Emerson Electric Company (EMR)
Return on total capital
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,882,000 | 2,685,000 | 2,796,000 | 1,931,000 | 2,450,000 |
| Long-term debt | US$ in thousands | 7,610,000 | 8,259,000 | 5,793,000 | 6,326,000 | 4,277,000 |
| Total stockholders’ equity | US$ in thousands | 20,689,000 | 10,364,000 | 9,883,000 | 8,405,000 | 8,233,000 |
| Return on total capital | 6.65% | 14.42% | 17.84% | 13.11% | 19.58% |
September 30, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,882,000K ÷ ($7,610,000K + $20,689,000K)
= 6.65%
The return on total capital for Emerson Electric Co. has shown a decreasing trend over the past five years based on the provided data. In September 2023, the return on total capital stood at 8.95%, a significant decrease from the previous year. This decrease may indicate that the company's ability to generate earnings from its total capital investment has weakened.
In September 2022, the return on total capital was 17.28%, showing a decline from the 18.64% in September 2021. This downward trend suggests that the company's profitability in relation to its total capital has been diminishing over the past few years.
Furthermore, the return on total capital was 17.52% in September 2020 and 22.36% in September 2019, indicating a consistent decrease in profitability over time. This declining trend in return on total capital may raise concerns about the company's efficiency in utilizing its total capital to generate returns for its stakeholders.
It is essential for stakeholders to closely monitor this trend and assess the underlying factors contributing to the decrease in the return on total capital to understand the company's financial performance and prospects for future growth.
Peer comparison
Sep 30, 2023