Emerson Electric Co. (NYSE:EMR)

The analysis of the financial indicators over the observed period reveals several noteworthy trends and shifts in capital structure and leverage metrics. The values shown pertain to debt levels, equity positions, and the corresponding debt-to-equity ratios, offering insights into the company’s financial strategy and risk profile through time.

Short-term borrowings and long-term debt

The amount of debt has generally increased from 2005 to 2019. Initially, there is a slight decline observed from 2005 (4098 million USD) to 2007 (3776 million USD). However, starting from 2008, debt levels rose consistently reaching a peak of 6842 million USD in 2015. A decrease followed in 2016 and 2017 before debt increased again significantly by 2019 to 5721 million USD. This trend indicates a growing reliance on borrowed funds over the long term, with fluctuations that may reflect refinancing activities or changes in capital expenditure strategies.

Common stockholders’ equity

Equity values increased steadily from 7400 million USD in 2005 to a high of 10399 million USD in 2011. After this peak, equity values experienced a noticeable decline, dropping to 7568 million USD by 2016. Thereafter, there is a partial recovery rising again to 8947 million USD in 2018, before a subsequent decrease to 8233 million USD in 2019. This pattern suggests periods of both growth and contraction in retained earnings or equity financing, which could be influenced by profit performance, dividends, share repurchases, or other comprehensive income effects.

Debt to equity ratio

The debt-to-equity ratio trends reflect the interplay between the above two components. Beginning at 0.55 in 2005, it decreased steadily to 0.43 in 2007, indicating a stronger equity base relative to debt. The ratio then increased somewhat, fluctuating around 0.5 to 0.6 until 2014, where a marked increase is visible, peaking at 0.88 in 2016. This surge corresponds with the simultaneous peak in debt and trough in equity, indicating a significantly higher leverage level. Post-2016, the ratio declines back to approximately 0.53 in 2018, showing deleveraging or equity increase, but it rises again to 0.69 in 2019, reflecting renewed leverage increments.

Overall, the data points to a company that initially strengthened its equity base while managing debt at moderate levels, followed by an era of increased leverage primarily due to mounting debt levels and declining equity. The fluctuations in the debt-to-equity ratio highlight varying financial policies or responses to external economic pressures, with the peak leverage in 2016 suggesting heightened financial risk. The partial recovery in equity post-2016 and the consequent lowering of leverage ratio indicate some remediation efforts, though by 2019 increased leverage appears once more.