Emerson Electric Company (EMR)

Activity ratios

Short-term

Turnover ratios

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Inventory turnover	7.19	6.40	9.44	7.55	7.48
Receivables turnover	5.06	4.91	5.71	6.15	5.99
Payables turnover	11.74	10.06	12.89	7.34	8.41
Working capital turnover	3.92	1.72	26.92	8.36	5.56

The activity ratios of Emerson Electric Company indicate its efficiency in managing its assets and liabilities.

1. Inventory turnover: The company's inventory turnover has been consistently above 6 in the past five years, showing that it is able to sell and replace its inventory multiple times a year. A higher inventory turnover indicates efficient inventory management and reduces the risk of obsolete inventory.

2. Receivables turnover: Emerson Electric has maintained a stable receivables turnover ratio above 4.9, which means it collects its outstanding receivables a little over five times a year. Higher receivables turnover indicates effective credit and collection policies, reducing the risk of bad debts.

3. Payables turnover: The payables turnover ratio has varied over the years but has generally been above 8, peaking at 12.89 in 2022. A higher payables turnover suggests that the company is efficiently managing its trade credit obligations and paying its suppliers in a timely manner.

4. Working capital turnover: Emerson Electric's working capital turnover has varied significantly over the years, reaching a notably high level of 26.92 in 2022. This indicates how effectively the company utilizes its working capital to generate sales. A higher working capital turnover ratio reflects efficient use of resources to support revenue generation.

Overall, Emerson Electric's activity ratios show efficient management of inventory, receivables, payables, and working capital, which are all essential for sustaining operational activities and maximizing profitability.

Average number of days

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	50.78	57.07	38.66	48.36	48.82
Days of sales outstanding (DSO)	days	72.14	74.30	63.91	59.36	60.93
Number of days of payables	days	31.10	36.28	28.32	49.73	43.43

Emerson Electric Company's activity ratios provide insights into the efficiency of its operations and management of working capital.

1. Days of Inventory on Hand (DOH): Emerson Electric Company has shown fluctuating trends in inventory management over the past five years, with the number of days of inventory on hand decreasing from 57.07 days in 2023 to 50.78 days in 2024. A lower DOH indicates that the company is selling its inventory more quickly, which can be beneficial for cash flow and profitability.

2. Days of Sales Outstanding (DSO): The trend in Emerson Electric Company's DSO over the past five years has been relatively stable, hovering around the 60-70 day range. A lower DSO indicates that the company is collecting its accounts receivable more quickly, which is a positive sign of efficient credit management and liquidity.

3. Number of Days of Payables: Emerson Electric Company's days of payables have shown inconsistency over the past five years, with fluctuations between 28.32 days in 2022 to 36.28 days in 2023. A higher number of days of payables means that the company is taking longer to pay its suppliers, which can be advantageous in managing cash flow and working capital.

Overall, Emerson Electric Company's activity ratios suggest mixed results in terms of efficiency in managing its inventory, accounts receivable, and accounts payable. The company may need to focus on optimizing its working capital management to improve overall operational efficiency and financial performance.

Long-term

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Fixed asset turnover	6.21	6.40	8.76	4.89	4.55
Total asset turnover	0.39	0.35	0.55	0.74	0.73

Emerson Electric Company's long-term activity ratios indicate the efficiency of the company in utilizing its fixed assets and total assets to generate revenue. The fixed asset turnover ratio has been fluctuating over the past five years, with a significant decrease from 8.76 in 2022 to 4.55 in 2020, before rising slightly to 6.21 in 2024. This suggests that the company may have experienced challenges in maximizing the revenue generated from its fixed assets, but has shown some improvement in recent years.

On the other hand, the total asset turnover ratio has also varied over the same period, with a notable drop from 0.74 in 2021 to 0.35 in 2023, before increasing to 0.39 in 2024. This ratio indicates how efficiently the company is using all its assets to generate sales. The declining trend from 2021 to 2023 may suggest potential inefficiencies in asset utilization or a shift in the company's asset composition.

Overall, while the fixed asset turnover ratio shows some improvement in recent years, the total asset turnover ratio indicates a mixed performance in asset utilization efficiency for Emerson Electric Company. Further analysis of the company's operating strategies and asset management practices may be necessary to better understand the factors influencing these ratios.