Emerson Electric Company (EMR)

Quick ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash	US$ in thousands	8,051,000	1,804,000	2,354,000	3,315,000	1,494,000
Short-term investments	US$ in thousands	—	—	—	—	—
Receivables	US$ in thousands	3,077,000	3,436,000	2,971,000	2,802,000	2,985,000
Total current liabilities	US$ in thousands	5,032,000	7,777,000	6,246,000	5,785,000	5,976,000
Quick ratio		2.21	0.67	0.85	1.06	0.75

September 30, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($8,051,000K + $—K + $3,077,000K) ÷ $5,032,000K
= 2.21

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing quick assets (cash, marketable securities, and accounts receivable) by current liabilities.

Emerson Electric Co.'s quick ratio has shown significant fluctuations over the past five years. In 2023, the quick ratio stands at 2.35, marking a substantial increase from the previous year's 0.81. This improvement indicates that the company has a significantly higher proportion of quick assets relative to its current liabilities, reflecting a strengthened liquidity position compared to last year.

The quick ratio was 1.02 in 2021, showing a decrease from the 2020 figure of 1.19, but an increase from the 2019 level of 0.88. This suggests that the company had a lower ability to meet its short-term obligations in 2021 compared to 2020. However, the ratio improved compared to the 2019 performance, indicating a positive trend over the two-year period.

Overall, while the quick ratio fluctuated over the past five years, the 2023 quick ratio of 2.35 indicates a notable improvement in Emerson Electric Co.'s short-term liquidity compared to the previous year, portraying a favorable position in meeting its immediate financial obligations.