Emerson Electric Company (EMR)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	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	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	5.72	6.40	6.53	7.19	7.77	9.42	6.96	6.63	6.70	7.55	7.10	7.20	7.11	7.48	7.00	7.40	7.56	8.23	7.49	7.33
Receivables turnover	4.70	4.92	5.42	6.24	6.75	5.72	5.60	6.39	6.77	6.15	6.49	6.21	6.33	5.99	6.85	6.80	6.74	6.15	6.30	6.20
Payables turnover	11.27	10.06	11.18	12.11	12.74	12.86	7.91	7.76	7.45	7.34	7.64	8.08	8.44	8.41	10.32	10.02	9.46	8.25	8.65	8.78
Working capital turnover	17.57	1.72	1.79	12.18	22.08	26.94	34.15	3.46	3.36	8.36	8.53	10.25	12.87	5.56	9.08	195.30	21.47	15.80	16.16	41.24

Emerson Electric Co.'s activity ratios indicate the efficiency of the company in managing its working capital and operations. The inventory turnover ratio has shown a decreasing trend over the quarters, indicating that the company is taking longer to sell its inventory, which could lead to potential issues such as obsolete inventory or overstocking.

Conversely, the receivables turnover ratio has been relatively stable, suggesting that the company efficiently collects payments from its customers. The payables turnover ratio has fluctuated but generally reflects the company's ability to manage its trade payables effectively.

The working capital turnover ratio has shown significant variation over the quarters, with a notable spike in Q3 2022. This ratio measures how effectively the company is utilizing its working capital to generate sales revenue. A higher ratio indicates better efficiency in converting working capital into revenue.

Overall, Emerson Electric Co. should focus on improving its inventory turnover rate to optimize its inventory management and potentially free up cash flow. Additionally, monitoring and maintaining stable receivables and payables turnover ratios can help ensure efficient working capital management.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	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	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	63.83	57.07	55.91	50.78	46.97	38.74	52.46	55.07	54.49	48.36	51.38	50.68	51.36	48.82	52.11	49.31	48.27	44.36	48.70	49.81
Days of sales outstanding (DSO)	days	77.60	74.26	67.39	58.46	54.05	63.85	65.15	57.10	53.93	59.36	56.23	58.80	57.64	60.93	53.31	53.65	54.15	59.30	57.90	58.83
Number of days of payables	days	32.38	36.28	32.66	30.13	28.64	28.38	46.15	47.04	49.01	49.73	47.79	45.18	43.22	43.43	35.35	36.44	38.57	44.22	42.18	41.56

Emerson Electric Co.'s activity ratios provide insights into the efficiency of the company's operations in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- Emerson Electric Co.'s DOH has shown an increasing trend over the quarters, indicating a longer period of time taken to sell its inventory.
- The company held inventory for an average of 108.44 days in Q1 2024, compared to 69.21 days in Q1 2023, which suggests a significant increase in inefficiency in managing its inventory levels.
- A high DOH may tie up capital in unsold inventory and could indicate obsolete or slow-moving inventory that might need to be liquidated at a discount.

2. Days of Sales Outstanding (DSO):
- Emerson Electric Co.'s DSO has fluctuated over the quarters, with a decrease in Q1 2024 compared to the previous quarter.
- The company took an average of 63.30 days to collect receivables in Q1 2024, implying that customers are taking longer to pay their bills.
- A higher DSO can indicate potential collection issues or a lenient credit policy that may impact the company's cash flow.

3. Number of Days of Payables:
- Emerson Electric Co.'s days of payables have shown fluctuations, with a decreasing trend observed in Q1 2024.
- The company took an average of 55.02 days to pay its suppliers in Q1 2024, which is lower compared to the previous quarter, indicating a potential improvement in managing payables.
- A decrease in the number of days of payables may suggest a better negotiating position with suppliers or a proactive approach to managing working capital.

In conclusion, Emerson Electric Co. needs to focus on optimizing its inventory levels, improving receivables collection, and maintaining an effective payables management strategy to enhance its overall efficiency and financial performance.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	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	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	5.86	6.40	7.23	7.73	8.20	8.77	5.72	5.30	5.04	4.89	4.88	4.67	4.55	4.55	4.82	5.06	5.06	5.04	5.06	5.00
Total asset turnover	0.34	0.35	0.37	0.48	0.51	0.55	0.52	0.64	0.69	0.74	0.73	0.72	0.71	0.73	0.79	0.83	0.87	0.90	0.86	0.86

Emerson Electric Co.'s long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the efficiency and effectiveness of the company in utilizing its assets to generate sales.

The fixed asset turnover ratio has displayed some fluctuations over the past eight quarters, ranging from 5.30 to 8.19. This ratio measures how efficiently the company is utilizing its fixed assets to generate revenue. A higher ratio indicates that the company is generating more sales revenue for each unit of fixed assets. The trend of increasing fixed asset turnover from Q1 2023 to Q1 2024 suggests that Emerson Electric Co. improved its efficiency in utilizing fixed assets to generate revenue over this period.

On the other hand, the total asset turnover ratio fluctuated between 0.34 and 0.64 during the same period. This ratio measures the company's overall efficiency in utilizing all its assets to generate sales. A higher total asset turnover indicates that the company is generating more sales revenue per dollar of total assets. The decreasing trend from Q1 2023 to Q1 2024 in the total asset turnover implies that Emerson Electric Co. may have become less efficient in utilizing its total assets to generate revenue during this period.

Overall, analyzing both the fixed asset turnover and total asset turnover ratios provides a comprehensive understanding of Emerson Electric Co.'s efficiency in utilizing its long-term assets to drive sales growth.