An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)
Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

Emerson Electric Co., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Total undiscounted future operating lease payments	511)	661)	536)	600)	855)	895)
Discount rate¹	3.06%	3.81%	3.89%	2.99%	2.98%	3.28%

Total present value of future operating lease payments	470)	592)	481)	550)	782)	810)

Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

¹ Weighted-average interest rate for Emerson Electric Co. debt

2019 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 3.06%
2020	159)	2020	159)	154)
2021	112)	2021	112)	105)
2022	82)	2022	82)	75)
2023	57)	2023	57)	51)
2024	38)	2024	38)	33)
2025 and thereafter	63)	2025	38)	32)
		2026	25)	20)
Total:	511)		511)	470)

Based on: 10-K (reporting date: 2019-09-30).

2018 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 3.81%
2019	204)	2019	204)	197)
2020	146)	2020	146)	135)
2021	97)	2021	97)	87)
2022	66)	2022	66)	57)
2023	41)	2023	41)	34)
2024 and thereafter	107)	2024	41)	33)
		2025	41)	32)
		2026	25)	19)
Total:	661)		661)	592)

Based on: 10-K (reporting date: 2018-09-30).

2017 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 3.89%
2018	171)	2018	171)	165)
2019	125)	2019	125)	116)
2020	81)	2020	81)	72)
2021	49)	2021	49)	42)
2022	31)	2022	31)	26)
2023 and thereafter	79)	2023	31)	25)
		2024	31)	24)
		2025	17)	13)
Total:	536)		536)	481)

Based on: 10-K (reporting date: 2017-09-30).

2016 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 2.99%
2017	183)	2017	183)	178)
2018	130)	2018	130)	123)
2019	94)	2019	94)	86)
2020	57)	2020	57)	51)
2021	36)	2021	36)	31)
2022 and thereafter	100)	2022	36)	30)
		2023	36)	29)
		2024	28)	22)
Total:	600)		600)	550)

Based on: 10-K (reporting date: 2016-09-30).

2015 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 2.98%
2016	263)	2016	263)	255)
2017	181)	2017	181)	171)
2018	123)	2018	123)	113)
2019	84)	2019	84)	75)
2020	51)	2020	51)	44)
2021 and thereafter	153)	2021	51)	43)
		2022	51)	42)
		2023	51)	40)
Total:	855)		855)	782)

Based on: 10-K (reporting date: 2015-09-30).

2014 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 3.28%
2015	270)	2015	270)	261)
2016	193)	2016	193)	181)
2017	131)	2017	131)	119)
2018	82)	2018	82)	72)
2019	52)	2019	52)	44)
2020 and thereafter	167)	2020	52)	43)
		2021	52)	41)
		2022	52)	40)
		2023	11)	8)
Total:	895)		895)	810)

Based on: 10-K (reporting date: 2014-09-30).

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Emerson Electric Co., adjustments to financial statements

US$ in millions

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Adjustment to Total Assets
Total assets (as reported)	20,497)	20,390)	19,589)	21,743)	22,088)	24,177)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	470)	592)	481)	550)	782)	810)
Total assets (adjusted)	20,967)	20,982)	20,070)	22,293)	22,870)	24,987)
Adjustment to Total Debt
Total debt (as reported)	5,721)	4,760)	4,656)	6,646)	6,842)	6,024)
Add: Operating lease liability (before adoption of FASB Topic 842)²	470)	592)	481)	550)	782)	810)
Total debt (adjusted)	6,191)	5,352)	5,137)	7,196)	7,624)	6,834)

Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

^{1, 2} Equal to total present value of future operating lease payments.

Emerson Electric Co., Financial Data: Reported vs. Adjusted

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Emerson Electric Co., adjusted financial ratios

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Total Asset Turnover¹
Reported total asset turnover	0.90	0.85	0.78	0.67	1.01	1.01
Adjusted total asset turnover	0.88	0.83	0.76	0.65	0.98	0.98
Debt to Equity²
Reported debt to equity	0.69	0.53	0.53	0.88	0.85	0.60
Adjusted debt to equity	0.75	0.60	0.59	0.95	0.94	0.68
Return on Assets³ (ROA)
Reported ROA	11.25%	10.80%	7.75%	7.52%	12.27%	8.88%
Adjusted ROA	11.00%	10.50%	7.56%	7.33%	11.85%	8.59%

Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

¹ See details »

² See details »

³ See details »

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Emerson Electric Co. adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Emerson Electric Co. adjusted debt to equity ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Emerson Electric Co. adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Emerson Electric Co., Financial Ratios: Reported vs. Adjusted

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	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Selected Financial Data (US$ in millions)
Net sales	18,372)	17,408)	15,264)	14,522)	22,304)	24,537)
Total assets	20,497)	20,390)	19,589)	21,743)	22,088)	24,177)
Activity Ratio
Total asset turnover¹	0.90	0.85	0.78	0.67	1.01	1.01
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net sales	18,372)	17,408)	15,264)	14,522)	22,304)	24,537)
Adjusted total assets	20,967)	20,982)	20,070)	22,293)	22,870)	24,987)
Activity Ratio
Adjusted total asset turnover²	0.88	0.83	0.76	0.65	0.98	0.98

Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

2019 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 18,372 ÷ 20,497 = 0.90

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 18,372 ÷ 20,967 = 0.88

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Emerson Electric Co. adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Selected Financial Data (US$ in millions)
Total debt	5,721)	4,760)	4,656)	6,646)	6,842)	6,024)
Common stockholders’ equity	8,233)	8,947)	8,718)	7,568)	8,081)	10,119)
Solvency Ratio
Debt to equity¹	0.69	0.53	0.53	0.88	0.85	0.60
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	6,191)	5,352)	5,137)	7,196)	7,624)	6,834)
Common stockholders’ equity	8,233)	8,947)	8,718)	7,568)	8,081)	10,119)
Solvency Ratio
Adjusted debt to equity²	0.75	0.60	0.59	0.95	0.94	0.68

Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

2019 Calculations

¹ Debt to equity = Total debt ÷ Common stockholders’ equity
= 5,721 ÷ 8,233 = 0.69

² Adjusted debt to equity = Adjusted total debt ÷ Common stockholders’ equity
= 6,191 ÷ 8,233 = 0.75

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Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Emerson Electric Co. adjusted debt-to-equity ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings common stockholders	2,306)	2,203)	1,518)	1,635)	2,710)	2,147)
Total assets	20,497)	20,390)	19,589)	21,743)	22,088)	24,177)
Profitability Ratio
ROA¹	11.25%	10.80%	7.75%	7.52%	12.27%	8.88%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net earnings common stockholders	2,306)	2,203)	1,518)	1,635)	2,710)	2,147)
Adjusted total assets	20,967)	20,982)	20,070)	22,293)	22,870)	24,987)
Profitability Ratio
Adjusted ROA²	11.00%	10.50%	7.56%	7.33%	11.85%	8.59%

Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

2019 Calculations

¹ ROA = 100 × Net earnings common stockholders ÷ Total assets
= 100 × 2,306 ÷ 20,497 = 11.25%

² Adjusted ROA = 100 × Net earnings common stockholders ÷ Adjusted total assets
= 100 × 2,306 ÷ 20,967 = 11.00%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Emerson Electric Co. adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Emerson Electric Co. (NYSE:EMR)

Analysis of Operating Leases

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Adjustments to Financial Statements for Operating Leases

Emerson Electric Co., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios for Operating Leases (Summary)

Emerson Electric Co., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)