Name: Emerson Electric Co. (NYSE:EMR) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Emerson Electric Co., consolidated cash flow statement

US$ in millions

12 months ended:	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Net earnings	2,328)	2,224)	1,550)	1,664)	2,733)	2,184)
(Earnings) loss from discontinued operations, net of tax	—)	—)	125)	(45)	—)	—)
Depreciation and amortization	822)	758)	636)	568)	815)	831)
Stock compensation expense	120)	216)	110)	145)	30)	143)
Pension expense	2)	49)	127)	95)	167)	153)
Pension funding	(60)	(61)	(45)	(66)	(53)	(130)
Transition impact of Tax Act	—)	(189)	—)	—)	—)	—)
Gains on divestitures of businesses, after tax	—)	—)	—)	—)	(611)	—)
Income taxes paid on divestiture gains	—)	—)	—)	—)	(424)	—)
Goodwill impairment, after tax	—)	—)	—)	—)	—)	508)
Receivables	51)	(189)	(25)	162)	304)	(263)
Inventories	(87)	17)	32)	58)	(16)	(132)
Other current assets	(87)	(28)	(12)	(4)	(101)	59)
Accounts payable	(37)	115)	135)	(22)	(287)	294)
Accrued expenses	10)	2)	30)	(101)	(42)	156)
Changes in operating working capital	(150)	(83)	160)	93)	(142)	114)
Other, net	(56)	(22)	27)	45)	14)	(111)
Adjustments to reconcile net earnings to net cash provided by operating activities	828)	751)	855)	787)	(62)	1,394)
Cash provided by operating activities	3,006)	2,892)	2,690)	2,499)	2,529)	3,692)
Capital expenditures	(594)	(617)	(476)	(447)	(685)	(767)
Purchases of businesses, net of cash and equivalents acquired	(469)	(2,203)	(2,990)	(132)	(324)	(610)
Divestitures of businesses	14)	201)	39)	—)	1,812)	363)
Other, net	(125)	(101)	(106)	30)	(212)	(145)
Cash (used in) provided by investing activities	(1,174)	(2,720)	(3,533)	(549)	591)	(1,159)
Net increase (decrease) in short-term borrowings	(6)	343)	(1,635)	(34)	1,116)	180)
Proceeds from short-term borrowings greater than three months	—)	—)	—)	1,264)	2,515)	2,952)
Payments of short-term borrowings greater than three months	—)	—)	(90)	(1,174)	(3,286)	(2,510)
Proceeds from long-term debt	1,691)	—)	—)	—)	1,000)	1)
Payments on long-term debt	(656)	(241)	(254)	(254)	(504)	(329)
Dividends paid	(1,209)	(1,229)	(1,239)	(1,227)	(1,269)	(1,210)
Purchases of common stock	(1,250)	(1,000)	(400)	(601)	(2,501)	(1,048)
Purchase of noncontrolling interests	—)	—)	—)	—)	—)	(574)
Other, net	39)	35)	27)	(19)	(19)	(21)
Cash used in financing activities	(1,391)	(2,092)	(3,591)	(2,045)	(2,948)	(2,559)
Cash from discontinued operating activities	—)	—)	(778)	382)	—)	—)
Cash from discontinued investing activities	—)	—)	5,047)	(77)	—)	—)
Cash from discontinued operations	—)	—)	4,269)	305)	—)	—)
Effect of exchange rate changes on cash and equivalents	(40)	(49)	45)	(82)	(267)	(100)
Increase (decrease) in cash and equivalents	401)	(1,969)	(120)	128)	(95)	(126)
Beginning cash and equivalents	1,093)	3,062)	3,182)	3,054)	3,149)	3,275)
Ending cash and equivalents	1,494)	1,093)	3,062)	3,182)	3,054)	3,149)

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).

The cash flow profile from 2014 to 2019 reveals a strategic shift from divestiture-led liquidity to an aggressive acquisition phase, supported by resilient operating cash flows and a consistent commitment to shareholder returns.

Operating Cash Flow Performance: Cash provided by operating activities exhibits a steady upward trajectory, growing from 2,499 million US$ in 2016 to 3,006 million US$ in 2019. While net earnings experienced volatility—dropping to a low of 1,550 million US$ in 2017 before recovering to 2,328 million US$ in 2019—the cash generated from operations remained more stable and grew consistently. This divergence suggests high-quality earnings and effective management of non-cash adjustments, such as depreciation and amortization, which remained significant throughout the period.
Investing Activities and Capital Allocation: A distinct pivot in investment strategy is observable. The period began with significant divestitures, peaking in 2015 with 1,812 million US$ in proceeds. However, the strategy shifted toward inorganic growth in 2017 and 2018, with business purchases totaling 2,990 million US$ and 2,203 million US$ respectively. Capital expenditures for maintenance and growth remained relatively stable, generally fluctuating between 447 million US$ and 767 million US$, indicating a disciplined approach to internal infrastructure investment amidst larger corporate restructuring.
Financing and Shareholder Distributions: Shareholder returns are characterized by a highly stable dividend policy, with annual payments remaining nearly constant at approximately 1.2 billion US$. Common stock purchases were more opportunistic, with a peak of 2,501 million US$ in 2015 and a subsequent range between 400 million US$ and 1,250 million US$. To fund the aggressive acquisition spree of 2017 and 2018, the financing mix shifted, including a significant increase in long-term debt proceeds of 1,691 million US$ by 2019 to replenish liquidity.
Liquidity and Cash Position: The ending cash and equivalents balance remained stable around 3 billion US$ from 2014 through 2017. However, a sharp decline occurred in 2018, where cash dropped to 1,093 million US$, directly correlating with the peak of the business acquisition cycle and continued stock repurchases. A partial recovery to 1,494 million US$ in 2019 was facilitated by a reduction in the pace of acquisitions and new debt issuance.

In summary, the financial data indicates a transition period where the organization leveraged its strong operating cash flow and existing liquidity to pivot its business portfolio. The ability to maintain flat dividend payments and continue share repurchases while investing over 5 billion US$ in acquisitions between 2017 and 2018 demonstrates a high capacity for capital deployment.

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