Emerson Electric Company (EMR)

Cash conversion cycle

		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
Cash conversion cycle	days	91.82	95.10	74.26	58.00	66.32

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 50.78 + 72.14 – 31.10
= 91.82

Emerson Electric Company's cash conversion cycle has fluctuated over the past five years. In 2024, the cash conversion cycle was 91.82 days, representing a decrease from the previous year's 95.10 days. This indicates that the company is taking slightly less time to convert inventory and accounts receivable into cash.

Comparing 2024 to 2020, there has been an overall increase in the cash conversion cycle, from 66.32 days to 91.82 days. This suggests that Emerson Electric Company may be facing challenges in managing its working capital efficiently, as it is taking longer to convert its investments in inventory and accounts receivable into cash.

The trend observed over the five-year period indicates fluctuations in the efficiency of Emerson Electric Company's cash conversion cycle. Further analysis of the company's operational and financial strategies may be necessary to identify the factors contributing to these fluctuations and to determine potential areas for improvement in working capital management.