Emerson Electric Company (EMR)

Number of days of payables

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Payables turnover		10.06	12.89	7.34	8.41	8.25
Number of days of payables	days	36.28	28.32	49.73	43.43	44.22

September 30, 2023 calculation

Number of days of payables = 365 ÷ Payables turnover
= 365 ÷ 10.06
= 36.28

The number of days of payables, also known as the payables turnover period, measures how long, on average, a company takes to pay its suppliers and vendors. It is calculated as 365 days divided by the payables turnover ratio. A lower number of days of payables indicates that the company is taking fewer days to pay its suppliers, which may be interpreted as a positive sign of efficient cash management or strong bargaining power with suppliers. Conversely, a higher number may suggest a longer financing period obtained from suppliers or potentially strained relationships with vendors.

Reviewing the historical data for Emerson Electric Co., we observe a declining trend in the number of days of payables from 2019 to 2023. In 2019, the company's payables turnover period was 64.79 days, which decreased to 60.14 days in 2023. This indicates that the company has been paying its suppliers more efficiently over the last five years. However, it's important to note that a decreasing trend in the number of days of payables may also result from a deterioration in the company's relationship with suppliers if it involves deliberate late payments. Thus, the context behind the change in this metric should be thoroughly evaluated.

Overall, the reduction in the number of days of payables for Emerson Electric Co. suggests improved cash management or more favorable payment terms with suppliers, which can positively impact working capital and liquidity. Nonetheless, further qualitative analysis is essential to decipher the underlying reasons behind this trend and its potential implications on the company's relationships with suppliers.