Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Emerson Electric Co., long-term (investment) activity ratios
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 analysis of the financial ratios over the six-year period reveals notable trends in the efficiency and utilization of assets and equity.
- Net Fixed Asset Turnover
- This ratio shows a declining trend from 6.45 in 2014 to 4.6 in 2017, indicating a reduced efficiency in generating revenue from fixed assets. However, there is a slight recovery observed in 2018 and 2019, reaching 5.04. Despite the partial rebound, the turnover remained below the initial 2014 level, suggesting potential challenges or changes in fixed asset utilization.
- Total Asset Turnover
- The ratio remains stable at 1.01 in both 2014 and 2015, but experiences a significant drop to 0.67 in 2016. Following this decline, a gradual increase is evident through 2017 to 2019, where it reaches 0.9. This pattern indicates that overall asset efficiency decreased sharply in 2016 but has been improving steadily since then, though it has not fully recovered to the early years' performance.
- Equity Turnover
- Starting at 2.42 in 2014, equity turnover increases to 2.76 in 2015, signaling enhanced revenue generation relative to equity. However, a decline follows in 2016 and 2017, bringing the ratio down to 1.75. From 2018 onwards, the ratio rises again, reaching 2.23 in 2019. This suggests fluctuations in equity usage with periods of lower and higher efficiency, but a positive trend towards recovery by 2019.
Overall, the data reflects an initial period of strong asset and equity utilization, followed by a decline around the mid-point of the period analyzed, with subsequent gradual recoveries by the end of 2019. The trends may indicate operational adjustments or external factors impacting asset management and equity efficiency during this time frame.
Net Fixed Asset Turnover
Emerson Electric Co., net fixed asset turnover calculation, comparison to benchmarks
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | 18,372) | 17,408) | 15,264) | 14,522) | 22,304) | 24,537) | |
| Property, plant and equipment, net | 3,642) | 3,562) | 3,321) | 2,931) | 3,585) | 3,802) | |
| Long-term Activity Ratio | |||||||
| Net fixed asset turnover1 | 5.04 | 4.89 | 4.60 | 4.95 | 6.22 | 6.45 | |
| Benchmarks | |||||||
| Net Fixed Asset Turnover, Competitors2 | |||||||
| Boeing Co. | — | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | — | |
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 2019 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 18,372 ÷ 3,642 = 5.04
2 Click competitor name to see calculations.
- Net sales
- Net sales exhibited a notable decline from 24,537 million USD in 2014 to 14,522 million USD in 2016, representing a substantial reduction over the two-year period. Following this decrease, there was a recovery trend with net sales rising gradually to 18,372 million USD by 2019, although these figures remained below the initial 2014 level.
- Property, plant and equipment, net
- Net property, plant, and equipment values declined from 3,802 million USD in 2014 to a low of 2,931 million USD in 2016. Subsequent years showed a steady increase, reaching 3,642 million USD in 2019. This indicates a period of asset reduction followed by reinvestment or acquisition of fixed assets.
- Net fixed asset turnover
- The net fixed asset turnover ratio decreased sharply from 6.45 in 2014 to 4.60 in 2017, reflecting reduced efficiency in generating sales from fixed assets during this timeframe. From 2017 onwards, the ratio improved marginally to 5.04 by 2019, suggesting some recovery in asset utilization efficiency, though the levels remained below those observed in 2014.
Total Asset Turnover
Emerson Electric Co., total asset turnover calculation, comparison to benchmarks
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
|---|---|---|---|---|---|---|---|
| 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) | |
| Long-term Activity Ratio | |||||||
| Total asset turnover1 | 0.90 | 0.85 | 0.78 | 0.67 | 1.01 | 1.01 | |
| Benchmarks | |||||||
| Total Asset Turnover, Competitors2 | |||||||
| Boeing Co. | — | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | — | |
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 2019 Calculation
Total asset turnover = Net sales ÷ Total assets
= 18,372 ÷ 20,497 = 0.90
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a notable decline from 24,537 million US dollars in 2014 to 14,522 million US dollars in 2016. Following this low point, there was a gradual recovery with net sales increasing steadily to reach 18,372 million US dollars by 2019. This indicates a period of contraction followed by incremental growth over the six-year span.
- Total Assets
- Total assets decreased consistently over the period under review, starting at 24,177 million US dollars in 2014 and diminishing to 20,497 million US dollars by 2019. The most significant reductions occurred between 2014 and 2017, with a slight stabilization observed in the subsequent years.
- Total Asset Turnover
- The total asset turnover ratio remained stable at 1.01 in both 2014 and 2015, then fell sharply to 0.67 in 2016, reflecting reduced efficiency in using assets to generate sales during that year. Thereafter, the ratio showed a recovery trend, improving each year to 0.90 in 2019, signalling a progressive enhancement in asset utilization.
- Summary
- The data reveals a phase of declining sales accompanied by shrinking asset base and decreasing asset efficiency until 2016. Subsequently, the company experienced a recovery in net sales and a simultaneous improvement in asset turnover, despite the total assets not returning to earlier levels. This suggests efforts to optimize asset use and improve operational performance following a period of contraction.
Equity Turnover
Emerson Electric Co., equity turnover calculation, comparison to benchmarks
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | 18,372) | 17,408) | 15,264) | 14,522) | 22,304) | 24,537) | |
| Common stockholders’ equity | 8,233) | 8,947) | 8,718) | 7,568) | 8,081) | 10,119) | |
| Long-term Activity Ratio | |||||||
| Equity turnover1 | 2.23 | 1.95 | 1.75 | 1.92 | 2.76 | 2.42 | |
| Benchmarks | |||||||
| Equity Turnover, Competitors2 | |||||||
| Boeing Co. | — | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | — | |
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 2019 Calculation
Equity turnover = Net sales ÷ Common stockholders’ equity
= 18,372 ÷ 8,233 = 2.23
2 Click competitor name to see calculations.
The financial data reveals several trends over the six-year period ending September 30, 2019.
- Net Sales
- Net sales demonstrated a declining trend initially, dropping significantly from 24,537 million US dollars in 2014 to a low of 14,522 million US dollars in 2016. After this decrease, net sales began to recover, gradually increasing to 18,372 million US dollars by 2019, though they remained below the 2014 peak.
- Common Stockholders’ Equity
- Common stockholders’ equity also declined overall, falling from 10,119 million US dollars in 2014 to 7,568 million US dollars in 2016. Following this decrease, equity values exhibited some variability but largely stabilized around 8,000 to 8,900 million US dollars in the subsequent years, ending at 8,233 million US dollars in 2019. This pattern suggests some recovery efforts but without reaching earlier high levels.
- Equity Turnover Ratio
- The equity turnover ratio exhibited a fluctuating pattern, starting at 2.42 in 2014 and increasing to 2.76 in 2015, indicating a higher efficiency of equity usage relative to sales initially. However, this ratio then decreased substantially to 1.75 by 2017, reflecting diminished efficiency. From 2018 onward, equity turnover improved again, reaching 2.23 in 2019, signaling a return toward more effective use of equity to generate sales, though not as high as the 2015 peak.
Overall, the data indicate a challenging period during 2015-2016 marked by reduced net sales and equity levels and a decline in equity turnover efficiency. Subsequent years show gradual recovery in sales and improved efficiency, but equity remains below the earlier levels. These trends suggest a phase of restructuring or adjustment with positive momentum towards restoring operational and financial performance.