An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

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)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	—)	—)	—)	—)	2,826)	2,777)
Total assets (adjusted)	23,415)	20,910)	21,971)	17,781)	15,982)	15,344)
Adjustment to Total Debt
Total debt (as reported)	8,114)	5,412)	5,569)	6,136)	3,412)	3,544)
Add: Operating lease liability (before adoption of FASB Topic 842)²	—)	—)	—)	—)	2,826)	2,777)
Add: Current operating lease liabilities	357)	365)	379)	375)	—)	—)
Add: Long-term operating lease liabilities	1,698)	1,868)	2,151)	2,278)	—)	—)
Total debt (adjusted)	10,169)	7,645)	8,099)	8,789)	6,238)	6,321)

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).

^{1, 2} Equal to total present value of future operating lease payments.

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
Total Asset Turnover¹
Reported total asset turnover	0.68	0.85	0.74	0.80	1.13	1.09
Adjusted total asset turnover	0.68	0.85	0.74	0.80	0.93	0.89
Debt to Equity²
Reported debt to equity	1.45	0.97	0.92	1.56	0.78	0.76
Adjusted debt to equity	1.82	1.37	1.34	2.23	1.42	1.35
Return on Assets³ (ROA)
Reported ROA	4.30%	11.43%	13.06%	3.85%	13.57%	8.82%
Adjusted ROA	4.30%	11.43%	13.06%	3.85%	11.17%	7.22%

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).

¹ See details »

² See details »

³ See details »

Financial 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.
Adjusted debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Estée Lauder Cos. Inc. adjusted debt to equity ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as 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 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 Operating Leases
Selected Financial Data (US$ in millions)
Net sales	15,910)	17,737)	16,215)	14,294)	14,863)	13,683)
Adjusted total assets	23,415)	20,910)	21,971)	17,781)	15,982)	15,344)
Activity Ratio
Adjusted total asset turnover²	0.68	0.85	0.74	0.80	0.93	0.89

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 ÷ 23,415 = 0.68

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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 debt	8,114)	5,412)	5,569)	6,136)	3,412)	3,544)
Stockholders’ equity, The Estée Lauder Companies Inc.	5,585)	5,590)	6,057)	3,935)	4,386)	4,688)
Solvency Ratio
Debt to equity¹	1.45	0.97	0.92	1.56	0.78	0.76
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	10,169)	7,645)	8,099)	8,789)	6,238)	6,321)
Stockholders’ equity, The Estée Lauder Companies Inc.	5,585)	5,590)	6,057)	3,935)	4,386)	4,688)
Solvency Ratio
Adjusted debt to equity²	1.82	1.37	1.34	2.23	1.42	1.35

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 Debt to equity = Total debt ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 8,114 ÷ 5,585 = 1.45

² Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 10,169 ÷ 5,585 = 1.82

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Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Estée Lauder Cos. Inc. adjusted debt-to-equity 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 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 Operating Leases
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)
Adjusted total assets	23,415)	20,910)	21,971)	17,781)	15,982)	15,344)
Profitability Ratio
Adjusted ROA²	4.30%	11.43%	13.06%	3.85%	11.17%	7.22%

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

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as 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 Operating Leases

Adjustments to Financial Statements for Operating Leases

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

Adjusted Financial Ratios for Operating Leases (Summary)

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

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)