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Short-term (Operating) Activity Analysis

Difficulty: Beginner


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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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