Emerson Electric Company (EMR)

Days of sales outstanding (DSO)

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Receivables turnover		4.91	5.71	6.15	5.99	6.15
DSO	days	74.30	63.91	59.36	60.93	59.30

September 30, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 4.91
= 74.30

Days Sales Outstanding (DSO) is a key metric used to assess Emerson Electric Co.'s efficiency in collecting receivables from its customers. It represents the average number of days it takes for the company to collect payment after making a sale. A lower DSO value indicates quicker collection of receivables, which is generally favorable as it leads to improved cash flow and lower credit risk.

Looking at the DSO trend over the past five years, we observe some fluctuations. In 2023, the DSO stands at 60.60 days, which is higher compared to the previous year. This could suggest a slight deterioration in the company's collection efficiency as it took longer to convert sales into cash during this period.

Comparing the DSO to previous years, we note that 2022 had a lower DSO of 55.93 days, indicating an improvement in the collection process. However, in 2021, the DSO increased to 59.47 days, and a similar trend was observed in 2020 and 2019, with DSO values of 60.93 days and 59.30 days, respectively.

It's essential to delve deeper into the reasons behind the fluctuations in DSO. A higher DSO may be a result of less stringent credit policies or difficulties in collection, potentially indicating an increased credit risk or issues with customer payment behavior.

In conclusion, while DSO for Emerson Electric Co. has shown some variability in recent years, the recent increase to 60.60 days warrants further investigation into the company's receivables management and collection processes to ensure optimal efficiency and cash flow management.