Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Emerson Electric Co., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
- Current Ratio Analysis
- The current ratio demonstrates notable volatility throughout the observed periods. Initially, it hovers slightly above 1.1, with modest fluctuations around the 1.2 mark through 2014 and the first three quarters of 2015. A pronounced increase occurs at the end of 2016 and into the first quarter of 2017, peaking at 2.5. This spike indicates a temporary strengthening of short-term liquidity. Following this peak, the ratio declines steadily, returning to levels closer to or below 1.2 by 2018 and continuing a downward trend through early 2020, with the lowest point near 0.88 occurring at the end of 2018. The gradual decrease in the latter periods may suggest tightening liquidity or increased current liabilities relative to current assets.
- Quick Ratio Analysis
- The quick ratio reflects a pattern similar to the current ratio, with values generally staying below 1.0 in the earlier periods, indicating limited liquid assets relative to current liabilities. There is a sharp increase towards the end of 2016 and the early part of 2017, reaching a peak of nearly 2.0, suggesting a temporary improvement in the company's ability to meet short-term obligations with its most liquid assets. Subsequent values show a noticeable decline and stabilization between approximately 0.53 and 0.97 from late 2017 through 2020, indicating a reduction in liquid asset coverage relative to current liabilities compared to the peak period.
- Cash Ratio Analysis
- The cash ratio trends illustrate a consistent increase until the end of 2016, culminating in a peak of 1.34 in the first quarter of 2017, signifying a momentary strong cash position relative to immediate liabilities. After this peak, the cash ratio declines sharply through 2018, reaching a low of 0.17 in the first quarter of 2019. Although there is a slight recovery thereafter, the ratio remains below 0.4 through to the first quarter of 2020. This pattern suggests a significant reduction in cash or cash equivalents relative to current liabilities after early 2017, possibly pointing to increased cash outflows or investments.
- Overall Observations
- All three liquidity ratios exhibit a similar trajectory with a pronounced peak around late 2016 to early 2017, indicating a temporarily strengthened liquidity position across multiple measures. Post-peak, each ratio declines, with variations in magnitude but consistent direction, suggesting a general relaxation of liquidity buffers over subsequent periods. The downward trend in liquidity ratios from 2017 onwards indicates a potential increase in current liabilities, reduction in current or liquid assets, or both, which may warrant further investigation into working capital management and operational cash flow dynamics during these periods.
Current Ratio
Emerson Electric Co., current ratio calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Current assets | 8,032) | 7,196) | 7,139) | 7,350) | 7,152) | 6,658) | 6,619) | 8,576) | 7,725) | 8,152) | 8,252) | 8,554) | 9,446) | 8,877) | 9,960) | 10,220) | 9,913) | 9,694) | 10,049) | 10,644) | 10,344) | 10,483) | |||||||
| Current liabilities | 7,940) | 6,340) | 5,976) | 6,218) | 6,714) | 7,540) | 6,164) | 6,954) | 5,945) | 6,192) | 5,045) | 5,370) | 3,771) | 4,146) | 8,008) | 8,326) | 8,182) | 8,202) | 7,800) | 8,312) | 8,770) | 8,877) | |||||||
| Liquidity Ratio | |||||||||||||||||||||||||||||
| Current ratio1 | 1.01 | 1.14 | 1.19 | 1.18 | 1.07 | 0.88 | 1.07 | 1.23 | 1.30 | 1.32 | 1.64 | 1.59 | 2.50 | 2.14 | 1.24 | 1.23 | 1.21 | 1.18 | 1.29 | 1.28 | 1.18 | 1.18 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||||||||
| Boeing Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q2 2020 Calculation
Current ratio = Current assets ÷ Current liabilities
= 8,032 ÷ 7,940 = 1.01
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's liquidity position over the observed periods.
- Current Assets
- Current assets show a fluctuating pattern with an overall downward trend in later periods. Starting at approximately $10,483 million in December 2014, current assets remain relatively stable through mid-2015, with minor increases and decreases. A decline becomes more pronounced from late 2017, with values dropping from around $8,152 million in December 2017 to roughly $6,619 million in March 2018. While there is some recovery afterward, the figures remain generally lower than earlier periods, ending around $8,032 million in March 2020.
- Current Liabilities
- Current liabilities also exhibit variability but with some distinctive shifts. Initial values near $8,877 million in December 2014 show a gradual decrease through 2015 and early 2016. A significant drop is observed in December 2016, declining sharply to about $4,146 million, a level maintained with fluctuations into early 2017. From late 2017 onward, current liabilities increase again, moving from approximately $6,192 million in December 2017 to $7,940 million by March 2020, indicating rising short-term obligations.
- Current Ratio
- The current ratio illustrates the company's short-term liquidity trend, oscillating across the quarters. It remains slightly above 1.1 in the early periods 2014-2016, suggesting a modest margin of liquidity. A notable spike occurs around December 2016 and March 2017, where the ratio exceeds 2.1 and reaches 2.5 respectively, mainly driven by the sharp decline in current liabilities. However, this elevated liquidity position is temporary; from mid-2017, the ratio declines steadily, dropping below 1.1 in early 2019 and finishing just above 1.0 in March 2020. This trend signals a tightening liquidity position, where current assets are only marginally sufficient to cover current liabilities.
In summary, the company experienced a period of relatively stable liquidity followed by a transient improvement due to a sharp reduction in current liabilities around late 2016. Subsequently, both current assets and liabilities leveled out at lower levels compared to the initial periods, with increasing liabilities causing the current ratio to approach the critical threshold of 1.0. This suggests a need for ongoing monitoring of short-term financial health to ensure liquidity remains adequate to meet obligations.
Quick Ratio
Emerson Electric Co., quick ratio calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Cash and equivalents | 2,583) | 1,635) | 1,494) | 1,603) | 1,384) | 1,248) | 1,093) | 3,411) | 2,444) | 3,096) | 3,062) | 3,140) | 5,039) | 4,151) | 3,182) | 3,516) | 3,322) | 3,109) | 3,054) | 3,393) | 3,256) | 3,122) | |||||||
| Receivables, less allowances | 2,641) | 2,726) | 2,985) | 2,901) | 2,911) | 2,733) | 3,344) | 3,027) | 3,042) | 2,881) | 3,072) | 2,926) | 2,479) | 2,426) | 2,701) | 4,014) | 3,874) | 3,842) | 4,319) | 4,272) | 4,299) | 4,404) | |||||||
| Total quick assets | 5,224) | 4,361) | 4,479) | 4,504) | 4,295) | 3,981) | 4,437) | 6,438) | 5,486) | 5,977) | 6,134) | 6,066) | 7,518) | 6,577) | 5,883) | 7,530) | 7,196) | 6,951) | 7,373) | 7,665) | 7,555) | 7,526) | |||||||
| Current liabilities | 7,940) | 6,340) | 5,976) | 6,218) | 6,714) | 7,540) | 6,164) | 6,954) | 5,945) | 6,192) | 5,045) | 5,370) | 3,771) | 4,146) | 8,008) | 8,326) | 8,182) | 8,202) | 7,800) | 8,312) | 8,770) | 8,877) | |||||||
| Liquidity Ratio | |||||||||||||||||||||||||||||
| Quick ratio1 | 0.66 | 0.69 | 0.75 | 0.72 | 0.64 | 0.53 | 0.72 | 0.93 | 0.92 | 0.97 | 1.22 | 1.13 | 1.99 | 1.59 | 0.73 | 0.90 | 0.88 | 0.85 | 0.95 | 0.92 | 0.86 | 0.85 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||||||||
| Boeing Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q2 2020 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 5,224 ÷ 7,940 = 0.66
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets fluctuated over the observed periods, beginning at $7,526 million at the end of 2014 and generally trending downward toward early 2019. Notably, there was a significant drop from $7,530 million in mid-2016 to $4,437 million by early 2018. Following this decrease, the total quick assets appeared to stabilize at lower levels, ranging between approximately $4,000 million and $4,500 million through to the first quarter of 2020.
- Current Liabilities
- Current liabilities exhibited variation without a clear upward or downward trend over the timeframe. Initially, liabilities hovered around $8,800 million at the end of 2014, then sharply declined to a low of $3,771 million in the first quarter of 2017, indicating a reduction in short-term obligations. Subsequent periods showed a renewed increase in current liabilities, reaching $7,940 million by the first quarter of 2020, suggesting a return to higher levels of short-term debt or obligations.
- Quick Ratio
- The quick ratio demonstrated significant volatility throughout the period. It started below 1 at 0.85 at the end of 2014, indicating that quick assets were insufficient to cover current liabilities at that time. There was an improvement in 2016-2017, peaking at 1.99 in early 2017, reflecting strong liquidity. However, from 2018 onward, the quick ratio declined steadily, falling to 0.66 by the first quarter of 2020, suggesting a weakening liquidity position, with quick assets covering only about two-thirds of current liabilities by the end of the timeframe.
- Overall Insights
- The data reflect fluctuating liquidity conditions, with a noteworthy peak in quick ratio around 2017, followed by a general decline. The initial decrease in current liabilities accompanied by a steep drop in quick assets before 2017 indicates a restructuring or changes in operational financing. The return to higher current liabilities paired with declining quick assets after 2017 suggests increasing short-term financial pressure. The persistent quick ratio below 1 in recent periods indicates a cautious stance on liquidity management may be warranted to ensure short-term obligations are met without strain.
Cash Ratio
Emerson Electric Co., cash ratio calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Cash and equivalents | 2,583) | 1,635) | 1,494) | 1,603) | 1,384) | 1,248) | 1,093) | 3,411) | 2,444) | 3,096) | 3,062) | 3,140) | 5,039) | 4,151) | 3,182) | 3,516) | 3,322) | 3,109) | 3,054) | 3,393) | 3,256) | 3,122) | |||||||
| Total cash assets | 2,583) | 1,635) | 1,494) | 1,603) | 1,384) | 1,248) | 1,093) | 3,411) | 2,444) | 3,096) | 3,062) | 3,140) | 5,039) | 4,151) | 3,182) | 3,516) | 3,322) | 3,109) | 3,054) | 3,393) | 3,256) | 3,122) | |||||||
| Current liabilities | 7,940) | 6,340) | 5,976) | 6,218) | 6,714) | 7,540) | 6,164) | 6,954) | 5,945) | 6,192) | 5,045) | 5,370) | 3,771) | 4,146) | 8,008) | 8,326) | 8,182) | 8,202) | 7,800) | 8,312) | 8,770) | 8,877) | |||||||
| Liquidity Ratio | |||||||||||||||||||||||||||||
| Cash ratio1 | 0.33 | 0.26 | 0.25 | 0.26 | 0.21 | 0.17 | 0.18 | 0.49 | 0.41 | 0.50 | 0.61 | 0.58 | 1.34 | 1.00 | 0.40 | 0.42 | 0.41 | 0.38 | 0.39 | 0.41 | 0.37 | 0.35 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||||||||
| Boeing Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q2 2020 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,583 ÷ 7,940 = 0.33
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends and fluctuations across the reported periods.
- Total Cash Assets (US$ in millions)
-
Total cash assets generally experienced moderate growth from the end of 2014 through early 2017, rising from approximately 3,122 million USD to peaks above 5,000 million USD in the first quarter of 2017. Following this peak, cash levels displayed substantial volatility, including a sharp decline to around 1,093 million USD by the first quarter of 2018. Subsequently, a recovery trend is observable during mid-2018, though cash assets remained significantly below earlier highs. After that, the figures showed fluctuation with a moderate incline towards the first quarter of 2020, reaching approximately 2,583 million USD, yet still below the peak levels observed in early 2017.
- Current Liabilities (US$ in millions)
-
Current liabilities showed a slight decreasing trend from nearly 8,877 million USD at the end of 2014 to a trough near 3,771 million USD during the first quarter of 2017, indicating a possible reduction in short-term obligations. However, this reduction coincided with an unusually large drop in liabilities, which may reflect restructuring or reporting adjustments. Following that low point, current liabilities rebounded and fluctuated between approximately 5,370 million USD and 7,9540 million USD through to the first quarter of 2020. Overall, liabilities remained relatively stable with tendencies to rise in the latter periods.
- Cash Ratio (Ratio)
-
The cash ratio exhibited significant variation aligned with movements in cash assets and current liabilities. Initially, from the end of 2014 through early 2016, the ratio hovered between 0.35 to 0.42, indicating a moderate ability to cover current liabilities with cash. A pronounced increase occurred around the end of 2016 and the first quarter of 2017, reaching a peak ratio of 1.34, signifying that cash holdings exceeded current liabilities during that period. After this peak, the ratio declined sharply, bottoming out near 0.18 to 0.21 in early to mid-2018, reflecting diminished liquidity relative to current obligations. In the final periods leading up to the first quarter of 2020, the ratio gradually improved to about 0.33 but remained below initial levels observed at the start of the dataset.
In summary, the data portrays a cycle of liquidity fluctuation marked by a peak in cash reserves and liquidity ratios around late 2016 to early 2017, followed by a significant decrease and partial recovery. The current liabilities trend suggests some initial deleveraging followed by stabilization and moderate increase. The cash ratio trends underscore periods of both robust and constrained liquidity, implying that financial management strategies or market conditions likely influenced short-term liquidity positioning across the reviewed quarters.