Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Estée Lauder Cos. Inc., balance sheet: goodwill and intangible assets

US$ in millions

	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
Goodwill	2,486)	2,521)	2,616)	1,401)	1,868)	1,926)
Customer lists, license agreements and other	2,030)	2,064)	2,316)	1,633)	727)	740)
Amortizable intangible assets, gross carrying value	2,030)	2,064)	2,316)	1,633)	727)	740)
Accumulated amortization	(766)	(628)	(587)	(518)	(412)	(375)
Amortizable intangible assets, net book value	1,264)	1,436)	1,729)	1,115)	315)	365)
Trademarks	4,338)	1,992)	2,366)	1,223)	888)	911)
Non-amortizable intangible assets	4,338)	1,992)	2,366)	1,223)	888)	911)
Intangible assets	5,602)	3,428)	4,095)	2,338)	1,203)	1,276)
Goodwill and other intangible assets	8,088)	5,949)	6,711)	3,739)	3,071)	3,202)

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Estée Lauder Cos. Inc. goodwill decreased from 2021 to 2022 and from 2022 to 2023.
Intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Estée Lauder Cos. Inc. intangible assets decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Goodwill and other intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Estée Lauder Cos. Inc. goodwill and other intangible assets decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Estée Lauder Cos. Inc., adjustments to financial statements

US$ in millions

	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
Adjustment to Total Assets
Total assets (as reported)	23,415)	20,910)	21,971)	17,781)	13,156)	12,567)
Less: Goodwill	2,486)	2,521)	2,616)	1,401)	1,868)	1,926)
Total assets (adjusted)	20,929)	18,389)	19,355)	16,380)	11,288)	10,641)
Adjustment to Stockholders’ Equity, The Estée Lauder Companies Inc.
Stockholders’ equity, The Estée Lauder Companies Inc. (as reported)	5,585)	5,590)	6,057)	3,935)	4,386)	4,688)
Less: Goodwill	2,486)	2,521)	2,616)	1,401)	1,868)	1,926)
Stockholders’ equity, The Estée Lauder Companies Inc. (adjusted)	3,099)	3,069)	3,441)	2,534)	2,518)	2,762)
Adjustment to Net Earnings Attributable To The Estée Lauder Companies Inc.
Net earnings attributable to The Estée Lauder Companies Inc. (as reported)	1,006)	2,390)	2,870)	684)	1,785)	1,108)
Add: Goodwill impairment charges	—)	—)	71)	812)	68)	—)
Net earnings attributable to The Estée Lauder Companies Inc. (adjusted)	1,006)	2,390)	2,941)	1,496)	1,853)	1,108)

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

Estée Lauder Cos. Inc., Financial Data: Reported vs. Adjusted

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Estée Lauder Cos. Inc., adjusted financial ratios

	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
Net Profit Margin
Reported net profit margin	6.32%	13.47%	17.70%	4.79%	12.01%	8.10%
Adjusted net profit margin	6.32%	13.47%	18.14%	10.47%	12.47%	8.10%
Total Asset Turnover
Reported total asset turnover	0.68	0.85	0.74	0.80	1.13	1.09
Adjusted total asset turnover	0.76	0.96	0.84	0.87	1.32	1.29
Financial Leverage
Reported financial leverage	4.19	3.74	3.63	4.52	3.00	2.68
Adjusted financial leverage	6.75	5.99	5.62	6.46	4.48	3.85
Return on Equity (ROE)
Reported ROE	18.01%	42.75%	47.38%	17.38%	40.70%	23.63%
Adjusted ROE	32.46%	77.88%	85.47%	59.04%	73.59%	40.12%
Return on Assets (ROA)
Reported ROA	4.30%	11.43%	13.06%	3.85%	13.57%	8.82%
Adjusted ROA	4.81%	13.00%	15.20%	9.13%	16.42%	10.41%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Estée Lauder Cos. Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Estée Lauder Cos. Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Estée Lauder Cos. Inc. adjusted financial leverage ratio increased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Estée Lauder Cos. Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Estée Lauder Cos. Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Estée Lauder Cos. Inc., Financial Ratios: Reported vs. Adjusted

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	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to The Estée Lauder Companies Inc.	1,006)	2,390)	2,870)	684)	1,785)	1,108)
Net sales	15,910)	17,737)	16,215)	14,294)	14,863)	13,683)
Profitability Ratio
Net profit margin¹	6.32%	13.47%	17.70%	4.79%	12.01%	8.10%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to The Estée Lauder Companies Inc.	1,006)	2,390)	2,941)	1,496)	1,853)	1,108)
Net sales	15,910)	17,737)	16,215)	14,294)	14,863)	13,683)
Profitability Ratio
Adjusted net profit margin²	6.32%	13.47%	18.14%	10.47%	12.47%	8.10%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

¹ Net profit margin = 100 × Net earnings attributable to The Estée Lauder Companies Inc. ÷ Net sales
= 100 × 1,006 ÷ 15,910 = 6.32%

² Adjusted net profit margin = 100 × Adjusted net earnings attributable to The Estée Lauder Companies Inc. ÷ Net sales
= 100 × 1,006 ÷ 15,910 = 6.32%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Estée Lauder Cos. Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Net sales	15,910)	17,737)	16,215)	14,294)	14,863)	13,683)
Total assets	23,415)	20,910)	21,971)	17,781)	13,156)	12,567)
Activity Ratio
Total asset turnover¹	0.68	0.85	0.74	0.80	1.13	1.09
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales	15,910)	17,737)	16,215)	14,294)	14,863)	13,683)
Adjusted total assets	20,929)	18,389)	19,355)	16,380)	11,288)	10,641)
Activity Ratio
Adjusted total asset turnover²	0.76	0.96	0.84	0.87	1.32	1.29

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 15,910 ÷ 23,415 = 0.68

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 15,910 ÷ 20,929 = 0.76

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Estée Lauder Cos. Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets	23,415)	20,910)	21,971)	17,781)	13,156)	12,567)
Stockholders’ equity, The Estée Lauder Companies Inc.	5,585)	5,590)	6,057)	3,935)	4,386)	4,688)
Solvency Ratio
Financial leverage¹	4.19	3.74	3.63	4.52	3.00	2.68
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	20,929)	18,389)	19,355)	16,380)	11,288)	10,641)
Adjusted stockholders’ equity, The Estée Lauder Companies Inc.	3,099)	3,069)	3,441)	2,534)	2,518)	2,762)
Solvency Ratio
Adjusted financial leverage²	6.75	5.99	5.62	6.46	4.48	3.85

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 23,415 ÷ 5,585 = 4.19

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity, The Estée Lauder Companies Inc.
= 20,929 ÷ 3,099 = 6.75

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Estée Lauder Cos. Inc. adjusted financial leverage ratio increased from 2021 to 2022 and from 2022 to 2023.

	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to The Estée Lauder Companies Inc.	1,006)	2,390)	2,870)	684)	1,785)	1,108)
Stockholders’ equity, The Estée Lauder Companies Inc.	5,585)	5,590)	6,057)	3,935)	4,386)	4,688)
Profitability Ratio
ROE¹	18.01%	42.75%	47.38%	17.38%	40.70%	23.63%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to The Estée Lauder Companies Inc.	1,006)	2,390)	2,941)	1,496)	1,853)	1,108)
Adjusted stockholders’ equity, The Estée Lauder Companies Inc.	3,099)	3,069)	3,441)	2,534)	2,518)	2,762)
Profitability Ratio
Adjusted ROE²	32.46%	77.88%	85.47%	59.04%	73.59%	40.12%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

¹ ROE = 100 × Net earnings attributable to The Estée Lauder Companies Inc. ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 100 × 1,006 ÷ 5,585 = 18.01%

² Adjusted ROE = 100 × Adjusted net earnings attributable to The Estée Lauder Companies Inc. ÷ Adjusted stockholders’ equity, The Estée Lauder Companies Inc.
= 100 × 1,006 ÷ 3,099 = 32.46%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Estée Lauder Cos. Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.

	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to The Estée Lauder Companies Inc.	1,006)	2,390)	2,870)	684)	1,785)	1,108)
Total assets	23,415)	20,910)	21,971)	17,781)	13,156)	12,567)
Profitability Ratio
ROA¹	4.30%	11.43%	13.06%	3.85%	13.57%	8.82%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to The Estée Lauder Companies Inc.	1,006)	2,390)	2,941)	1,496)	1,853)	1,108)
Adjusted total assets	20,929)	18,389)	19,355)	16,380)	11,288)	10,641)
Profitability Ratio
Adjusted ROA²	4.81%	13.00%	15.20%	9.13%	16.42%	10.41%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

¹ ROA = 100 × Net earnings attributable to The Estée Lauder Companies Inc. ÷ Total assets
= 100 × 1,006 ÷ 23,415 = 4.30%

² Adjusted ROA = 100 × Adjusted net earnings attributable to The Estée Lauder Companies Inc. ÷ Adjusted total assets
= 100 × 1,006 ÷ 20,929 = 4.81%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Estée Lauder Cos. Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Estée Lauder Cos. Inc. (NYSE:EL)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Estée Lauder Cos. Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Estée Lauder Cos. Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)