.Short-term (Operating) Activity Analysis
Difficulty: Beginner
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Ratios (Summary)
Emerson Electric Co., short-term (operating) activity ratios
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Turnover Ratios | |||||||
| | Inventory turnover | ||||||
| | Receivables turnover | ||||||
| | Payables turnover | ||||||
| | Working capital turnover | ||||||
| Average No. of Days | |||||||
| | Average inventory processing period | ||||||
| | Add: Average receivable collection period | ||||||
| | Operating cycle | ||||||
| | Less: Average payables payment period | ||||||
| | Cash conversion cycle | ||||||
Source: Based on data from Emerson Electric Co. Annual Reports
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Emerson Electric Co.'s inventory turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Emerson Electric Co.'s receivables turnover improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Emerson Electric Co.'s payables turnover declined from 2015 to 2016 and from 2016 to 2017. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Emerson Electric Co.'s working capital turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Emerson Electric Co.'s average inventory processing period deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Emerson Electric Co.'s average receivable collection period improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Emerson Electric Co.'s operating cycle improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Emerson Electric Co.'s average payables payment period increased from 2015 to 2016 and from 2016 to 2017. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Emerson Electric Co.'s cash conversion cycle improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Inventory Turnover
Emerson Electric Co., inventory turnover calculation, comparison to benchmarks
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | |||||||
| | Cost of sales | ||||||
| | Inventories | ||||||
| Ratio | |||||||
| | Inventory turnover1 | ||||||
| Benchmarks | |||||||
| Inventory Turnover, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Inventory turnover = Cost of sales ÷ Inventories
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Emerson Electric Co.'s inventory turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
Receivables Turnover
Emerson Electric Co., receivables turnover calculation, comparison to benchmarks
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | |||||||
| | Net sales | ||||||
| | Receivables, less allowances | ||||||
| Ratio | |||||||
| | Receivables turnover1 | ||||||
| Benchmarks | |||||||
| Receivables Turnover, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Receivables turnover = Net sales ÷ Receivables, less allowances
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Emerson Electric Co.'s receivables turnover improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Payables Turnover
Emerson Electric Co., payables turnover calculation, comparison to benchmarks
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | |||||||
| | Cost of sales | ||||||
| | Accounts payable | ||||||
| Ratio | |||||||
| | Payables turnover1 | ||||||
| Benchmarks | |||||||
| Payables Turnover, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Payables turnover = Cost of sales ÷ Accounts payable
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Emerson Electric Co.'s payables turnover declined from 2015 to 2016 and from 2016 to 2017. |
Working Capital Turnover
Emerson Electric Co., working capital turnover calculation, comparison to benchmarks
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | |||||||
| | Current assets | ||||||
| | Less: Current liabilities | ||||||
| | Working capital | ||||||
| | Net sales | ||||||
| Ratio | |||||||
| | Working capital turnover1 | ||||||
| Benchmarks | |||||||
| Working Capital Turnover, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Working capital turnover = Net sales ÷ Working capital
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Emerson Electric Co.'s working capital turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
Average Inventory Processing Period
Emerson Electric Co., average inventory processing period calculation, comparison to benchmarks
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| | Inventory turnover | ||||||
| Ratio (no. of days) | |||||||
| | Average inventory processing period1 | ||||||
| Benchmarks (no. of days) | |||||||
| Average Inventory Processing Period, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Emerson Electric Co.'s average inventory processing period deteriorated from 2015 to 2016 and from 2016 to 2017. |
Average Receivable Collection Period
Emerson Electric Co., average receivable collection period calculation, comparison to benchmarks
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| | Receivables turnover | ||||||
| Ratio (no. of days) | |||||||
| | Average receivable collection period1 | ||||||
| Benchmarks (no. of days) | |||||||
| Average Receivable Collection Period, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Emerson Electric Co.'s average receivable collection period improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Operating Cycle
Emerson Electric Co., operating cycle calculation, comparison to benchmarks
No. of days
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| | Average inventory processing period | ||||||
| | Average receivable collection period | ||||||
| Ratio | |||||||
| | Operating cycle1 | ||||||
| Benchmarks | |||||||
| Operating Cycle, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Operating cycle = Average inventory processing period + Average receivable collection period
= + =
| Ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Emerson Electric Co.'s operating cycle improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Average Payables Payment Period
Emerson Electric Co., average payables payment period calculation, comparison to benchmarks
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| | Payables turnover | ||||||
| Ratio (no. of days) | |||||||
| | Average payables payment period1 | ||||||
| Benchmarks (no. of days) | |||||||
| Average Payables Payment Period, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Emerson Electric Co.'s average payables payment period increased from 2015 to 2016 and from 2016 to 2017. |
Cash Conversion Cycle
Emerson Electric Co., cash conversion cycle calculation, comparison to benchmarks
No. of days
| Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| | Average inventory processing period | ||||||
| | Average receivable collection period | ||||||
| | Average payables payment period | ||||||
| Ratio | |||||||
| | Cash conversion cycle1 | ||||||
| Benchmarks | |||||||
| Cash Conversion Cycle, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Emerson Electric Co. Annual Reports
2017 Calculations
1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
| Ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Emerson Electric Co.'s cash conversion cycle improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
