Emerson Electric Company (EMR)

Financial leverage ratio

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Total assets	US$ in thousands	46,513,000	42,746,000	44,173,000	36,147,000	36,241,000	35,672,000	37,042,000	29,497,000	26,959,000	24,715,000	24,484,000	23,800,000	23,678,000	22,882,000	21,730,000	21,711,000	21,101,000	20,497,000	21,317,000	21,071,000
Total stockholders’ equity	US$ in thousands	20,674,000	20,689,000	20,464,000	11,360,000	10,727,000	10,364,000	10,315,000	10,575,000	10,249,000	9,883,000	9,291,000	9,130,000	8,895,000	8,405,000	7,831,000	7,517,000	8,421,000	8,233,000	8,755,000	8,526,000
Financial leverage ratio		2.25	2.07	2.16	3.18	3.38	3.44	3.59	2.79	2.63	2.50	2.64	2.61	2.66	2.72	2.77	2.89	2.51	2.49	2.43	2.47

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $46,513,000K ÷ $20,674,000K
= 2.25

The financial leverage ratio of Emerson Electric Co. has fluctuated over the past eight quarters, ranging from 2.07 to 3.59. A higher financial leverage ratio indicates that the company relies more on debt to finance its operations and investments, which can amplify returns in favorable conditions but also increase financial risk.

In Q2 2023 and Q1 2023, the company had notably high leverage ratios of 3.18 and 3.38, respectively, suggesting a significant reliance on debt during that period. This could be a cause for concern as higher leverage ratios may indicate increased vulnerability to economic downturns or fluctuations in interest rates.

On the other hand, the financial leverage ratio decreased in Q4 2023 to 2.07, showing a potential reduction in debt usage compared to previous quarters. This could be a positive sign as lower leverage ratios generally indicate a healthier financial position with less financial risk.

Overall, monitoring Emerson Electric Co.'s financial leverage ratio trends over time can provide insights into the company's debt management and financial stability. It is essential for investors and stakeholders to assess whether the company's leverage levels are sustainable and in line with its financial goals and risk tolerance.