Emerson Electric Company (EMR)
Cash conversion cycle
| 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 |
| Cash conversion cycle | days | 109.04 | 95.06 | 90.64 | 79.11 | 72.38 | 74.21 | 71.46 | 65.14 | 59.41 | 58.00 | 59.82 | 64.31 | 65.77 | 66.32 | 70.07 | 66.52 | 63.85 | 59.45 | 64.42 | 67.07 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 63.83 + 77.60 – 32.38
= 109.04
The cash conversion cycle of Emerson Electric Co. has shown some fluctuations over the past eight quarters. In Q1 2024, the company's cash conversion cycle was 116.72 days, which reflects an increase compared to the previous quarter. This indicates that it took the company longer to convert its investments in inventory into cash receipts from sales and then to pay off its accounts payable during this period.
Overall, the trend in the cash conversion cycle has been increasing since Q1 2023, when it stood at 70.95 days. This suggests that Emerson Electric Co. may be facing challenges in efficiently managing its working capital, potentially leading to a strain on its liquidity and operational efficiency.
It is important for the company to closely monitor and address the reasons behind the prolonged cash conversion cycle to enhance its financial performance and competitiveness in the market. By focusing on optimizing inventory management, accelerating receivable collections, and efficiently managing payables, Emerson Electric Co. can improve its cash flow dynamics and overall financial health.
Peer comparison
Dec 31, 2023
See also:
Emerson Electric Company Cash Conversion Cycle (Quarterly Data)