Emerson Electric Company (EMR)

Debt-to-capital ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
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
Debt-to-capital ratio		0.27	0.44	0.37	0.43	0.34

September 30, 2023 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $7,610,000K ÷ ($7,610,000K + $20,689,000K)
= 0.27

The debt-to-capital ratio of Emerson Electric Co. has exhibited fluctuations over the past five years. As of September 30, 2023, the ratio stands at 0.28, a decline from the previous year's ratio of 0.50. This indicates that the company's reliance on debt as a source of financing has decreased in comparison to its capital structure. In 2021, the ratio was 0.40, and in 2020 and 2019, it stood at 0.47 and 0.41 respectively.

The declining trend in the debt-to-capital ratio suggests that Emerson Electric Co. has been effectively managing its capital structure by reducing its debt relative to its total capital. This may indicate a lower financial risk and improved financial stability. However, it is important to consider the company's overall financial strategy, including the cost of debt and the impact on profitability.

The decrease in the debt-to-capital ratio could also signal improved financial flexibility and a stronger ability to fund future growth through internal resources or equity financing. Nonetheless, it is essential for stakeholders to closely monitor how the company maintains its balance between debt and equity to ensure sustainable and healthy financial performance in the long term.