Emerson Electric Company (EMR)
Cash conversion cycle
| Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 50.04 | 56.35 | 59.01 | 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 |
| Days of sales outstanding (DSO) | days | 72.32 | 70.90 | 75.70 | 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 |
| Number of days of payables | days | 30.64 | 30.61 | 31.82 | 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 |
| Cash conversion cycle | days | 91.71 | 96.64 | 102.89 | 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 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 50.04 + 72.32 – 30.64
= 91.71
The cash conversion cycle of Emerson Electric Company portrays a fluctuating trend over the past few quarters. The cycle indicates the time taken by the company to convert its investments in inventory and other resources into cash inflows from sales.
From Dec 2019 to Dec 2020, the company's cash conversion cycle increased from 66.52 days to 65.77 days, implying a slight improvement. However, the cycle increased significantly to 64.31 days by Mar 2021, then decreased to 59.82 days by Jun 2021. This reduction continued with a cycle of 58.00 days by Dec 2021, indicating efficient management of inventory and accounts receivables.
The trend experienced an upward trajectory in recent quarters, with the cycle reaching a peak of 109.04 days by Dec 2023. This indicated a longer period to convert investments into cash, which could be a sign of increased inventory levels or delayed collections from customers.
Subsequently, there was a gradual decrease in the cycle, reaching 91.71 days by Sep 2024. Although there was an improvement compared to the peak in Dec 2023, the cycle remains higher than the levels seen in the previous quarters.
Overall, Emerson Electric Company should focus on optimizing its inventory management, collections processes, and payment terms to reduce the cash conversion cycle and enhance cash flow efficiency in the future.
Peer comparison
Sep 30, 2024
See also:
Emerson Electric Company Cash Conversion Cycle (Quarterly Data)