory and receivables periods alongside a modest increase in the payables period has resulted in a longer cash conversion cycle. These patterns warrant attention to optimize working capital and operational responsiveness going forward.
Turnover Ratios
Average No. Days
Inventory Turnover
Carrier Global Corp., inventory turnover 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Cost of products and services sold | 3,895) | 3,858) | 3,974) | 3,764) | 3,361) | 3,767) | 3,740) | 3,821) | 3,305) | ||||
| Inventories, net | 2,803) | 2,640) | 2,664) | 2,350) | 2,358) | 1,970) | 1,926) | 1,885) | 1,854) | ||||
| Short-term Activity Ratio | |||||||||||||
| Inventory turnover1 | 5.53 | 5.67 | 5.58 | 6.23 | 6.23 | 7.43 | 7.36 | 7.36 | 6.95 | ||||
| Benchmarks | |||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||
| Boeing Co. | 0.83 | 0.81 | 0.78 | 0.74 | 0.74 | 0.75 | 0.77 | 0.76 | 0.74 | ||||
| Caterpillar Inc. | 2.38 | 2.54 | 2.36 | 2.40 | 2.46 | 2.53 | 2.44 | 2.49 | 2.46 | ||||
| Eaton Corp. plc | 3.94 | 4.04 | 3.95 | 3.87 | 4.03 | 4.48 | 4.73 | 4.86 | 5.12 | ||||
| GE Aerospace | 3.32 | 3.19 | 3.10 | 3.04 | 3.25 | 3.40 | 3.21 | 3.28 | 3.46 | ||||
| Honeywell International Inc. | 3.90 | 4.04 | 4.09 | 4.06 | 4.20 | 4.55 | 4.72 | 4.88 | 4.85 | ||||
| Lockheed Martin Corp. | 16.63 | 18.68 | 18.09 | 16.20 | 18.12 | 19.45 | 19.81 | 18.64 | 17.58 | ||||
| RTX Corp. | 4.81 | 5.03 | 5.03 | 5.14 | 5.33 | 5.65 | 5.57 | 5.49 | 5.48 | ||||
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).
1 Q1 2023 Calculation
Inventory turnover
= (Cost of products and services soldQ1 2023
+ Cost of products and services soldQ4 2022
+ Cost of products and services soldQ3 2022
+ Cost of products and services soldQ2 2022)
÷ Inventories, net
= (3,895 + 3,858 + 3,974 + 3,764)
÷ 2,803 = 5.53
2 Click competitor name to see calculations.
- Cost of products and services sold
- The cost of products and services sold displayed fluctuation over the reported quarters. Initially, there was a rise from 3,305 million USD in the first quarter of 2021 to a peak of 3,821 million USD in the second quarter of 2021. This was followed by a moderate decline and relative stabilization around the 3,740 to 3,767 million USD range during the third and fourth quarters of 2021. In 2022, costs declined to 3,361 million USD in the first quarter but then increased again, reaching levels above 3,900 million USD by the end of 2022 and slightly below that in the first quarter of 2023 at 3,895 million USD. Overall, the data indicates a seasonal pattern with a general upward trend towards the end of the most recent period.
- Inventories, net
- Net inventories showed a consistent increasing trend throughout the periods. Starting at 1,854 million USD in the first quarter of 2021, inventories gradually rose each quarter, reaching a level of 2,803 million USD by the first quarter of 2023. The most significant growth occurred during the year 2022, with inventory levels increasing notably from around 2,358 million USD in the first quarter to 2,664 million USD by the third quarter, and maintaining higher levels thereafter. This upward trend suggests accumulation of inventory stock over time.
- Inventory turnover
- The inventory turnover ratio exhibited a declining trend over the analyzed period. In early 2021, the ratio was relatively high, ranging between 6.95 and 7.43. However, beginning in 2022, the ratio dropped to approximately 6.23 and continued to decrease steadily, reaching around 5.53 by the first quarter of 2023. This decline in inventory turnover indicates slower movement of inventory relative to cost of goods sold, implying increasing inventory holding periods or potentially reduced sales velocity.
- Summary of observed trends
- The analysis reveals an overall increase in net inventories accompanied by a concurrent decrease in inventory turnover ratios, suggesting a trend of inventory buildup and slower turnover. Despite fluctuations, the cost of products and services sold generally showed upward movement, especially towards the end of the examined timeframe. Combined, these indicators might reflect changing operational dynamics possibly related to supply chain adjustments, demand shifts, or strategic inventory management decisions.
Receivables Turnover
Carrier Global Corp., receivables turnover 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Net sales | 5,273) | 5,105) | 5,451) | 5,211) | 4,654) | 5,133) | 5,341) | 5,440) | 4,699) | ||||
| Accounts receivable, net | 3,032) | 2,833) | 3,003) | 2,823) | 2,599) | 2,403) | 2,669) | 3,128) | 2,831) | ||||
| Short-term Activity Ratio | |||||||||||||
| Receivables turnover1 | 6.94 | 7.21 | 6.81 | 7.20 | 7.91 | 8.58 | 7.52 | 6.31 | 6.45 | ||||
| Benchmarks | |||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||
| Boeing Co. | 24.65 | 26.46 | 22.98 | 20.27 | 25.37 | 23.58 | 27.95 | 24.76 | 23.97 | ||||
| Caterpillar Inc. | 6.37 | 6.39 | 6.59 | 6.10 | 5.46 | 5.68 | 5.97 | 5.51 | 5.07 | ||||
| Eaton Corp. plc | 5.05 | 5.09 | 5.28 | 5.15 | 5.39 | 5.95 | 5.75 | 5.72 | 5.79 | ||||
| GE Aerospace | 5.00 | 4.09 | 4.19 | 4.39 | 4.43 | 4.55 | 4.83 | 4.74 | 4.59 | ||||
| Honeywell International Inc. | 4.57 | 4.77 | 4.74 | 4.45 | 4.82 | 5.04 | 4.78 | 4.89 | 4.89 | ||||
| Lockheed Martin Corp. | 25.61 | 26.34 | 26.06 | 18.87 | 26.02 | 34.15 | 29.27 | 25.59 | 29.81 | ||||
| RTX Corp. | 6.81 | 7.36 | 7.15 | 6.28 | 7.15 | 6.66 | 6.69 | 6.99 | 6.03 | ||||
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).
1 Q1 2023 Calculation
Receivables turnover
= (Net salesQ1 2023
+ Net salesQ4 2022
+ Net salesQ3 2022
+ Net salesQ2 2022)
÷ Accounts receivable, net
= (5,273 + 5,105 + 5,451 + 5,211)
÷ 3,032 = 6.94
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a fluctuating pattern across the observed quarters. The highest sales were recorded in the second quarter of 2021, peaking at 5,440 million USD. Following this peak, there was a noticeable decline towards the end of 2021, with sales dropping to 5,133 million USD. In the first quarter of 2022, sales decreased further to 4,654 million USD. However, a recovery trend appeared in subsequent quarters in 2022, with sales rising again in the third quarter to 5,451 million USD before slightly declining by the year's end. The first quarter of 2023 saw a moderate increase to 5,273 million USD. Overall, net sales demonstrated variability without establishing a clear upward or downward long-term trend, indicating sensitivity to potentially fluctuating market or operational conditions.
- Accounts Receivable, Net
- The net accounts receivable showed significant volatility over the periods. Starting at 2,831 million USD in the first quarter of 2021, the figure gradually decreased over the year to a low of 2,403 million USD by the end of 2021. In 2022, net receivables reversed this downward trend, increasing steadily through the first three quarters and then slightly decreasing in the fourth quarter. The first quarter of 2023 registered a rise again to 3,032 million USD. These movements suggest management of receivables varied over time, possibly influenced by sales fluctuations or changes in credit policies.
- Receivables Turnover Ratio
- The receivables turnover ratio fluctuated throughout the period, moving inversely to the net accounts receivable trend to some extent. The ratio started at 6.45 in the first quarter of 2021, decreased slightly in the second quarter, and then increased significantly to a peak of 8.58 in the last quarter of 2021. This peak coincided with the lowest net accounts receivable, indicating faster collection during that time. In 2022, the ratio generally declined to 6.81 by the third quarter before marginally improving to 7.21 in the fourth quarter and settling at 6.94 in the first quarter of 2023. Overall, these variations in turnover suggest fluctuating efficiency in collecting receivables, possibly reflecting changing credit terms or sales composition.
Payables Turnover
Carrier Global Corp., payables turnover 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Cost of products and services sold | 3,895) | 3,858) | 3,974) | 3,764) | 3,361) | 3,767) | 3,740) | 3,821) | 3,305) | ||||
| Accounts payable | 2,926) | 2,833) | 2,817) | 2,403) | 2,519) | 2,334) | 2,158) | 2,362) | 2,175) | ||||
| Short-term Activity Ratio | |||||||||||||
| Payables turnover1 | 5.29 | 5.28 | 5.28 | 6.09 | 5.83 | 6.27 | 6.57 | 5.87 | 5.92 | ||||
| Benchmarks | |||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||
| Boeing Co. | 6.37 | 6.18 | 6.36 | 6.17 | 6.73 | 6.40 | 6.20 | 5.45 | 4.90 | ||||
| Caterpillar Inc. | 4.68 | 4.76 | 4.81 | 4.72 | 4.43 | 4.36 | 4.61 | 4.57 | 4.46 | ||||
| Eaton Corp. plc | 4.55 | 4.51 | 4.61 | 4.43 | 4.67 | 4.75 | 5.11 | 5.22 | 5.66 | ||||
| GE Aerospace | 3.57 | 2.98 | 3.14 | 3.14 | 3.32 | 3.32 | 3.33 | 3.35 | 3.56 | ||||
| Honeywell International Inc. | 3.50 | 3.53 | 3.68 | 3.63 | 3.66 | 3.61 | 3.83 | 3.76 | 3.86 | ||||
| Lockheed Martin Corp. | 17.65 | 27.25 | 21.48 | 24.07 | 21.92 | 74.34 | 37.83 | 36.15 | 30.31 | ||||
| RTX Corp. | 5.42 | 5.40 | 5.82 | 5.36 | 6.28 | 5.93 | 6.06 | 6.52 | 5.67 | ||||
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).
1 Q1 2023 Calculation
Payables turnover
= (Cost of products and services soldQ1 2023
+ Cost of products and services soldQ4 2022
+ Cost of products and services soldQ3 2022
+ Cost of products and services soldQ2 2022)
÷ Accounts payable
= (3,895 + 3,858 + 3,974 + 3,764)
÷ 2,926 = 5.29
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in cost management, liabilities, and operational efficiency related to accounts payable management.
- Cost of Products and Services Sold
- The cost of products and services sold shows fluctuations across the observed quarters. Initially, there is an increase from US$3,305 million in the first quarter of 2021 to a peak of US$3,821 million in the second quarter of 2021. Following this peak, costs slightly decreased and stabilized around the US$3,700 million to US$3,800 million range for the remainder of 2021. In 2022, there is variability with a drop at the first quarter to US$3,361 million, followed by a rise to US$3,974 million in the third quarter. Near the end of 2022, costs slightly decline but remain elevated compared to early 2021. The first quarter of 2023 shows a marginal increase to US$3,895 million. Overall, the cost base exhibits a generally elevated level with some quarter-to-quarter volatility but no clear long-term trend of either reduction or significant escalation.
- Accounts Payable
- The accounts payable balance has demonstrated a consistent increasing trend over the period. Starting at US$2,175 million in the first quarter of 2021, the balance gradually rises, with occasional minor fluctuations, reaching US$2,926 million by the first quarter of 2023. This steady growth indicates either an increase in purchasing activity on credit terms or an extension of payment timelines, contributing to higher outstanding payables in the balance sheet.
- Payables Turnover Ratio
- The payables turnover ratio, which measures the frequency of payment to suppliers, shows some variation but an overall declining trend. Early 2021 ratios ranged around 5.9 to 6.6, peaking in the third quarter of 2021 at 6.57. Subsequently, the ratio declines to around 5.28 by the fourth quarter of 2022 and remains stable through the first quarter of 2023. This decline in turnover suggests that the company is taking longer to pay its suppliers, consistent with the rising accounts payable balance. A lower payables turnover ratio may indicate more relaxed payment policies or liquidity management strategies aimed at preserving cash.
Working Capital Turnover
Carrier Global Corp., working capital turnover calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Current assets | 10,158) | 9,879) | 9,740) | 9,276) | 9,602) | 11,407) | 11,300) | 8,754) | 8,328) | ||||
| Less: Current liabilities | 5,958) | 6,032) | 6,013) | 5,546) | 5,531) | 6,627) | 6,068) | 5,604) | 5,138) | ||||
| Working capital | 4,200) | 3,847) | 3,727) | 3,730) | 4,071) | 4,780) | 5,232) | 3,150) | 3,190) | ||||
| Net sales | 5,273) | 5,105) | 5,451) | 5,211) | 4,654) | 5,133) | 5,341) | 5,440) | 4,699) | ||||
| Short-term Activity Ratio | |||||||||||||
| Working capital turnover1 | 5.01 | 5.31 | 5.49 | 5.45 | 5.05 | 4.31 | 3.84 | 6.27 | 5.73 | ||||
| Benchmarks | |||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||
| Boeing Co. | 4.61 | 3.42 | 3.13 | 2.87 | 2.51 | 2.34 | 2.02 | 2.00 | 1.88 | ||||
| Caterpillar Inc. | 4.25 | 4.62 | 4.35 | 3.93 | 3.83 | 3.54 | 2.87 | 2.80 | 2.52 | ||||
| Eaton Corp. plc | 7.01 | 8.70 | 10.69 | — | — | 65.65 | 12.41 | 21.65 | 5.34 | ||||
| GE Aerospace | 5.87 | 7.93 | 13.29 | 10.55 | 7.14 | 4.94 | 1.57 | 1.57 | 1.27 | ||||
| Honeywell International Inc. | 7.79 | 7.03 | 7.91 | 8.84 | 8.07 | 5.86 | 5.94 | 4.52 | 4.27 | ||||
| Lockheed Martin Corp. | 12.81 | 12.93 | 14.03 | 14.28 | 15.14 | 11.52 | 10.48 | 12.30 | 11.93 | ||||
| RTX Corp. | 12.76 | 20.15 | 19.15 | 17.77 | 11.41 | 9.75 | 8.11 | 10.24 | 9.77 | ||||
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).
1 Q1 2023 Calculation
Working capital turnover
= (Net salesQ1 2023
+ Net salesQ4 2022
+ Net salesQ3 2022
+ Net salesQ2 2022)
÷ Working capital
= (5,273 + 5,105 + 5,451 + 5,211)
÷ 4,200 = 5.01
2 Click competitor name to see calculations.
- Working Capital
- Working capital showed fluctuations over the periods, beginning at 3,190 million US dollars at the end of March 2021 and experiencing an increase to 5,232 million by the end of September 2021. Thereafter, it declined to 3,730 million by June 2022 and remained relatively stable for the following quarters, ending at 4,200 million in the quarter ending March 31, 2023. The overall trend indicates variability with a peak in late 2021 followed by a contraction and slight recovery.
- Net Sales
- Net sales exhibited moderate variability without a clear directional trend. Starting at 4,699 million US dollars in March 2021, sales increased to a peak of 5,440 million in June 2021, then generally fluctuated between approximately 4,650 million and 5,450 million in subsequent quarters. The figure at the most recent quarter, March 2023, was 5,273 million, indicating a recovery from a lower point in the final quarter of 2022.
- Working Capital Turnover
- The working capital turnover ratio demonstrated significant variation. It began at 5.73 times in March 2021, rose to a high of 6.27 times in June 2021, and then declined sharply to 3.84 times in September 2021. Subsequent quarters showed a recovery to a range between approximately 5.0 and 5.5 times, with the ratio ending at 5.01 times in March 2023. This suggests an improvement in using working capital to generate sales after the dip in late 2021.
- Overall Analysis
- The data reveals a period of instability in working capital, with a notable surge and subsequent correction, potentially reflecting inventory management, receivables, or payables adjustments. Net sales remained relatively stable with some fluctuations but no significant growth or decline trend. Correspondingly, working capital turnover declined significantly in late 2021 but rebounded, indicating enhanced operational efficiency in the use of working capital to drive sales activities in the latest periods analyzed.
Average Inventory Processing Period
Carrier Global Corp., average inventory processing period 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||
| Inventory turnover | 5.53 | 5.67 | 5.58 | 6.23 | 6.23 | 7.43 | 7.36 | 7.36 | 6.95 | ||||
| Short-term Activity Ratio (no. days) | |||||||||||||
| Average inventory processing period1 | 66 | 64 | 65 | 59 | 59 | 49 | 50 | 50 | 53 | ||||
| Benchmarks (no. days) | |||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||
| Boeing Co. | 438 | 452 | 468 | 494 | 493 | 486 | 475 | 478 | 496 | ||||
| Caterpillar Inc. | 154 | 144 | 155 | 152 | 148 | 144 | 150 | 146 | 149 | ||||
| Eaton Corp. plc | 93 | 90 | 92 | 94 | 90 | 82 | 77 | 75 | 71 | ||||
| GE Aerospace | 110 | 114 | 118 | 120 | 112 | 107 | 114 | 111 | 105 | ||||
| Honeywell International Inc. | 94 | 90 | 89 | 90 | 87 | 80 | 77 | 75 | 75 | ||||
| Lockheed Martin Corp. | 22 | 20 | 20 | 23 | 20 | 19 | 18 | 20 | 21 | ||||
| RTX Corp. | 76 | 73 | 73 | 71 | 69 | 65 | 65 | 66 | 67 | ||||
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).
1 Q1 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 5.53 = 66
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals significant trends in inventory management efficiency over the examined periods.
- Inventory turnover ratio
- This ratio was relatively stable and slightly increasing during 2021, starting at 6.95 in the first quarter and reaching 7.43 by the last quarter. This indicates an efficient rotation of inventory within the year. However, beginning in the first quarter of 2022, a declining trend is observed. The turnover ratio decreased from 6.23 to 5.53 by the first quarter of 2023, suggesting slower inventory movement and possibly increasing stock levels or reduced sales velocity.
- Average inventory processing period (days)
- The average days required to process inventory exhibited a reversed trend compared to the turnover ratio. The processing period shortened slightly through 2021, moving from 53 days down to 49 days, reflecting improved efficiency in inventory handling during that time frame. From 2022 onwards, the trend reversed, with processing days increasing substantially from 59 days to 66 days by March 2023. This signifies that inventory is being held longer before being turned over, confirming the slowdown indicated by the turnover ratio.
Overall, the data suggest that inventory management was more efficient during 2021, with higher turnover rates and shorter processing times. This efficiency diminished throughout 2022 and into early 2023, pointing to potential challenges such as slower sales, supply chain disruptions, or strategic decisions to hold more inventory. The consistent inverse relationship between turnover ratio and processing period underscores the reliability of these metrics in capturing inventory dynamics.
Average Receivable Collection Period
Carrier Global Corp., average receivable collection period 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||
| Receivables turnover | 6.94 | 7.21 | 6.81 | 7.20 | 7.91 | 8.58 | 7.52 | 6.31 | 6.45 | ||||
| Short-term Activity Ratio (no. days) | |||||||||||||
| Average receivable collection period1 | 53 | 51 | 54 | 51 | 46 | 43 | 49 | 58 | 57 | ||||
| Benchmarks (no. days) | |||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||
| Boeing Co. | 15 | 14 | 16 | 18 | 14 | 15 | 13 | 15 | 15 | ||||
| Caterpillar Inc. | 57 | 57 | 55 | 60 | 67 | 64 | 61 | 66 | 72 | ||||
| Eaton Corp. plc | 72 | 72 | 69 | 71 | 68 | 61 | 63 | 64 | 63 | ||||
| GE Aerospace | 73 | 89 | 87 | 83 | 82 | 80 | 76 | 77 | 80 | ||||
| Honeywell International Inc. | 80 | 77 | 77 | 82 | 76 | 72 | 76 | 75 | 75 | ||||
| Lockheed Martin Corp. | 14 | 14 | 14 | 19 | 14 | 11 | 12 | 14 | 12 | ||||
| RTX Corp. | 54 | 50 | 51 | 58 | 51 | 55 | 55 | 52 | 61 | ||||
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).
1 Q1 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 6.94 = 53
2 Click competitor name to see calculations.
- Receivables Turnover Ratio
- The receivables turnover ratio showed an overall increasing trend from March 2021 to December 2021, rising from 6.45 to a peak of 8.58. This indicates an improvement in the efficiency of collecting receivables during the first three quarters. However, from March 2022 onward, the ratio declined steadily to 6.94 by March 2023. This suggests a slowdown in collection efficiency in the most recent year, approaching levels similar to those seen at the beginning of the period reviewed.
- Average Receivable Collection Period
- The average receivable collection period displayed an inverse pattern relative to the receivables turnover ratio. It decreased from 57 days in March 2021 to 43 days in December 2021, reflecting faster collection of receivables in that period. Subsequently, from March 2022 to March 2023, the collection period increased again, trending upward from 46 days to 53 days. This increase correlates with the decline in receivables turnover ratio and highlights a lengthening duration for converting receivables into cash.
- Overall Insights
- The data reveals that the company initially enhanced its receivables management efficiency through 2021, reducing the time needed for collection and increasing turnover. However, this trend reversed in 2022 and early 2023, where the efficiency dropped and the collection period elongated. This shift could indicate challenges in receivables collection or changes in credit terms or customer payment behavior during the latter period.
Operating Cycle
Carrier Global Corp., operating cycle calculation (quarterly data)
No. days
| 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||
| Average inventory processing period | 66 | 64 | 65 | 59 | 59 | 49 | 50 | 50 | 53 | ||||
| Average receivable collection period | 53 | 51 | 54 | 51 | 46 | 43 | 49 | 58 | 57 | ||||
| Short-term Activity Ratio | |||||||||||||
| Operating cycle1 | 119 | 115 | 119 | 110 | 105 | 92 | 99 | 108 | 110 | ||||
| Benchmarks | |||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||
| Boeing Co. | 453 | 466 | 484 | 512 | 507 | 501 | 488 | 493 | 511 | ||||
| Caterpillar Inc. | 211 | 201 | 210 | 212 | 215 | 208 | 211 | 212 | 221 | ||||
| Eaton Corp. plc | 165 | 162 | 161 | 165 | 158 | 143 | 140 | 139 | 134 | ||||
| GE Aerospace | 183 | 203 | 205 | 203 | 194 | 187 | 190 | 188 | 185 | ||||
| Honeywell International Inc. | 174 | 167 | 166 | 172 | 163 | 152 | 153 | 150 | 150 | ||||
| Lockheed Martin Corp. | 36 | 34 | 34 | 42 | 34 | 30 | 30 | 34 | 33 | ||||
| RTX Corp. | 130 | 123 | 124 | 129 | 120 | 120 | 120 | 118 | 128 | ||||
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).
1 Q1 2023 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 66 + 53 = 119
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period demonstrated relative stability during 2021, fluctuating between 49 and 53 days. However, starting from March 31, 2022, a noticeable increase occurred, reaching a peak of 66 days by March 31, 2023. This upward trend suggests a lengthening in the time taken to process inventory over the observed period.
- Average Receivable Collection Period
- The average receivable collection period showed a declining trend throughout 2021, moving from 57 days in March to a low of 43 days in December. In 2022, however, it reversed course, increasing from 46 days in March to a higher range of 51 to 54 days by December, stabilizing around 53 days by March 2023. This pattern indicates variability in the efficiency of receivables collection but with a recent tendency toward longer collection times compared to the end of 2021.
- Operating Cycle
- The operating cycle mirrored the patterns observed in the inventory processing and receivable collection periods. Initially, there was a decline from 110 days at the start of 2021 to 92 days by the end of 2021, signifying an improvement in working capital efficiency. However, beginning in 2022, the operating cycle lengthened, increasing to approximately 119 days by March 2023. This extension indicates a lengthening of the time between inventory acquisition and cash collection from sales.
- Overall Analysis
- From the data, it can be inferred that after an initial improvement in operational efficiency during 2021, the company experienced a gradual deterioration in 2022 and early 2023. The lengthening of both inventory processing and receivable collection periods contributed to a longer operating cycle. This suggests potential challenges in managing working capital, perhaps due to slower inventory turnover or less efficient collections. Monitoring these trends will be important for addressing liquidity and operational responsiveness going forward.
Average Payables Payment Period
Carrier Global Corp., average payables payment period 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||
| Payables turnover | 5.29 | 5.28 | 5.28 | 6.09 | 5.83 | 6.27 | 6.57 | 5.87 | 5.92 | ||||
| Short-term Activity Ratio (no. days) | |||||||||||||
| Average payables payment period1 | 69 | 69 | 69 | 60 | 63 | 58 | 56 | 62 | 62 | ||||
| Benchmarks (no. days) | |||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||
| Boeing Co. | 57 | 59 | 57 | 59 | 54 | 57 | 59 | 67 | 74 | ||||
| Caterpillar Inc. | 78 | 77 | 76 | 77 | 82 | 84 | 79 | 80 | 82 | ||||
| Eaton Corp. plc | 80 | 81 | 79 | 82 | 78 | 77 | 71 | 70 | 65 | ||||
| GE Aerospace | 102 | 123 | 116 | 116 | 110 | 110 | 109 | 109 | 103 | ||||
| Honeywell International Inc. | 104 | 103 | 99 | 101 | 100 | 101 | 95 | 97 | 95 | ||||
| Lockheed Martin Corp. | 21 | 13 | 17 | 15 | 17 | 5 | 10 | 10 | 12 | ||||
| RTX Corp. | 67 | 68 | 63 | 68 | 58 | 62 | 60 | 56 | 64 | ||||
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).
1 Q1 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 5.29 = 69
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits notable fluctuations over the observed periods. Initially, the ratio maintained a relatively stable level around 5.9 in the first two quarters of 2021, before increasing to a peak of 6.57 in the third quarter of 2021. This was followed by a slight decline to 6.27 by the end of 2021. In 2022, the ratio decreased to 5.83 in the first quarter, increased to 6.09 mid-year, then significantly dropped to 5.28 in the last two quarters. The ratio remained almost unchanged at 5.29 in the first quarter of 2023. Overall, the payables turnover ratio shows some volatility, with a general downward trend from the third quarter of 2021 through early 2023, indicating that payables were being settled less frequently relative to purchases.
- Average Payables Payment Period
- The average payables payment period displays an inverse pattern to the payables turnover ratio across the timeline. Starting at 62 days in the first two quarters of 2021, the period shortened to 56 days in the third quarter, before slightly increasing to 58 days by the end of 2021. In 2022, the average payment period extended to 63 days initially, then slightly decreased to 60 days mid-year. The last two quarters of 2022 saw a marked increase to 69 days, which was sustained into the first quarter of 2023. This lengthening trend in payment period indicates that the company has gradually delayed its payments to creditors, consistent with the declining payables turnover ratio.
- Overall Analysis
- The inverse relationship between payables turnover and average payment period is consistent, reflecting the typical accounting interplay between these two metrics. The increasing payment period suggests a strategic choice or external factors leading to slower payments to suppliers. This may impact supplier relationships or cash flow management. The trend warrants attention as an extended payment period can influence the company's creditworthiness and operational efficiency.
Cash Conversion Cycle
Carrier Global Corp., cash conversion cycle calculation (quarterly data)
No. days
| 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 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||
| Average inventory processing period | 66 | 64 | 65 | 59 | 59 | 49 | 50 | 50 | 53 | ||||
| Average receivable collection period | 53 | 51 | 54 | 51 | 46 | 43 | 49 | 58 | 57 | ||||
| Average payables payment period | 69 | 69 | 69 | 60 | 63 | 58 | 56 | 62 | 62 | ||||
| Short-term Activity Ratio | |||||||||||||
| Cash conversion cycle1 | 50 | 46 | 50 | 50 | 42 | 34 | 43 | 46 | 48 | ||||
| Benchmarks | |||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||
| Boeing Co. | 396 | 407 | 427 | 453 | 453 | 444 | 429 | 426 | 437 | ||||
| Caterpillar Inc. | 133 | 124 | 134 | 135 | 133 | 124 | 132 | 132 | 139 | ||||
| Eaton Corp. plc | 85 | 81 | 82 | 83 | 80 | 66 | 69 | 69 | 69 | ||||
| GE Aerospace | 81 | 80 | 89 | 87 | 84 | 77 | 81 | 79 | 82 | ||||
| Honeywell International Inc. | 70 | 64 | 67 | 71 | 63 | 51 | 58 | 53 | 55 | ||||
| Lockheed Martin Corp. | 15 | 21 | 17 | 27 | 17 | 25 | 20 | 24 | 21 | ||||
| RTX Corp. | 63 | 55 | 61 | 61 | 62 | 58 | 60 | 62 | 64 | ||||
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).
1 Q1 2023 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 66 + 53 – 69 = 50
2 Click competitor name to see calculations.
The analysis of the financial ratios over the examined quarterly periods reveals notable trends in the company's working capital management.
- Average inventory processing period
- This metric, expressed in days, initially shows a gradual reduction from 53 days at the beginning of the first quarter in 2021 to 49 days by the end of the same year. However, starting in the first quarter of 2022, there is a marked increase, reaching 66 days by the first quarter of 2023. This rising trend from early 2022 indicates a slowdown in inventory turnover, suggesting either increased inventory levels or slower sales.
- Average receivable collection period
- The receivable collection period displays a decreasing trend from 57 days at the start of 2021 down to 43 days in the last quarter of 2021, implying improved efficiency in collecting receivables. From 2022 onwards, the period lengthens again to around 53 days by the first quarter of 2023. This fluctuation suggests a temporary tightening of credit policies or improved collections at the end of 2021, followed by a gradual easing or slower collections thereafter.
- Average payables payment period
- The payment period remains relatively stable with minor fluctuations, starting at 62 days in early 2021 and hovering in the 56 to 63 day range throughout 2021 and 2022. Notably, it increases towards the latter half of 2022, consistently registering 69 days through to the first quarter of 2023. This trend indicates a strategic extension of payment terms to suppliers or deferred payments, which may be aimed at preserving cash.
- Cash conversion cycle
- The cash conversion cycle exhibits an improvement during 2021, declining from 48 days down to 34 days at year-end, indicating more efficient working capital management and faster conversion of resources into cash. Conversely, this trend reverses starting in 2022, with the cycle lengthening up to 50 days by the first quarter of 2023. This increase corresponds with the lengthening inventory and receivables periods, slightly offset by longer payables, signifying a modest deterioration in overall liquidity efficiency.
In summary, the data suggest that while the company improved its working capital efficiency throughout 2021, it experienced some deterioration starting in early 2022. Inventory turnover slowed, receivables collection periods increased, and payment periods were extended. Together, these changes led to a longer cash conversion cycle, which may affect liquidity and operational flexibility moving forward.