Emerson Electric Company (EMR)

Working capital turnover

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Revenue	US$ in thousands	15,115,000	19,622,000	18,267,000	16,785,000	18,372,000
Total current assets	US$ in thousands	13,819,000	8,506,000	8,432,000	8,806,000	7,139,000
Total current liabilities	US$ in thousands	5,032,000	7,777,000	6,246,000	5,785,000	5,976,000
Working capital turnover		1.72	26.92	8.36	5.56	15.80

September 30, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $15,115,000K ÷ ($13,819,000K – $5,032,000K)
= 1.72

Based on the provided data, the working capital turnover ratio for Emerson Electric Co. has fluctuated significantly over the past five years. The working capital turnover ratio is a measure of a company's ability to efficiently utilize its working capital to generate sales revenue.

In 2019, the working capital turnover ratio stood at 15.80, implying that for every dollar of working capital, the company generated $15.80 in sales. This high turnover ratio indicates effective management of working capital to support sales activities.

However, in 2020, the ratio decreased to 5.56, suggesting a reduction in the efficiency of working capital utilization. This drop may be attributed to changes in inventory management, accounts receivable, or accounts payable, impacting the company's ability to convert working capital into sales.

The ratio experienced a significant and unusual spike to 26.93 in 2021, indicating a substantial improvement in working capital efficiency. Such a drastic change in a single year could be the result of changes in the company's operating cycle, supply chain management, or other internal factors that influenced working capital utilization.

In 2022, the ratio dropped to 8.34, still indicating a relatively high turnover but significantly lower than the previous year. This suggests a potential return to more typical levels of working capital efficiency following the unusual spike in 2021.

Finally, in 2023, the working capital turnover ratio decreased to 1.73, signifying a substantial decline in working capital efficiency to generate sales revenue. This decrease may raise concerns about the company's management of working capital and its ability to support sales activities effectively.

In summary, the working capital turnover ratio for Emerson Electric Co. has varied significantly over the past five years, with notable fluctuations that may indicate changes in the company's working capital management and its impact on sales generation. Further investigation into the underlying reasons for these fluctuations would be necessary to fully assess the company's financial performance and working capital efficiency.