Emerson Electric Company (EMR)
Solvency ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.16 | 0.18 | 0.23 | 0.23 | 0.28 |
| Debt-to-capital ratio | 0.25 | 0.27 | 0.44 | 0.37 | 0.43 |
| Debt-to-equity ratio | 0.33 | 0.37 | 0.80 | 0.59 | 0.75 |
| Financial leverage ratio | 2.05 | 2.07 | 3.44 | 2.50 | 2.72 |
The solvency ratios of Emerson Electric Company have shown a favorable trend over the past five years, indicating improved financial strength and stability. The debt-to-assets ratio has decreased from 0.28 in 2020 to 0.16 in 2024, suggesting that the company has reduced its reliance on debt to finance its assets.
Similarly, the debt-to-capital ratio has shown a decreasing trend from 0.43 in 2020 to 0.25 in 2024, indicating that Emerson Electric is financing a lower proportion of its capital structure through debt.
The debt-to-equity ratio has also exhibited a declining pattern from 0.75 in 2020 to 0.33 in 2024, signaling a strengthening of the company's financial structure by decreasing its debt relative to equity.
Furthermore, the financial leverage ratio has reduced from 2.72 in 2020 to 2.05 in 2024, demonstrating that Emerson Electric has become more efficient in leveraging its assets to generate profits while maintaining a lower level of debt.
Overall, the decreasing trend in these solvency ratios suggests that Emerson Electric Company has been effectively managing its debt levels and improving its financial health over the past five years.
Coverage ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 5.95 | 55.35 | 13.91 | 19.02 | 12.38 |
The interest coverage ratio for Emerson Electric Company has exhibited fluctuations over the past five years, ranging from a low of 5.95 in September 2024 to a high of 55.35 in September 2023. The substantial increase in interest coverage in 2023 indicates the company's strong ability to cover its interest obligations with earnings before interest and taxes (EBIT). However, the significant decline in 2024 suggests a potential decrease in earnings relative to interest expenses, warranting further investigation into the company's financial performance and debt servicing capacity. Overall, a consistent analysis of Emerson Electric's interest coverage ratio is essential to assess its financial health and ability to meet its interest payments effectively.