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Long-Term Debt & Capital Lease Obligation is the debt and capital lease obligation due more than 12 months in the future. Emerson Electric Co's Long-Term Debt & Capital Lease Obligation for the quarter that ended in Dec. 2023 was $8,097 Mil.
Warning Sign:
Emerson Electric Co has been issuing new debt. Over the past 3 years, it issued USD 2.2 billion of debt. But overall, its debt level is acceptable.
LT-Debt-to-Total-Asset is a measurement representing the percentage of a corporation's assets that are financed with loans and financial obligations lasting more than one year. The ratio provides a general measure of the financial position of a company, including its ability to meet financial requirements for outstanding loans. It is calculated as a company's Long-Term Debt & Capital Lease Obligation divides by its Total Assets. Emerson Electric Co's Long-Term Debt & Capital Lease Obligation for the quarter that ended in Dec. 2023 was $8,097 Mil. Emerson Electric Co's Total Assets for the quarter that ended in Dec. 2023 was $46,513 Mil. Emerson Electric Co's LT-Debt-to-Total-Asset for the quarter that ended in Dec. 2023 was 0.17.
Emerson Electric Co's LT-Debt-to-Total-Asset declined from Dec. 2022 (0.23) to Dec. 2023 (0.17). It may suggest that Emerson Electric Co is progressively becoming less dependent on debt to grow their business.
The historical data trend for Emerson Electric Co's Long-Term Debt & Capital Lease Obligation can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Long-Term Debt is the debt due more than 12 months in the future. The debt can be owed to banks or bondholders. Some companies issue bonds to investors and pay interest on the bonds.
Long-Term Capital Lease Obligation represents the total liability for long-term leases lasting over one year. It's amount equal to the present value (the principal) at the beginning of the lease term less lease payments during the lease term.
The interest paid on companies' debt is reflected in the income statement as interest expense. If a company has too much debt and it cannot serve the interest payment on the debt or repay the matured debt, the company risks bankruptcy. Peter Lynch famously said: A company that does not have debt cannot go bankrupt.
A company's long term debt may have different dates of maturity and interest rates, depending on the terms.
Usually a company issues long term debt to pay for its capital expenditures. Borrowing allows the company to do things that otherwise cannot be done with only the capital it has. But debt can be risky.
Emerson Electric Co (NYSE:EMR) Long-Term Debt & Capital Lease Obligation Explanation
LT-Debt-to-Total-Asset is a measurement representing the percentage of a corporation's assets that are financed with loans and financial obligations lasting more than one year. The ratio provides a general measure of the financial position of a company, including its ability to meet financial requirements for outstanding loans. A year-over-year decrease in this metric would suggest the company is progressively becoming less dependent on debt to grow their business.
Emerson Electric Co's LT-Debt-to-Total-Asset ratio for the quarter that ended in Dec. 2023 is calculated as:
LT-Debt-to-Total-Asset (Q: Dec. 2023 ) | = | Long-Term Debt & Capital Lease Obligation (Q: Dec. 2023 ) | / | Total Assets (Q: Dec. 2023 ) |
= | 8097 | / | 46513 | |
= | 0.17 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Buffett says that durable competitive advantages carry little to no long-term debt because the company is so profitable that even expansions or acquisitions are self financed.
We are interested in long term debt load for the last ten years. If the ten years of operation show little to no long term debt, then the company has some kind of strong competitive advantage.
Warren Buffett's historic purchases indicate that on any given year, the company should have sufficient yearly net earnings to pay all long term within 3 or 4 year earnings period. (e.g. Coke + Moody's = 1yr)
Companies with enough earning power to pay long term debt in less than 3 or 4 years is a good candidate in our search for long term competitive advantage.
BUT, these companies are targets for leveraged buy outs, which saddles the business with long term debt.
If all else indicates the company has a moat, but it has ton of debt, a leveraged buyout may have created the debt. In these cases the company's bonds offer the better bet, in that the companys earnings power is focused on paying off the debt and not growth.
Important: little or no long term debt often means a Good Long Term Bet
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Ram R. Krishnan | officer: Executive Vice Pres & COO | C/O EMERSON ELECTRIC CO., 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Surendralal Lanca Karsanbhai | officer: Exec Pres Auto Sols | C/O EMERSON ELECTRIC CO., 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Mckelvey James Morgan Jr. | director | 2645 SOUTH BAYSHORE #802, MIAMI FL 33133 |
Joshua B. Bolten | director | ROCK CREEK GLOBAL ADVISORS, 1401 I STREET NW, SUITE 1120, WASHINGTON DC 20005 |
Arthur F Golden | director | 450 LEXINGTON AVE, NEW YORK NY 10017 |
Easter William H Iii | director | 370 17TH ST, STE 2500, DENVER CO 80202 |
Vidya Ramnath | officer: Senior VP & CMO | C/O EMERSON ELECTRIC CO., 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Nicholas J. Piazza | officer: Senior VP & CPO | C/O EMERSON ELECTRIC CO., 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Lisa Flavin | officer: Sr. VP & CCO | 8300 MARYLAND AVENUE, ST. LOUIS MO 63105 |
Leticia Goncalves Lourenco | director | C/O EMERSON ELECTRIC CO., 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Peter Zornio | officer: Chief Technology Officer | C/O EMERSON ELECTRIC CO., 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Sara Yang Bosco | officer: Sr. VP, Secy & Gen. Counsel | 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Frank J Dellaquila | officer: Sr. V. P. and Controller | C/O RELIANCE STEEL & ALUMINUM CO., 16100 N. 71ST STREET, SUITE 400, SCOTTSDALE AZ 85254 |
Mark J Bulanda | officer: VP-Acquisitions & Development | 8000 W. FLORISSANT AVENUE, ST. LOUIS MO 63136 |
Elizabeth Adefioye | officer: Chief People Officer | 5 WESTBROOK CORPORATE CENTER, WESTCHESTER IL 60154 |
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