Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Emerson Electric Co., short-term (operating) activity 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
The analysis of the quarterly financial ratios over the presented periods reveals notable trends and fluctuations in the company's operational efficiency and working capital management.
- Inventory Turnover
- The inventory turnover ratio displays variability, with values starting around 6.99 and experiencing a general decline over time, reaching lows around 4.47 to 5.07 in mid to late 2017. After this period, the ratio moderately recovered, stabilizing near 5.1 by the end of the series. This indicates a fluctuating efficiency in inventory management, with slower inventory movement especially noticeable in 2016 and 2017.
- Receivables Turnover
- The receivables turnover ratio shows an overall upward trend, starting at approximately 4.89 and increasing to values above 6.7 by early 2020. This suggests improved effectiveness in collecting receivables over the years, with the company accelerating its collection process and reducing the time customers take to pay.
- Payables Turnover
- The payables turnover ratio fluctuates but generally trends upward from around 4.87 to close to 6.8 at the end of the observed period. This trend indicates an increasing velocity in settling accounts payable, implying a strategy of faster payment toward suppliers or vendors over time.
- Working Capital Turnover
- The working capital turnover ratio experiences significant volatility. Early periods show moderate ratios near 10 to 15, followed by a sharp drop to as low as approximately 2.54 in 2016. Subsequent values demonstrate recovery, including a pronounced spike to over 195 in the final reported quarter, albeit with irregular data points and some missing values. This volatility suggests variability in the efficiency of using working capital to generate sales, with possible anomalies or one-off events influencing late-period figures.
- Average Inventory Processing Period (Days)
- The average inventory processing period tends to lengthen from about 52 days to peaks approaching 82 days around 2016 and 2017, before settling between 65 and 73 days in later periods. This pattern reflects a tendency toward slower inventory turnover in mid-periods, which aligns with the declining inventory turnover ratio, before some improvement in more recent quarters.
- Average Receivable Collection Period (Days)
- This metric generally decreases from roughly 75 days to about 54 days over the timeframe, indicating enhanced efficiency in collecting payments from customers. The decline supports the earlier observation of increasing receivables turnover ratios.
- Operating Cycle (Days)
- The operating cycle remains relatively stable, fluctuating modestly between 118 and 164 days, with peaks around 2016 and dips near the start and end of the data series. This suggests the overall time taken from inventory acquisition to cash collection has not dramatically changed but reflects the combined effects of inventory and receivables management trends.
- Average Payables Payment Period (Days)
- The payables payment period experiences fluctuations, starting near 75 days and trending down to mid-50s in later years. The shorter payment duration aligns with the observed increase in payables turnover, indicating quicker settlement of obligations.
- Cash Conversion Cycle (Days)
- The cash conversion cycle generally rises from around 52 days, peaking near 84 days in 2017, before decreasing back to the 59–73 day range toward the end of the series. This fluctuation highlights variations in the net time interval between cash outflows to suppliers and cash inflows from customers, influenced by the inventory processing and collection periods as well as payment terms.
In summary, the company exhibits improving efficiency in receivables management and payables turnover, suggesting better liquidity management. However, inventory management shows periods of reduced efficiency, with longer processing times and lower turnover ratios especially evident around 2016–2017. The working capital turnover ratio's volatility merits further investigation due to extreme values observed in the later periods. The cash conversion cycle's fluctuations reflect these mixed performance aspects, culminating in a generally moderate duration for converting investments in inventory back to cash.
Turnover Ratios
Average No. Days
Inventory Turnover
Emerson Electric Co., inventory turnover 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Cost of sales | 2,412) | 2,392) | 2,843) | 2,683) | 2,645) | 2,386) | 2,823) | 2,507) | 2,423) | 2,195) | 2,631) | 2,361) | 2,017) | 1,851) | 2,219) | 2,081) | 2,037) | 1,923) | 3,446) | 3,269) | 3,234) | 3,307) | 3,918) | 3,674) | 3,417) | 3,370) | ||||||||
| Inventories | 2,058) | 2,064) | 1,880) | 2,061) | 2,073) | 1,980) | 1,813) | 1,805) | 1,897) | 1,845) | 1,696) | 1,891) | 1,331) | 1,278) | 1,208) | 1,949) | 1,950) | 1,903) | 1,847) | 2,144) | 2,107) | 2,121) | 2,057) | 2,253) | 2,233) | 2,162) | ||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||||||
| Inventory turnover1 | 5.02 | 5.12 | 5.62 | 5.11 | 5.00 | 5.12 | 5.49 | 5.40 | 5.07 | 4.99 | 5.22 | 4.47 | 6.14 | 6.41 | 6.84 | 4.87 | 5.47 | 6.24 | 7.18 | 6.40 | 6.71 | 6.75 | 6.99 | — | — | — | ||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Inventory Turnover, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Inventory turnover
= (Cost of salesQ2 2020
+ Cost of salesQ1 2020
+ Cost of salesQ4 2019
+ Cost of salesQ3 2019)
÷ Inventories
= (2,412 + 2,392 + 2,843 + 2,683)
÷ 2,058 = 5.02
2 Click competitor name to see calculations.
The quarterly data reveals several notable trends in cost of sales, inventories, and inventory turnover ratios over the examined periods.
- Cost of Sales
-
The cost of sales values exhibit a fluctuating pattern across the quarters. Initial figures around 2013 and early 2014 show steady values generally ranging between approximately 3,200 million and 3,900 million US dollars. A significant drop occurs starting in late 2015, with values around and below 2,000 million US dollars indicating a likely restructuring or shift in business operations. Following this drop, cost of sales rises again, peaking near 2,800 million US dollars in late 2018 and the end of 2019. The most recent figures show a slight decline to just above 2,300 million US dollars, suggesting some moderation in cost pressure or sales volume.
- Inventories
-
Inventory levels show a less consistent pattern, with moderate fluctuations over time. From late 2013 through early 2015, inventories hover around 2,100 million US dollars, with occasional increases and decreases that do not correspond simply to cost of sales patterns. Starting in mid-2016, inventory values sharply decrease to roughly 1,200–1,300 million US dollars, which aligns with the period of lower cost of sales observed previously. This reduction may indicate efforts to optimize inventory or changes in supply chain dynamics. From the end of 2016 to mid-2017, inventories increase again, peaking near 1,900 million US dollars, before fluctuating between 1,800 million and just over 2,000 million US dollars through 2019 and early 2020.
- Inventory Turnover Ratio
-
The inventory turnover ratio, where available, demonstrates a declining trend from approximately 6.99 in late 2014 to lows near 4.47 through late 2017. This declining turnover may suggest slower movement of inventory relative to sales or a buildup of stock. Post-2017, turnover ratios moderately recover to values ranging between approximately 5.0 and 5.6, stabilizing somewhat in recent periods. This recovery indicates improved efficiency in inventory management or sales velocity relative to inventory holdings.
Overall, the data suggests that the company experienced a significant reduction in cost of sales and inventories around late 2015 to early 2016, potentially linked to operational shifts or strategic adjustments. Inventory turnover ratios indicate a period of reduced efficiency in inventory management or sales speed between 2014 and 2017, followed by stabilization and modest improvement thereafter. These patterns merit further investigation in the context of business strategy, market conditions, and operational changes during these periods.
Receivables Turnover
Emerson Electric Co., receivables turnover 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Net sales | 4,162) | 4,151) | 4,971) | 4,684) | 4,570) | 4,147) | 4,888) | 4,456) | 4,248) | 3,816) | 4,435) | 4,039) | 3,574) | 3,216) | 3,932) | 3,674) | 3,579) | 3,337) | 5,814) | 5,503) | 5,400) | 5,587) | 6,807) | 6,312) | 5,812) | 5,606) | ||||||||
| 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) | 5,019) | 4,772) | 4,563) | 4,429) | ||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||||||
| Receivables turnover1 | 6.80 | 6.74 | 6.15 | 6.30 | 6.20 | 6.49 | 5.21 | 5.60 | 5.44 | 5.51 | 4.97 | 5.04 | 5.81 | 5.94 | 5.38 | 4.09 | 4.71 | 5.22 | 5.16 | 5.45 | 5.61 | 5.57 | 4.89 | — | — | — | ||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Receivables Turnover, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Receivables turnover
= (Net salesQ2 2020
+ Net salesQ1 2020
+ Net salesQ4 2019
+ Net salesQ3 2019)
÷ Receivables, less allowances
= (4,162 + 4,151 + 4,971 + 4,684)
÷ 2,641 = 6.80
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends across net sales, receivables, and receivables turnover over the examined periods.
- Net Sales
- Net sales demonstrate fluctuations throughout the periods with a pattern of declines and recoveries. Initially, from December 2013 to September 2014, net sales increased steadily, reaching a peak of 6807 million USD by September 2014. This was followed by a decline through to December 2015, where sales dropped sharply to 3337 million USD. Starting in 2016, net sales showed a recovery trend, generally increasing over the subsequent periods with some minor fluctuations, reaching 4971 million USD by September 2019. The data for the first quarter of 2020 indicates a decrease to 4151 million USD, signaling a potential downturn entering 2020.
- Receivables, Less Allowances
- Receivables generally follow net sales trends but with some lag and variance in magnitude. From December 2013 through September 2014, receivables rose steadily from 4429 million USD to 5019 million USD. A downward trend then occurred until December 2015, with receivables decreasing to 3842 million USD. The following years show volatility, including a significant drop to 2701 million USD by September 2016. Thereafter, values fluctuated between the lower 2400s and 3300s, without a consistent trend, ending at 2641 million USD in March 2020. This variability may suggest changing credit policies, collection efficiencies, or sales mix effects over time.
- Receivables Turnover Ratio
- The receivables turnover ratio, available from June 2014 onward, illustrates the efficiency of collecting receivables. Early data in 2014 showed moderate turnover around 4.89 to 5.61. It dipped significantly during late 2015 and 2016, reaching as low as 4.09 in September 2016, indicating slower collections or extended credit terms. Starting in late 2016, turnover improved steadily, surpassing the earlier levels and reaching highs above 6.0 from 2019 onward, with values such as 6.49 to 6.80. This improvement suggests enhanced collection efforts or tighter credit controls in recent periods.
In summary, the financial data point to a period of volatility in net sales and receivables, especially around 2015 and 2016, followed by a gradual recovery and improvement in receivables management as evidenced by the rising turnover ratio. The downturn in net sales in early 2020 may warrant further monitoring to assess underlying causes and potential impacts.
Payables Turnover
Emerson Electric Co., payables turnover 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Cost of sales | 2,412) | 2,392) | 2,843) | 2,683) | 2,645) | 2,386) | 2,823) | 2,507) | 2,423) | 2,195) | 2,631) | 2,361) | 2,017) | 1,851) | 2,219) | 2,081) | 2,037) | 1,923) | 3,446) | 3,269) | 3,234) | 3,307) | 3,918) | 3,674) | 3,417) | 3,370) | ||||||||
| Accounts payable | 1,521) | 1,649) | 1,874) | 1,785) | 1,730) | 1,794) | 1,943) | 1,647) | 1,603) | 1,596) | 1,776) | 1,613) | 1,368) | 1,335) | 1,517) | 2,230) | 2,140) | 2,075) | 2,358) | 2,402) | 2,407) | 2,468) | 2,951) | 2,645) | 2,522) | 2,425) | ||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||||||
| Payables turnover1 | 6.79 | 6.41 | 5.63 | 5.90 | 5.99 | 5.65 | 5.12 | 5.92 | 6.00 | 5.77 | 4.99 | 5.24 | 5.97 | 6.13 | 5.44 | 4.25 | 4.99 | 5.72 | 5.62 | 5.72 | 5.87 | 5.80 | 4.87 | — | — | — | ||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Payables Turnover, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Payables turnover
= (Cost of salesQ2 2020
+ Cost of salesQ1 2020
+ Cost of salesQ4 2019
+ Cost of salesQ3 2019)
÷ Accounts payable
= (2,412 + 2,392 + 2,843 + 2,683)
÷ 1,521 = 6.79
2 Click competitor name to see calculations.
The cost of sales exhibits noticeable fluctuations over the examined quarters. Initially, it increased steadily from 3,370 million USD at the end of 2013 to a peak of 3,918 million USD in September 2014. Subsequently, there is a sharp decline starting in December 2014, dropping to 1,923 million USD by December 2015. This lower level persists with moderate increases and decreases through 2016 and 2017, followed by a general upward trend reaching 2,843 million USD in September 2019. The final two quarters show a slight decrease, settling around 2,400 million USD in early 2020.
Accounts payable data also display a variable trend over the same period. There is a gradual increase from 2,425 million USD at the end of 2013 up to a peak of 2,951 million USD in September 2014. After that, a downward movement occurs until December 2016, reaching as low as 1,335 million USD. From early 2017 onward, accounts payable steadily rise again, peaking at 1,943 million USD in December 2018, before declining moderately towards early 2020.
Payables turnover ratio, calculated on an intermittent basis across the periods, shows variability ranging from a low of approximately 4.25 to a high of around 6.79. Early values near 2014 and 2015 fluctuate between the mid-4 to high-5 range. Starting from late 2016, the ratio tends to increase with some short-term oscillations, reaching its peak in the first quarter of 2020. This suggests improvements in the efficiency of managing payables over time, particularly in the most recent quarters.
Summarizing, cost of sales and accounts payable both experienced significant variability, with pronounced declines during late 2014 to 2016, followed by partial rebounds. Payables turnover improved over the longer term, indicating more effective payables management. The observed patterns point to dynamic operational conditions impacting costs and liabilities, alongside an ongoing focus on optimizing payment cycles.
- Cost of Sales
- Steady increase until Q3 2014 followed by a sharp decline through 2015.
- Moderate oscillations in 2016-2017 with recovery and growth leading to late 2019.
- Decreases slightly entering 2020, remaining above the low levels seen during 2015-2016.
- Accounts Payable
- Gradual rise to a peak in Q3 2014, then a continuous decline until late 2016.
- Recovery and growth from 2017 through 2018, then moderate decline in 2019-2020.
- Payables Turnover Ratio
- Fluctuates between 4.25 and 6.79 over the reported periods.
- An overall increasing trend, especially noticeable from late 2016 to early 2020, indicating improved efficiency.
Working Capital Turnover
Emerson Electric Co., working capital turnover 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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) | 10,867) | 10,813) | 10,203) | 9,999) | ||||||||
| Less: 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) | 8,454) | 8,533) | 7,832) | 7,108) | ||||||||
| Working capital | 92) | 856) | 1,163) | 1,132) | 438) | (882) | 455) | 1,622) | 1,780) | 1,960) | 3,207) | 3,184) | 5,675) | 4,731) | 1,952) | 1,894) | 1,731) | 1,492) | 2,249) | 2,332) | 1,574) | 1,606) | 2,413) | 2,280) | 2,371) | 2,891) | ||||||||
| Net sales | 4,162) | 4,151) | 4,971) | 4,684) | 4,570) | 4,147) | 4,888) | 4,456) | 4,248) | 3,816) | 4,435) | 4,039) | 3,574) | 3,216) | 3,932) | 3,674) | 3,579) | 3,337) | 5,814) | 5,503) | 5,400) | 5,587) | 6,807) | 6,312) | 5,812) | 5,606) | ||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||||||
| Working capital turnover1 | 195.30 | 21.47 | 15.80 | 16.16 | 41.24 | — | 38.26 | 10.45 | 9.29 | 8.09 | 4.76 | 4.64 | 2.54 | 3.04 | 7.44 | 8.66 | 10.53 | 13.44 | 9.92 | 9.99 | 15.32 | 15.27 | 10.17 | — | — | — | ||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Working Capital Turnover, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Working capital turnover
= (Net salesQ2 2020
+ Net salesQ1 2020
+ Net salesQ4 2019
+ Net salesQ3 2019)
÷ Working capital
= (4,162 + 4,151 + 4,971 + 4,684)
÷ 92 = 195.30
2 Click competitor name to see calculations.
Over the analyzed quarters, the working capital demonstrates significant volatility, fluctuating between positive and negative values. Initially, it shows a decreasing pattern from 2891 million USD to a low of 455 million USD by the end of 2018, followed by a sharp decline into negative territory (−882 million USD) in early 2019. After this period, it rebounds to positive values again but remains relatively low compared to earlier figures.
Net sales maintain a generally upward trend with some interruptions. Net sales increased from 5606 million USD at the end of 2013 to a peak near 6807 million USD in the third quarter of 2014. This was followed by a considerable drop to the 3300-4000 million USD range during 2015-2016. Sales recover steadily from 2017 onwards, reaching over 4900 million USD by the end of 2018, but slightly declining again in the first quarter of 2020.
The working capital turnover ratio reflects substantial inconsistency over the reviewed periods. In 2014, the ratio indicates efficient use of working capital, with values mostly above 9 and peaking around 15.32. This efficiency dips sharply in late 2016 and 2017, with ratios falling below 5 at some points. A notable spike in turnover ratio occurs at the end of 2018 reaching 38.26, coinciding with the significant reduction in working capital, implying very high sales relative to working capital. The ratio continues to fluctuate widely through 2019 and early 2020, reaching an unusually high ratio of 195.3, which likely indicates an anomaly or minor working capital base against steady net sales.
In summary, the data suggest a period characterized by volatility in working capital management, with net sales showing resilience but periodic declines likely reflecting operational or market challenges. The erratic working capital turnover ratios highlight challenges in maintaining consistent capital efficiency, possibly due to fluctuating inventory levels, receivables, or payables. The extraordinary ratios seen toward the end of the period warrant further investigation into working capital components to understand the underpinnings of these metrics.
- Working Capital
- Highly volatile with periods of significant decrease and occasional negative values, indicating possible liquidity constraints or changes in asset/liability management.
- Net Sales
- Shows an overall growth trend with some dips, suggesting some market or operational impacts but general resilience over time.
- Working Capital Turnover Ratio
- Widely fluctuating, with periods of high efficiency and some low points, indicating inconsistent working capital utilization and possible operational instability, with extreme values at some points likely reflecting very low working capital rather than substantial performance improvements.
Average Inventory Processing Period
Emerson Electric Co., average inventory processing period 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||||||
| Inventory turnover | 5.02 | 5.12 | 5.62 | 5.11 | 5.00 | 5.12 | 5.49 | 5.40 | 5.07 | 4.99 | 5.22 | 4.47 | 6.14 | 6.41 | 6.84 | 4.87 | 5.47 | 6.24 | 7.18 | 6.40 | 6.71 | 6.75 | 6.99 | — | — | — | ||||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||||||
| Average inventory processing period1 | 73 | 71 | 65 | 71 | 73 | 71 | 67 | 68 | 72 | 73 | 70 | 82 | 59 | 57 | 53 | 75 | 67 | 59 | 51 | 57 | 54 | 54 | 52 | — | — | — | ||||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||||||
| Average Inventory Processing Period, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 5.02 = 73
2 Click competitor name to see calculations.
- Inventory Turnover Trend
-
The inventory turnover ratio shows moderate fluctuations across the observed periods. Starting around 6.99 at the end of 2013 and early 2014, it decreased to a low of 4.47 in the third quarter of 2016, indicating slower inventory movement during that period. Following this trough, the ratio gradually increased to values ranging between 5.0 and 5.6 in the later years, suggesting an improvement in inventory turnover but at a lower level compared to the initial periods. Overall, the turnover ratio appears to have stabilized in the range of approximately 5.0 to 5.6 from 2016 through early 2020, representing a less efficient turnover compared to the higher ratios observed in 2013 and 2014.
- Average Inventory Processing Period
-
The average inventory processing period shows a roughly inverse pattern to the inventory turnover ratio, as expected. Early data from 2014 to 2016 indicates an increasing trend in the number of days inventory remains on hand, rising from the low 50s to a peak of 82 days in the third quarter of 2016. Thereafter, the period generally fluctuates between the mid-60s and low 70s, suggesting that inventory tends to stay longer before being sold compared to the early years. Notably, the peak duration aligns with the lowest inventory turnover period, reinforcing the slower inventory movement hypothesis during that timeframe. The latter part of the data, from 2017 onward, presents a somewhat stable but elevated processing period relative to the earlier quarters.
- Overall Interpretation
-
The inverse relationship between inventory turnover and average inventory processing period is consistent throughout the dataset. The observed dip in inventory turnover and corresponding increase in processing period around 2016 highlights a period of reduced inventory efficiency. Although there is some recovery thereafter, the inventory management metrics do not return to the levels seen in 2013 and early 2014. This suggests challenges in inventory control or changes in sales patterns impacting inventory velocity. The fluctuations within the later periods indicate some variability but no clear return to earlier efficiency benchmarks.
Average Receivable Collection Period
Emerson Electric Co., average receivable collection period 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||||||
| Receivables turnover | 6.80 | 6.74 | 6.15 | 6.30 | 6.20 | 6.49 | 5.21 | 5.60 | 5.44 | 5.51 | 4.97 | 5.04 | 5.81 | 5.94 | 5.38 | 4.09 | 4.71 | 5.22 | 5.16 | 5.45 | 5.61 | 5.57 | 4.89 | — | — | — | ||||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||||||
| Average receivable collection period1 | 54 | 54 | 59 | 58 | 59 | 56 | 70 | 65 | 67 | 66 | 73 | 72 | 63 | 61 | 68 | 89 | 78 | 70 | 71 | 67 | 65 | 66 | 75 | — | — | — | ||||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||||||
| Average Receivable Collection Period, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 6.80 = 54
2 Click competitor name to see calculations.
The receivables turnover ratio exhibits variability throughout the observed periods, indicating fluctuations in the efficiency of the company's credit and collection processes. Initially, from late 2013 to late 2014, the ratio increased from 4.89 to a peak of 5.61, suggesting an improvement in receivables turnover. However, a decline is observed in early to mid-2016, with the ratio dropping to a low of 4.09, highlighting a period of slower collection efficiency.
From the end of 2016 onwards, there is a general upward trend in the receivables turnover ratio, rising steadily and reaching the highest levels recorded in the series by early 2020 at approximately 6.8. This trend suggests enhanced effectiveness in managing receivables and collecting outstanding amounts more rapidly.
Correspondingly, the average receivable collection period inversely mirrors these trends. The period starts high at 75 days in late 2014, decreasing to a minimum near 61 days by early 2017, indicating faster collections at that time. A temporary rise to about 73 days around late 2017 signals a short-term slowdown in collections.
Subsequently, the collection period declines steadily from mid-2018 to early 2020, reaching approximately 54 days. This decrease aligns with the increasing receivables turnover ratio, confirming an overall improvement in the speed with which the company collects its receivables. Lower collection periods and higher turnover ratios together reflect positive developments in the company's working capital management.
In summary, the data shows an initial phase of moderate efficiency, followed by a dip in collection performance around 2015-2016, and a marked improvement thereafter, culminating in faster receivable turnover and decreased collection periods by early 2020.
Operating Cycle
Emerson Electric Co., operating cycle calculation (quarterly data)
No. days
| 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||||||
| Average inventory processing period | 73 | 71 | 65 | 71 | 73 | 71 | 67 | 68 | 72 | 73 | 70 | 82 | 59 | 57 | 53 | 75 | 67 | 59 | 51 | 57 | 54 | 54 | 52 | — | — | — | ||||||||
| Average receivable collection period | 54 | 54 | 59 | 58 | 59 | 56 | 70 | 65 | 67 | 66 | 73 | 72 | 63 | 61 | 68 | 89 | 78 | 70 | 71 | 67 | 65 | 66 | 75 | — | — | — | ||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||||||
| Operating cycle1 | 127 | 125 | 124 | 129 | 132 | 127 | 137 | 133 | 139 | 139 | 143 | 154 | 122 | 118 | 121 | 164 | 145 | 129 | 122 | 124 | 119 | 120 | 127 | — | — | — | ||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Operating Cycle, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 73 + 54 = 127
2 Click competitor name to see calculations.
The analysis of the quarterly financial metrics related to inventory processing, receivable collection, and the overall operating cycle reveals notable trends over the observed periods.
- Average inventory processing period
- The inventory processing period exhibits some fluctuations across the quarters. Initially, the period increases from 52 days to a peak of 82 days by the third quarter of 2017. Following this peak, there is a moderate decline with some volatility, stabilizing around the low 70s in subsequent quarters. This indicates that the company experienced lengthening inventory turnover times up to 2017, but then managed to somewhat reduce and stabilize processing times thereafter.
- Average receivable collection period
- The receivable collection period demonstrates a decreasing trend over the timeline. Starting around 75 days in late 2014, it decreases generally towards the mid-50 days range by early 2020. Despite minor fluctuations and some short-term increases, the overall trend suggests improvement in receivables management and faster collection from customers.
- Operating cycle
- The operating cycle, combining inventory processing and receivables collection, reflects the joint effect of the two metrics. It rose from approximately 127 days at the end of 2014 to a high point of 164 days in the third quarter of 2016, indicating a lengthening cycle. After this peak, the cycle length declined and then remained somewhat steady, fluctuating between 124 and 139 days in the following years, suggesting partial recovery and stabilization in working capital efficiency.
Average Payables Payment Period
Emerson Electric Co., average payables payment period 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||||||
| Payables turnover | 6.79 | 6.41 | 5.63 | 5.90 | 5.99 | 5.65 | 5.12 | 5.92 | 6.00 | 5.77 | 4.99 | 5.24 | 5.97 | 6.13 | 5.44 | 4.25 | 4.99 | 5.72 | 5.62 | 5.72 | 5.87 | 5.80 | 4.87 | — | — | — | ||||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||||||
| Average payables payment period1 | 54 | 57 | 65 | 62 | 61 | 65 | 71 | 62 | 61 | 63 | 73 | 70 | 61 | 60 | 67 | 86 | 73 | 64 | 65 | 64 | 62 | 63 | 75 | — | — | — | ||||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||||||
| Average Payables Payment Period, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 6.79 = 54
2 Click competitor name to see calculations.
- Payables Turnover Ratio Trends
- The payables turnover ratio exhibited variability across the observed periods, beginning with a value of 4.87 and demonstrating a general upward trend over time. After initial fluctuations, the ratio increased from 4.87 to levels mostly above 5.5, reaching a peak near 6.79 in the latest data point. This indicates a tendency towards more frequent payment cycles to suppliers, reflecting potentially improved cash management or changes in payment terms.
- Average Payables Payment Period Trends
- Corresponding to the payables turnover ratio, the average payables payment period, expressed in days, showed an opposite pattern. It started at 75 days and generally declined over the course of the periods, with some intermittent increases. The period notably decreased from 75 days to 54 days by the most recent quarter, indicating that the company reduced the time taken to settle its payables. This trend corresponds with the increase in payables turnover.
- Relationship and Insights
- The inverse relationship between the payables turnover ratio and the average payment period is consistent throughout the observed timeframe. As the payables turnover ratio improves, the payment period shortens, suggesting a strategic shift towards quicker vendor payments. This can be indicative of stronger liquidity positions or a desire to maintain favorable supplier relationships. The fluctuations observed in some quarters may be reflective of operational factors or seasonal payment cycles.
Cash Conversion Cycle
Emerson Electric Co., cash conversion cycle calculation (quarterly data)
No. days
| 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 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||||||
| Average inventory processing period | 73 | 71 | 65 | 71 | 73 | 71 | 67 | 68 | 72 | 73 | 70 | 82 | 59 | 57 | 53 | 75 | 67 | 59 | 51 | 57 | 54 | 54 | 52 | — | — | — | ||||||||
| Average receivable collection period | 54 | 54 | 59 | 58 | 59 | 56 | 70 | 65 | 67 | 66 | 73 | 72 | 63 | 61 | 68 | 89 | 78 | 70 | 71 | 67 | 65 | 66 | 75 | — | — | — | ||||||||
| Average payables payment period | 54 | 57 | 65 | 62 | 61 | 65 | 71 | 62 | 61 | 63 | 73 | 70 | 61 | 60 | 67 | 86 | 73 | 64 | 65 | 64 | 62 | 63 | 75 | — | — | — | ||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||||||
| Cash conversion cycle1 | 73 | 68 | 59 | 67 | 71 | 62 | 66 | 71 | 78 | 76 | 70 | 84 | 61 | 58 | 54 | 78 | 72 | 65 | 57 | 60 | 57 | 57 | 52 | — | — | — | ||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Cash Conversion Cycle, 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), 10-K (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31).
1 Q2 2020 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 73 + 54 – 54 = 73
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibited an overall increasing trend from late 2013 through early 2017. Starting around 52 days in late 2013 and early 2014, it rose steadily to peak at 82 days in September 2017. Following this peak, the period showed fluctuations but generally trended downward through to early 2020, settling around 73 days. The increase through 2017 suggests slower inventory turnover during that time, with some improvement and stabilization thereafter.
- Average Receivable Collection Period
- The receivable collection period demonstrated a declining pattern from late 2013 to mid-2017, decreasing from roughly 75 days to about 61–63 days by mid-2016 and maintaining levels around low 60s through early 2017. After this period, it increased somewhat, peaking near 73 days in late 2017, before declining again to mid-50s by early 2020. This indicates periods of improved receivables turnover interrupted by short-term deteriorations, followed by recovery toward more efficient collections at the end of the period analyzed.
- Average Payables Payment Period
- The payables payment period generally decreased from the initial value of 75 days in late 2013 to a trough around 60 days by the end of 2016 and early 2017. It then experienced fluctuations, with a minor peak near 73 days in late 2017, before gradually decreasing again to the mid-50s by early 2020. The trend suggests efforts to optimize payment timing, balancing longer payment windows for working capital management without excessive delay.
- Cash Conversion Cycle
- The cash conversion cycle reflected the combined effects of inventory, receivables, and payables trends. It increased steadily from 52 days in late 2013 to a high of 84 days in September 2017, indicating a lengthening cash conversion process during this interval. Post-2017, the cycle length fluctuated but remained mostly elevated compared to early periods, eventually declining to about 73 days by March 2020. This pattern points to some challenges in managing working capital efficiently during the middle years, with gradual improvement yet sustained higher cycle times relative to the earliest data points.