Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Emerson Electric Co., liquidity 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 analyzed liquidity ratios reveal varied trends over the examined periods, indicating fluctuations in the company’s short-term financial health and liquidity management.
- Current Ratio
- The current ratio demonstrates moderate volatility with values generally fluctuating around 1.1 to 1.3 in most periods, suggesting a relatively stable ability to cover short-term liabilities with current assets. Notably, a significant spike occurred at the end of 2016 and early 2017, reaching up to 2.5, indicating a temporary increase in current assets relative to liabilities. However, this increase was followed by a decline in subsequent quarters, trending downward to approximately 1.01 by the first quarter of 2020. This decline may reflect a tightening liquidity position or a reduction in current assets relative to liabilities during this period.
- Quick Ratio
- The quick ratio closely mirrors the movement seen in the current ratio, with most values ranging between 0.7 and 1.0, suggesting moderate liquidity without reliance on inventory. The ratio peaked sharply to nearly 2.0 in early 2017, showing an abrupt increase in liquid assets excluding inventory. Following this peak, there was a general downward trend, reaching a low point near 0.53 in the first quarter of 2019. The subsequent slight recovery towards 0.66 by early 2020 indicates some improvement but still suggests constrained quick liquidity compared to earlier highs.
- Cash Ratio
- The cash ratio displays the most pronounced variability, with initial values around 0.35 to 0.42 pointing to a conservative cash position relative to current liabilities. During late 2016 and early 2017, the cash ratio experienced a sharp increase, peaking at 1.34, implying a substantial accumulation of cash and cash equivalents during this timeframe. However, this was followed by a significant decrease to values as low as 0.17 by early 2019, before a slight increase again towards 0.33 in the first quarter of 2020. This pattern suggests episodic changes in cash holdings, possibly due to operational cash flows, investment activities, or strategic cash management decisions.
Overall, the liquidity indicators reflect periods of enhanced liquidity, particularly around late 2016 to early 2017, followed by a general decline towards early 2020. These trends may indicate shifts in the financial strategy, asset management, or operational conditions impacting the firm’s capacity to meet short-term obligations with readily available resources.
Current Ratio
Emerson Electric Co., current ratio 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 | ||||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||||||
| Current ratio1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Current Ratio, 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
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's liquidity position over the examined periods.
- Current Assets
- The current assets exhibit fluctuations with a general declining trend in the later periods. Initially, starting around $9,999 million at the end of 2013, the value peaks in mid-2014 around $10,867 million and again in early 2016 near $10,220 million. After 2016, a downward trajectory is present, dropping to a low near $6,619 million in early 2018. Although some recovery is observed towards the end of the dataset, ending at approximately $8,032 million in March 2020, the overall pattern suggests increased volatility and a weakening in current asset levels in recent years.
- Current Liabilities
- Current liabilities show considerable variability, with no consistent directional trend. There is an initial rise from about $7,108 million in December 2013 to a peak over $8,800 million in late 2014, followed by a decline to approximately $3,771 million in March 2017. This significant decrease midway through the timeline likely impacts liquidity ratios. Subsequently, liabilities generally increase, reaching approximately $7,940 million by March 2020. These fluctuations contribute to varying liquidity conditions across the periods analyzed.
- Current Ratio
- The current ratio, indicative of short-term financial health, reflects the interplay between current assets and current liabilities. Starting at 1.41 at the end of 2013, the ratio declines gradually to approximately 1.18 by the end of 2014, suggesting a tightening liquidity position. A marked increase occurs in the first quarter of 2017, peaking at 2.5, driven by a sharp drop in current liabilities combined with relatively stable assets. However, this elevated liquidity is not sustained; following this peak, the ratio declines steadily, reaching a low of 0.88 by the first quarter of 2019, which signals potential liquidity stress. The ratio recovers slightly thereafter, stabilizing near 1.0–1.2 towards early 2020, but remains below the earlier high levels, indicating moderate liquidity.
In summary, the financial data illustrates fluctuating liquidity with periods of both strength and potential strain. The notable peak in the current ratio around early 2017 may represent a temporary condition rather than a sustained improvement. The general decline in current assets combined with variable current liabilities in the later intervals warrants attention to the company's short-term financial flexibility during this timeframe.
Quick Ratio
Emerson Electric Co., quick ratio 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) | ||||||||||||||||||||||||||||||||||
| Cash and equivalents | ||||||||||||||||||||||||||||||||||
| Receivables, less allowances | ||||||||||||||||||||||||||||||||||
| Total quick assets | ||||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||||||
| Quick ratio1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Quick Ratio, 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
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the liquidity position over the examined periods.
- Total Quick Assets
- Total quick assets fluctuated throughout the periods, generally remaining within a range between approximately 4,000 million and over 7,800 million US dollars. Initially, from December 2013 to September 2014, there was an upward movement, peaking at 8,168 million US dollars, followed by a decline towards the end of 2014 and early 2015. The asset values exhibited volatility thereafter, with a significant drop observed in the quarters surrounding 2016, reaching lows around 5,883 million US dollars. A partial recovery was noted in the following years, but the figures declined again sharply toward the end of 2018 and into 2019, hitting the lowest points in the dataset at around 3,981 million and 4,295 million. A minor recovery occurred in early 2020, ending at 5,224 million US dollars.
- Current Liabilities
- Current liabilities displayed a general upward trend until late 2016, reaching a peak of 8,326 million US dollars. A sudden and drastic reduction is evident in the quarters of 2016 and 2017, where liabilities decreased to as low as 3,771 million US dollars in March 2017, representing a significant inflection point. However, after this point, current liabilities began to rise steadily again, surpassing 7,900 million US dollars by the first quarter of 2020. This increase suggests growing short-term obligations during the latter part of the period analyzed.
- Quick Ratio
- The quick ratio, reflecting short-term liquidity, shows considerable fluctuations, mirroring movements in quick assets in relation to current liabilities. Early on, the ratio was close to or slightly below 1, indicating a near equilibrium between liquid assets and immediate liabilities. The period around late 2016 to early 2017 witnessed an extraordinary spike, with the quick ratio reaching a peak of 1.99 in March 2017, well above the one-to-one benchmark, signaling strong liquidity during that period. This peak is consistent with the simultaneous significant drop in current liabilities and relatively stable quick assets. Following this spike, the quick ratio steadily declined, falling below 1 again in late 2017 and continuing on a downward trajectory through 2018 and 2019, reaching lows near 0.53. The ratio showed a slight improvement towards early 2020 but remained below the ideal liquidity threshold of 1.
Overall, the data indicate episodes of improved liquidity, particularly in early 2017, but a general trend of declining short-term liquidity in recent periods, mainly due to increasing current liabilities combined with decreasing or stagnant quick assets. This pattern suggests challenges in maintaining ample liquid resources to cover short-term obligations towards the end of the timeframe analyzed.
Cash Ratio
Emerson Electric Co., cash ratio 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) | ||||||||||||||||||||||||||||||||||
| Cash and equivalents | ||||||||||||||||||||||||||||||||||
| Total cash assets | ||||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||||||
| Cash ratio1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Cash Ratio, 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 ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends regarding the liquidity position and short-term obligations over the examined periods.
- Total Cash Assets
- The total cash assets exhibited a generally fluctuating pattern throughout the quarters. From the initial value of approximately 2,737 million USD at the end of 2013, cash assets gradually increased, reaching a peak near 5,039 million USD in early 2017. However, subsequent quarters showed a decline, with a notable drop to about 1,093 million USD in the first quarter of 2018. Thereafter, cash assets moderately recovered, ending around 2,583 million USD by the first quarter of 2020. This variability suggests periods of both accumulation and usage of cash resources influenced by operational or strategic cash flow considerations.
- Current Liabilities
- Current liabilities remained relatively high and also showed considerable variation during the timeline. Starting at approximately 7,108 million USD in late 2013, liabilities generally increased with some fluctuations, peaking at roughly 8,833 million USD by the end of 2014. A significant and abrupt reduction occurred in early 2016, dropping liabilities sharply to around 4,146 million USD, which is an unusual change that could indicate reclassification or debt repayment. Following this drop, liabilities again trended upwards but fluctuated within the 5,000 to 8,000 million USD range, ultimately reaching approximately 7,940 million USD in the first quarter of 2020. These movements denote shifts in short-term obligations likely related to financing activities or operational cycle management.
- Cash Ratio
- The cash ratio, representing the relationship between cash assets and current liabilities, mirrored the movements in both cash and liabilities but displayed exceptional spikes in early 2016. Initially oscillating between 0.35 and 0.42, the ratio suddenly surged to 1.00 and then to 1.34 in the first two quarters of 2016 before declining to values around 0.5 or below in subsequent periods. This sharp increase primarily reflects the simultaneous increase in cash assets combined with a sharp fall in current liabilities during the same timeframe. Thereafter, the cash ratio generally declined, dropping as low as 0.17 in early 2019, indicating a lower liquidity cushion relative to short-term liabilities. The ratio modestly recovered to approximately 0.33 by early 2020 but remained below one, suggesting limited immediate liquidity coverage.
In summary, the financial data indicates that the company experienced substantial fluctuations in liquidity and short-term debt levels over the analyzed periods. The exceptional changes around early 2016 are particularly significant and likely reflect extraordinary financial events. Overall, the cash coverage ratio remained below one for most of the timeline, denoting a reliance on other current assets or financing sources beyond cash to meet current liabilities.