Emerson Electric Co. (NYSE:EMR)

The analysis of the financial data over the six-year period reveals several noteworthy trends in operational efficiency, liquidity, leverage, profitability, and returns.

Asset Turnover

The reported total asset turnover remained steady at 1.01 in 2014 and 2015 but experienced a significant decline to 0.67 in 2016. Subsequently, it showed a gradual improvement, reaching 0.90 by 2019, though it did not return to the initial levels. The adjusted total asset turnover mirrors this pattern, indicating a consistent trend in asset utilization efficiency with some recovery after 2016.

Current Ratio

The reported current ratio displayed relative stability between 2014 and 2016, around 1.29 to 1.24. There was a marked increase to 1.64 in 2017, followed by a decline to 1.07 in 2018 and a modest recovery to 1.19 in 2019. The adjusted current ratio follows a similar trend, suggesting fluctuations in short-term liquidity and working capital management during these years.

Debt to Equity and Debt to Capital

Reported debt to equity increased from 0.60 in 2014 to peak values of 0.88 in 2016, before decreasing to 0.53 in 2017 and 2018, then increasing again to 0.69 in 2019. The adjusted figures slightly exceed the reported values but reflect the same movements. Debt to capital ratios showed a similar pattern, rising to approximately 0.47 in 2015 and 2016, then declining to 0.35 in 2017 and 2018, with a slight increase to 0.41 in 2019. This indicates fluctuating leverage levels, with a period of deleveraging followed by moderate re-leveraging toward the end of the period.

Financial Leverage

The reported financial leverage rose from 2.39 in 2014 to 2.87 in 2016, indicating increased use of debt relative to equity. It then declined substantially to 2.25 in 2017 and stabilized near 2.28 and 2.49 in the subsequent years. Adjusted values follow this trajectory but tend to be marginally lower. Overall, financial leverage trends corroborate the changes observed in debt-related ratios, signaling tighter financial management after 2016.

Net Profit Margin

Reported net profit margin improved from 8.75% in 2014 to 12.15% in 2015, with a slight decline to 11.26% in 2016. It then dipped further to 9.94% in 2017, followed by a rebound to 12.66% in 2018 and a slight decrease to 12.55% in 2019. Adjusted net profit margin demonstrates more volatility, with a notable peak at 17.25% in 2017 and fluctuations thereafter. These movements indicate variability in profitability potentially impacted by operational or non-recurring factors.

Return on Equity (ROE)

Reported ROE rose sharply from 21.22% in 2014 to 33.54% in 2015 but subsequently declined and fluctuated between 17.41% and 28.01% during 2016–2019. Adjusted ROE also peaked in the same period, reaching 28.06% in 2017 before declining steadily to 18.19% by 2019. This suggests that while shareholder returns improved initially, they faced pressure in later years, possibly due to changing profitability or capital structure.

Return on Assets (ROA)

Reported ROA followed an upward and downward trend: increasing from 8.88% in 2014 to 12.27% in 2015, dropping to 7.52% in 2016, then rising steadily to 11.25% in 2019. Adjusted ROA shows a similar but more variable path, particularly with a spike to 13.12% in 2017. These patterns indicate fluctuating asset efficiency in generating profits over the periods examined.

In summary, the financial data portrays an initial period of strong operational performance and profitability, followed by a disruption around 2016 with decreases in asset turnover, profitability, and leverage. Subsequent years demonstrate recovery and stabilization, though some metrics do not fully return to early period levels. Variability in net profit margins and returns suggests the influence of both operational dynamics and possibly one-time adjustments affecting reported versus adjusted figures.

The financial data over the six-year period reveals notable trends in net sales, asset utilization, and total asset values. Net sales exhibited a significant decline from 2014 to 2016, dropping from $24,537 million to $14,522 million, which represents a steep contraction in revenue. However, from 2016 onwards, net sales demonstrated a recovery trend, gradually increasing year-over-year to reach $18,372 million by 2019, though remaining below the levels seen in 2014 and 2015.

Total assets showed a generally decreasing trajectory from 2014 to 2017, falling from $24,177 million to $19,589 million. This decline was followed by a mild recovery and stabilization, with total assets increasing slightly to $20,497 million by 2019. Adjusted total assets mirrored this pattern closely, declining initially before stabilizing and showing marginal growth toward the end of the period.

Total asset turnover ratios, which measure the efficiency in using assets to generate sales, declined markedly in 2016 to 0.67 (reported) and 0.66 (adjusted), coinciding with the sharp drop in net sales. The ratios started to improve from 2017 onward, reaching 0.90 (reported) and 0.88 (adjusted) in 2019, indicating a recovery in the efficiency of asset utilization. Despite this improvement, asset turnover in 2019 had not fully returned to the levels seen at the beginning of the period (around 1.00).

Net Sales Trend

Significant decline from 2014 to 2016, followed by a gradual recovery through 2019.

Total Assets

General downward trend until 2017, with stabilization and slight increase by 2019.

Asset Turnover Ratios

Marked dip in 2016, reflecting lower sales efficiency; progressive improvement thereafter but not reaching early period highs.

Relationship Between Metrics

The decline in asset turnover ratios corresponds with the sharp decrease in net sales, while the partial recovery of sales supports improved asset utilization.

Overall, the data depicts a period of initial challenge with declining revenue and asset efficiency, followed by a phase of recovery and stabilization. Although performance improved in later years, the company had not fully regained its earlier sales volume or asset turnover efficiency by the end of the reported period.

The analysis of the financial data over the period from 2014 to 2019 reveals several notable trends in the liquidity position of the company.

Current Assets

There is a clear downward trend in current assets, declining from US$10,867 million in 2014 to US$6,619 million in 2018, a substantial reduction over the five-year span. However, in 2019, current assets experienced a modest increase to US$7,139 million, indicating a possible recovery or stabilization after the previous decline.

Current Liabilities

Current liabilities displayed a fluctuating pattern. Initially decreasing from US$8,454 million in 2014 to US$5,045 million in 2017, then increasing again to US$6,164 million in 2018 before slightly falling to US$5,976 million in 2019. This indicates some volatility in the company's short-term obligations, with a notable dip in 2017.

Reported Current Ratio

The reported current ratio, reflecting liquidity health, remained relatively stable around 1.29 from 2014 to 2015, then showed a slight decline in 2016 to 1.24. It peaked substantially at 1.64 in 2017, which corresponds with the significant drop in current liabilities that year, before dropping steeply to 1.07 in 2018. In 2019, the ratio improved slightly to 1.19 but remained lower than in earlier years.

Adjusted Current Assets and Liabilities

Adjusted figures for current assets and liabilities closely mirror the reported ones, indicating consistency in adjustments made. Adjusted current assets also show a decreasing trend over time with a slight recovery in 2019. Adjusted current liabilities exhibit a pattern similar to reported liabilities, with a decrease until 2017 and rises thereafter.

Adjusted Current Ratio

The adjusted current ratio follows the same general trend as the reported ratio, moving from 1.29 in 2014–2015 down to 1.22 in 2016, peaking at 1.69 in 2017, then dropping sharply to 1.11 in 2018 and improving to 1.24 in 2019. This reinforces the observation of a peak in liquidity in 2017 followed by a decline and partial recovery later.

Overall, the data indicates a period of declining liquidity from 2014 through 2018, with a notable peak in 2017 due to reduced liabilities and stabilized assets. The partial recovery in 2019 in both assets and liquidity ratios suggests efforts to improve current financial stability following previous declines. The fluctuation in current liabilities highlights variability in short-term financial obligations, contributing to the changes observed in liquidity measures.

Total Debt

The total debt decreased from 6,024 million USD in 2014 to a low of 4,656 million USD in 2017, indicating a significant reduction in leverage during this period. Following 2017, total debt modestly increased, reaching 5,721 million USD by 2019, suggesting a partial reversal of the earlier debt reduction trend.

Common Stockholders’ Equity

Equity showed a declining trend from 10,119 million USD in 2014 to 7,568 million USD in 2016, reflecting a potential erosion of shareholder value or capital changes during those years. After 2016, equity increased to a peak of 8,947 million USD in 2018 but then declined again to 8,233 million USD in 2019, pointing to some variability but overall a lower equity base compared to the start of the period.

Reported Debt to Equity Ratio

The ratio climbed from 0.6 in 2014 to its highest point of 0.88 in 2016, consistent with the simultaneous increase in debt and decline in equity. This ratio then dropped sharply to 0.53 in 2017 and 2018, reflecting improved leverage due to reduced debt and increased equity. However, the ratio rose again to 0.69 in 2019, indicating some reversal of the deleveraging gains.

Adjusted Total Debt

The adjusted total debt values follow a similar pattern to total debt but are consistently higher, starting at 6,834 million USD in 2014, decreasing to 5,137 million USD in 2017, and then increasing to 6,191 million USD by 2019. This adjustment suggests additional debt-related obligations or considerations that slightly elevate debt levels beyond reported figures.

Adjusted Total Equity

Adjusted equity also mirrors the reported common stockholders’ equity trend but remains higher throughout the period. Beginning at 10,647 million USD in 2014, it declines to 7,644 million USD in 2016 before peaking at 9,689 million USD in 2018 and subsequently declining to 8,824 million USD in 2019. This indicates adjustments such as reserves or unrealized gains that enhance equity values relative to common stockholders’ equity.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio reflects the combined impact of adjusted debt and equity, moving from 0.64 in 2014 to a peak of 0.94 in 2016, then decreasing sharply to 0.55 in 2017 and 2018, before rising again to 0.7 in 2019. This ratio highlights similar leverage trends as the reported ratio but at slightly higher levels due to adjustments, emphasizing the cyclical nature of the company's leverage management over the six-year period.

The financial data reveals significant fluctuations in the company's debt levels and capital structure over the six-year period ending in 2019. Observations focus on both nominal amounts and ratio analyses, including reported and adjusted figures.

Total Debt and Adjusted Total Debt

Total debt increased from US$6,024 million in 2014 to a peak of US$6,842 million in 2015, then generally declined to a low of US$4,656 million by 2017 before rising again to US$5,721 million in 2019. Adjusted total debt follows a similar trend, peaking in 2015 at US$7,624 million and decreasing sharply to US$5,137 million in 2017, then increasing in the following years to US$6,191 million in 2019. This pattern suggests cyclical debt management strategies or possible refinancing activities.

Total Capital and Adjusted Total Capital

Total capital shows a consistent downward trend from US$16,143 million in 2014 to US$13,374 million in 2017. Subsequent years show a partial recovery, reaching US$13,954 million in 2019. Adjusted total capital exhibits a similar pattern, declining from US$17,481 million in 2014 to US$14,840 million in 2016, then stabilizing and slightly increasing to US$15,015 million by 2019. This indicates a reduction in overall capital base during the middle years followed by stabilization in later periods.

Debt to Capital Ratios (Reported and Adjusted)

Reported debt to capital ratio increased from 0.37 in 2014 to 0.47 in 2016, reflecting a growing reliance on debt relative to capital. This ratio then decreased sharply to 0.35 in 2017 and 2018, indicating a reduction in leverage, before rising again to 0.41 in 2019. Adjusted debt to capital ratios mimic this pattern closely, starting at 0.39 in 2014, peaking at 0.48 in 2016, dropping to 0.35 in 2017, and slightly increasing to 0.41 in 2019. These ratios demonstrate a period of heightened leverage followed by deleveraging, potentially due to strategic shifts or changes in financing conditions.

Overall, the company's financial structure experienced volatility, with debt levels and leverage ratios peaking around 2015-2016 and then moderating in subsequent years. The reduction in capital base during the middle years and partial recovery thereafter may suggest adjustments to the company's financing and investment policies. The alignment between reported and adjusted figures indicates consistent accounting approaches in evaluating debt and capital.

Total Assets

The total assets exhibit a downward trend from 2014 to 2017, declining from $24,177 million to $19,589 million. This is followed by a slight recovery in 2018 and 2019, where total assets increased modestly to $20,390 million and $20,497 million, respectively. Overall, there is a net decrease in total assets over the six-year period.

Common Stockholders’ Equity

Common stockholders’ equity decreased significantly between 2014 and 2016, falling from $10,119 million to $7,568 million. A notable recovery occurred in 2017 and 2018 when equity rose to $8,718 million and $8,947 million, respectively. However, this positive trend reversed slightly in 2019, dropping to $8,233 million. The trend indicates volatility with an overall reduction compared to the beginning of the period.

Reported Financial Leverage

The reported financial leverage ratio increased from 2.39 in 2014 to a peak of 2.87 in 2016, indicating greater reliance on debt relative to equity during this period. Subsequently, the ratio decreased sharply to 2.25 in 2017, then remained relatively stable, rising marginally to 2.49 in 2019.

Adjusted Total Assets

Adjusted total assets follow a similar pattern to reported total assets, decreasing from $24,685 million in 2014 to $20,075 million in 2017. Afterwards, a slight climb to $21,021 million in 2018 is observed before a minor drop to $20,982 million in 2019. The adjusted figures confirm the downward trend and partial recovery seen in the unadjusted data.

Adjusted Total Equity

Adjusted total equity declined more sharply than its unadjusted counterpart, starting at $10,647 million in 2014 and decreasing to $7,644 million in 2016. This was followed by a pronounced increase to $9,385 million in 2017 and peaked at $9,689 million in 2018. The most recent figure for 2019 shows a reduction to $8,824 million. The adjusted figures highlight a notable recovery phase in equity between 2017 and 2018.

Adjusted Financial Leverage

The adjusted financial leverage ratio mirrors the reported leverage trend with an increase from 2.32 in 2014 to 2.88 in 2016, indicating increased financial leverage during those years. Thereafter, a significant reduction to 2.14 in 2017 occurs, followed by a stable range near 2.17 to 2.38 through 2019. This suggests a strategic deleveraging after 2016, with leverage remaining moderate thereafter.

The financial data over the examined periods reveals several notable trends and variations in key profitability and revenue metrics.

Net Earnings for Common Stockholders

The net earnings exhibit fluctuations, with an initial increase from 2,147 million USD in 2014 to a peak of 2,710 million USD in 2015. This is followed by a decline reaching 1,518 million USD in 2017, before recovering to 2,306 million USD by 2019. The variation indicates periods of both contraction and recovery in the company's profitability.

Net Sales

Net sales demonstrate a generally declining trend until 2016, dropping from 24,537 million USD in 2014 to 14,522 million USD in 2016. This is succeeded by a gradual increase each year, reaching 18,372 million USD in 2019. Although sales have not returned to early period levels, the upward trend in the latter years suggests a positive sales recovery trajectory.

Reported Net Profit Margin

The reported net profit margin shows variability, increasing from 8.75% in 2014 to 12.15% in 2015, then slightly declining to 9.94% by 2017. Following that, it climbed again to around 12.5% in 2018 and 2019. This pattern implies fluctuating profit efficiency relative to sales, with overall improvement post-2016.

Adjusted Net Earnings

Adjusted net earnings display notable volatility. After a mild increase from 1,669 million USD in 2014 to 1,701 million USD in 2015, a decline occurred in 2016 (1,220 million USD). There is a significant surge in 2017 to 2,633 million USD, followed by decreases in subsequent years, finishing at 1,605 million USD in 2019. This suggests that adjustments impacting net earnings vary considerably year-over-year, with a peak in adjusted earnings during 2017.

Adjusted Net Profit Margin

The adjusted net profit margin trends mirror those of adjusted earnings, starting at 6.8% in 2014 and rising steadily to 17.25% in 2017. After this peak, the margin decreases to 11.44% and further to 8.74% by 2019. This substantial margin swing indicates temporal changes in operational efficiencies, non-recurring items, or accounting adjustments that significantly affect profitability measures.

In summary, the financial indicators demonstrate periods of instability and recovery, with marked declines in sales and net earnings during the mid-term followed by partial rebounds. Profit margins, both reported and adjusted, show significant fluctuations, highlighting variability in the company's profitability and potential impacts of extraordinary items or accounting adjustments. The data suggests attention should be given to understanding the drivers behind the adjusted earnings volatility and the factors contributing to the recovery in sales and reported profitability post-2016.

The financial data over the six-year period exhibits several noteworthy trends across profitability, equity measures, and returns on equity.

Net Earnings Common Stockholders

Net earnings fluctuated during the period. There was an increase from 2,147 million USD in 2014 to a peak of 2,710 million USD in 2015, followed by a decline to 1,518 million USD in 2017. After that, earnings rebounded to 2,306 million USD by 2019. This indicates some volatility in the company's net income generation capacity over the years.

Common Stockholders’ Equity

Common equity decreased significantly from 10,119 million USD in 2014 to 7,568 million USD in 2016, a reduction of approximately 25%. Subsequently, it showed a partial recovery, rising to 8,947 million USD in 2018 before dipping again in 2019 to 8,233 million USD. This pattern suggests that shareholder equity experienced erosion in the early years followed by a modest recovery but remained below the initial level by the end of the period.

Reported Return on Equity (ROE)

The reported ROE demonstrated considerable volatility, starting at 21.22% in 2014 and peaking sharply at 33.54% in 2015. It then declined steadily to 17.41% in 2017, before climbing again to 28.01% in 2019. These fluctuations reflect the combined effects of changing earnings and equity base, indicating variations in profitability efficiency relative to shareholders' equity across the years.

Adjusted Net Earnings

Adjusted earnings showed a different trend compared to reported net earnings. After a marginal increase from 1,669 million USD in 2014 to 1,701 million USD in 2015, they declined to 1,220 million USD in 2016. However, adjusted earnings surged significantly to 2,633 million USD in 2017, followed by a decline to 1,605 million USD in 2019. The large spike in 2017 could indicate the impact of adjustments related to one-time items or non-recurring charges.

Adjusted Total Equity

Adjusted total equity mirrored the pattern of common stockholders’ equity, falling from 10,647 million USD in 2014 to 7,644 million USD in 2016. Afterwards, it increased to 9,689 million USD in 2018 and fell again to 8,824 million USD in 2019. Adjusted equity amounts indicate a similar erosion and partial recovery trend, which might include reclassifications or adjustments impacting the equity base.

Adjusted Return on Equity (ROE)

Adjusted ROE exhibited less extreme swings than the reported ROE. It rose from 15.68% in 2014 to 20.01% in 2015, dipped to 15.96% in 2016, markedly increased to 28.06% in 2017, and then decreased to 18.19% in 2019. The fluctuations imply that the company’s profitability on an adjusted basis was subject to notable variations, with 2017 standing out as an exceptionally profitable year after adjustments.

In summary, earnings and equity levels experienced significant volatility during the period analyzed. The company’s profitability, as reflected by both reported and adjusted ROE, showed strong peaks in 2015 and 2017, with declines in intervening years. The adjusted results highlight the presence of substantial one-time or non-recurring events, particularly around 2017, which significantly influenced reported profitability and equity measurements. Equity values declined notably until 2016, followed by partial recoveries that did not fully restore the initial equity levels by 2019.

Net Earnings Common Stockholders

The net earnings for common stockholders displayed fluctuations over the analyzed periods. Beginning at a high point of 2,147 million USD in 2014, earnings increased notably to 2,710 million USD in 2015. However, subsequent years saw a decline, dropping to 1,635 million USD in 2016 and further to 1,518 million USD in 2017. The trend reversed in 2018 with a significant rise to 2,203 million USD, followed by a modest increase to 2,306 million USD in 2019.

Total Assets

Total assets demonstrated a general downward trend from 24,177 million USD in 2014 to 19,589 million USD in 2017. After this decline, the asset base experienced a slight recovery, rising to 20,390 million USD in 2018 and maintaining a similar level at 20,497 million USD in 2019.

Reported Return on Assets (ROA)

The reported ROA percentage followed a pattern in line with net earnings, initially increasing from 8.88% in 2014 to a peak of 12.27% in 2015. A decline ensued during 2016 and 2017, where ROA dropped to 7.52% and 7.75%, respectively. Thereafter, improvement was observed with ROA climbing to 10.8% in 2018 and slightly further to 11.25% in 2019.

Adjusted Net Earnings

Adjusted net earnings started at 1,669 million USD in 2014 and remained relatively stable, increasing marginally to 1,701 million USD in 2015. A decrease occurred in 2016 to 1,220 million USD. In contrast to net earnings, a noteworthy spike is evident in 2017, where adjusted net earnings surged to 2,633 million USD. Subsequently, a decline followed, dropping to 1,991 million USD in 2018 and further down to 1,605 million USD in 2019.

Adjusted Total Assets

Adjusted total assets mirrored the trends of total assets, with an initial decrease from 24,685 million USD in 2014 to 20,075 million USD in 2017. A recovery phase ensued with assets increasing to 21,021 million USD in 2018, before a slight decrease to 20,982 million USD was observed in 2019.

Adjusted Return on Assets (ROA)

The adjusted ROA showed a generally declining pattern from 6.76% in 2014 to 5.55% in 2016. A marked increase occurred in 2017, with adjusted ROA reaching 13.12%. This was followed by a decline to 9.47% in 2018 and a further drop to 7.65% in 2019.