Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
- Analysis of Debt
- Aggregate Accruals
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Solvency Ratios (Summary)
Estée Lauder Cos. Inc., solvency ratios (quarterly data)
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
The financial leverage of the company showed a general upward trend from late 2018 through mid-2020, increasing from approximately 2.85 to a peak near 4.52. This was followed by a slight decline and relative stabilization around 3.5 to 3.9 through mid-2023. This suggests a gradual increase in the use of debt financing over time, with some reduction in leverage in the intermediate periods.
Regarding the debt to equity ratio, the values initially hovered around 0.74 to 0.8 between late 2018 and mid-2019, then rose sharply to above 1.4 during early to mid-2020, before retreating again below 1.0 from late 2020 until early 2023. In the most recent quarters, there is a notable increase once more, reaching about 1.45. When including operating lease liabilities, this ratio shows a more pronounced increase, peaking at 2.23 in mid-2020 and remaining above 1.2 in subsequent periods, indicating that lease obligations contribute significantly to the company's overall leverage risk.
The debt to capital ratio followed a somewhat similar pattern, growing from the low 0.40s in early periods to peaks around 0.59 to 0.61 in 2020, then fluctuating between 0.48 and 0.59 in later quarters. Including operating lease liabilities, this ratio was consistently higher, climbing to nearly 0.7 during 2020 and maintaining an elevated range near 0.58 to 0.65 thereafter, reinforcing the impact of leasing on the firm's capital structure.
The debt to assets ratio reflects a moderate increase over time but remains lower than the debt to equity and debt to capital ratios, indicating the relative proportion of debt in total assets remains controlled. Including operating leases, this ratio is substantially higher, nearing 0.5 in 2020 and remaining above 0.35 subsequently, which further evidences the significance of operating lease liabilities on the balance sheet.
Interest coverage ratio, an indicator of the ability to meet interest payments from operating earnings, showed a strong position around 16 to 19 times coverage from 2018 to 2019. However, it sharply declined during 2020 alongside rising leverage, reaching lows near 6.5 times in late 2020 and mid-2023. Brief recoveries to above 20 times occurred intermittently in 2021 and early 2022, but the overall trend points to diminished interest payment safety margins during and following the peak leverage periods.
- Summary of Key Trends
- The data reveals that financial leverage and associated debt ratios increased significantly particularly around 2019 to mid-2020, possibly reflecting higher borrowing or capital structure changes during this timeframe. The inclusion of operating lease liabilities consistently increases reported leverage measures, highlighting the importance of lease obligations in assessing true financial risk.
- Despite some reductions in leverage ratios after mid-2020, the interest coverage ratio's decline underscores potential pressure on the company's earnings to cover interest expenses, thus pointing toward increased risk or tighter financial conditions.
- The patterns suggest a scenario where the company expanded its debt and leased obligations possibly to support growth or navigate operational needs, with subsequent partial mitigation but lingering elevated leverage and reduced interest coverage.
Debt Ratios
Coverage Ratios
Debt to Equity
Estée Lauder Cos. Inc., debt to equity calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||
| Current debt | ||||||||||||||||||||||||||
| Long-term debt, excluding current maturities | ||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||
| Stockholders’ equity, The Estée Lauder Companies Inc. | ||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||||
| Procter & Gamble Co. | ||||||||||||||||||||||||||
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= ÷ =
2 Click competitor name to see calculations.
The financial data indicates notable fluctuations in total debt and stockholders’ equity over the examined quarterly periods, resulting in varying debt-to-equity ratios that reflect changes in the company’s financial leverage.
- Total Debt
- The total debt exhibited a general upward trend, increasing from approximately $3.5 billion in September 2018 to over $8.1 billion by June 2023. Noteworthy increases occurred between late 2018 and 2020, where debt surged from around $3.4 billion to above $6.2 billion, with some slight declines afterward. A marked rise in total debt is evident again starting in early 2023.
- Stockholders' Equity
- Stockholders' equity fluctuated moderately throughout the period, beginning near $4.4 billion in September 2018. It showed gradual growth and peaked around $6.2 billion during 2021 before experiencing some decline through 2022 and into 2023, settling slightly above $5.5 billion by mid-2023. The equity level displayed relative stability compared to the volatility observed in debt levels.
- Debt to Equity Ratio
- This ratio followed a variable path that reflects the interplay between total debt and equity changes. Initially, it hovered below 1.0, indicating debt levels were somewhat lower than equity. In late 2019 and into 2020, the ratio increased significantly, peaking at approximately 1.56 mid-2020, indicative of heightened leverage. Afterwards, the ratio declined and remained around 0.9 to 1.0 from late 2020 through 2022, suggesting a rebalancing of capital structure. However, in 2023, a notable rise in the ratio occurred again, reaching 1.45 by June 2023, which corresponds with the substantial increase in total debt and modest equity decline during that period.
Overall, the company exhibited periods of elevated leverage particularly during 2020 and again in 2023, while equity levels showed more subdued variability. The shifts in debt to equity ratios emphasize periods where debt grew disproportionately relative to equity, signaling episodes of increased financial risk or strategic capital utilization.
Debt to Equity (including Operating Lease Liability)
Estée Lauder Cos. Inc., debt to equity (including operating lease liability) calculation (quarterly data)
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= ÷ =
- Total Debt (including operating lease liability)
- The total debt experienced a significant increase starting from the third quarter of 2019, rising sharply from approximately $3.4 billion to over $7.8 billion by the end of 2019. This elevated level of debt persisted through 2020, peaking around $8.9 billion in the first quarter of 2020, before gradually declining toward mid-2022. However, from the first quarter of 2023, debt levels again increased markedly, reaching over $10 billion by the second quarter of 2023, the highest level observed in the period analyzed.
- Stockholders’ Equity
- Stockholders’ equity displayed moderate fluctuations throughout the period. It was relatively stable around $4.3-$4.5 billion until the end of 2019. Beginning in 2020, equity showed a general increasing trend, reaching a peak above $6 billion by the end of 2021. After peaking, equity declined gradually through 2022 and into 2023, settling around $5.6 billion by the second quarter of 2023. Despite some variability, equity did not experience fluctuations as pronounced as total debt.
- Debt to Equity Ratio (Including Operating Lease Liability)
- The debt to equity ratio remained below 1.0 from late 2018 to mid-2019, indicating relatively balanced leverage. However, this ratio increased sharply in the third quarter of 2019, exceeding 1.3, and further climbing to over 2.0 in early 2020. This suggests a substantial increase in leverage during this period. Following this peak, the ratio gradually declined through 2021 and 2022, stabilizing around 1.3 to 1.4. Notably, in early 2023, the ratio again rose sharply, reaching approximately 1.8 by mid-2023, reflecting an increase in leverage relative to equity.
- Summary of Trends and Insights
- The data reflects a marked increase in debt levels starting in late 2019, coinciding with a rise in the debt to equity ratio, indicating increased leverage. Stockholders’ equity improved during 2020 and reached its peak in late 2021, but subsequently declined. The reduction in equity combined with a resurgence in debt levels in 2023 has elevated leverage ratios once again. These patterns suggest a strategic shift towards higher debt financing in recent years, with debt management and equity performance contributing to fluctuations in leverage ratios. The pronounced debt increase in 2019-2020 and again in 2023 warrants attention regarding the company’s balance sheet risk and capital structure management going forward.
Debt to Capital
Estée Lauder Cos. Inc., debt to capital calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||
| Current debt | ||||||||||||||||||||||||||
| Long-term debt, excluding current maturities | ||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||
| Stockholders’ equity, The Estée Lauder Companies Inc. | ||||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||||
| Procter & Gamble Co. | ||||||||||||||||||||||||||
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The financial data for Estée Lauder Cos. Inc. reveals several key trends concerning the company's debt and capital structure over the analyzed periods.
- Total Debt
- Total debt levels exhibited relative stability initially, fluctuating slightly between approximately $3.4 billion and $3.5 billion from late 2018 through mid-2019. However, starting in the last quarter of 2019, there was a notable increase, peaking at over $6.2 billion by the first quarter of 2020. Following this spike, debt levels decreased somewhat during mid to late 2020 but remained elevated compared to prior periods, hovering around $5.3 billion to $5.9 billion throughout 2021 and 2022. In 2023, there was a marked upward trend again, with total debt reaching a new high of over $8.1 billion by mid-2023.
- Total Capital
- Total capital showed a generally increasing trend across the periods. Starting at roughly $7.9 billion in late 2018, it gradually rose towards $11.7 billion by late 2021. While some fluctuations occurred in 2022, total capital stayed within a relatively narrow range around $10.9 billion to $11.7 billion before increasing significantly to nearly $13.7 billion by mid-2023. This rise in capital corresponds with the periods of increased debt, reflecting the company's broader growth in financing and capitalization.
- Debt to Capital Ratio
- The debt to capital ratio remained mostly stable in the mid-40% range through early 2019 but experienced a sharp increase by the end of 2019 and the first half of 2020, reaching a peak near 0.61. This reflects the concurrent surge in total debt relative to capital. After mid-2020, the ratio gradually declined back to the high 40% range by late 2021 and through 2022, suggesting some deleveraging or capital growth outpacing debt increase. Nonetheless, in 2023, the ratio increased again sharply, reaching nearly 0.59 by mid-year, indicative of increased leverage consistent with the rise in total debt.
Overall, the data highlights an increase in leverage beginning late 2019, peaking in early 2020, followed by a period of relative stabilization and moderate deleveraging, and then a renewed increase in debt and leverage in 2023. Total capital growth has supported some of the leverage increases, but the company's net debt levels have risen significantly in recent periods, suggesting strategic capital structure adjustments or increased borrowing to support operations or investments.
Debt to Capital (including Operating Lease Liability)
Estée Lauder Cos. Inc., debt to capital (including operating lease liability) calculation (quarterly data)
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= ÷ =
The analysis of the quarterly financial data reveals noteworthy trends in the company’s debt and capital structure over the period examined.
- Total Debt (Including Operating Lease Liability)
- The total debt showed a relatively stable trend from late 2018 through mid-2019, ranging between approximately $3.4 billion to $3.6 billion. From September 2019 onwards, a significant increase occurred, with debt rising sharply to around $6.1 billion and continuing upward until peaking near $8.9 billion in March 2020. Following this peak, debt fluctuated moderately around $8.0 billion to $8.5 billion through 2021 but began a gradual decline in 2022. However, this reduction was short-lived, as debt rose again starting in late 2022, reaching over $10 billion by mid-2023, the highest level in the series.
- Total Capital (Including Operating Lease Liability)
- Total capital mirrored some of the trends seen in debt, beginning at nearly $8 billion in the final quarter of 2018, with slight fluctuations until mid-2019. A substantial increase in capital occurred in late 2019, elevating total capital to above $12 billion and continuing upward to over $14 billion in late 2020 and 2021. From mid-2021 through 2022, capital saw slight decreases and fluctuations but remained in the $13 billion to $14 billion range. In 2023, total capital expanded considerably again, reaching approximately $15.7 billion by mid-year, indicating a general growth in the company’s financial base despite continuing volatility.
- Debt to Capital Ratio (Including Operating Lease Liability)
- The debt to capital ratio started at a moderate level of approximately 0.44 in late 2018, decreasing slightly to near 0.43 early in 2019. A marked increase followed, peaking at around 0.69 by mid-2020, reflecting the rapid accumulation of debt relative to capital during this period. After mid-2020, the ratio declined steadily, reaching a lower range around 0.56 through 2021 and most of 2022, signaling improved balance sheet leverage. Nonetheless, by 2023, the ratio increased again toward 0.65, implying a rising proportion of debt within the capital structure.
In summary, the data illustrate a period of increased leverage beginning in late 2019 and peaking in mid-2020, followed by a phase of deleveraging and relative stability. Most recently, both total debt and debt to capital ratio have increased, approaching or exceeding previous highs. At the same time, total capital has shown a generally upward trajectory, suggesting growth in the overall financial resources of the company even as debt levels elevated. These patterns may reflect strategic financing decisions, market conditions, or operational factors impacting the company’s capital structure over the examined timeframe.
Debt to Assets
Estée Lauder Cos. Inc., debt to assets calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||
| Current debt | ||||||||||||||||||||||||||
| Long-term debt, excluding current maturities | ||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||||
| Procter & Gamble Co. | ||||||||||||||||||||||||||
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total debt
- The total debt exhibited a generally increasing trend over the observed periods. Beginning at $3,544 million in September 2018, debt levels declined slightly until June 2019, then rose notably to a peak of $6,201 million in March 2020. Following this peak, debt decreased gradually until the end of 2022, reaching $5,371 million. However, the most recent quarters saw a sharp rise again, with total debt reaching $8,114 million by June 2023, the highest level in the timeframe analyzed.
- Total assets
- Total assets showed a consistent upward trend throughout the entire period under review. Starting at $12,543 million in September 2018, assets increased steadily each quarter, reaching $23,415 million by June 2023. This reflects sustained asset growth, with occasional accelerations particularly visible in late 2020 and 2021. Despite some minor fluctuations, the overall trajectory indicates considerable expansion of the company’s asset base.
- Debt to assets ratio
- The debt to assets ratio fluctuated within a range but exhibited some distinct periods of movement corresponding to changes in debt and asset levels. Initially, the ratio decreased from 0.28 in September 2018 to 0.22 in September 2019, reflecting relatively faster asset growth or debt reduction in that interval. Subsequently, it rose sharply to 0.35 in June 2020, coincident with the debt peak during that period, indicating increased leverage. Following this, the ratio declined and stabilized around 0.25 to 0.27 during 2021 and 2022, suggesting improved balance sheet leverage. However, a noticeable increase occurred again in early 2023, with the ratio reaching 0.35 by June 2023, mirroring the rise in debt outpacing asset growth.
- Overall insights
- The analysis reveals that while total assets have consistently expanded, total debt has experienced more volatility with significant increases around early 2020 and again in 2023. These debt surges have caused corresponding spikes in leverage as measured by the debt to assets ratio. The leverage ratio’s fluctuations suggest periods of strategic debt funding possibly in response to external or internal factors affecting capital requirements. The company appears to maintain a relatively moderate leverage position outside of these spikes. Continued monitoring of debt trends relative to asset growth will be important to assess financial risk moving forward.
Debt to Assets (including Operating Lease Liability)
Estée Lauder Cos. Inc., debt to assets (including operating lease liability) calculation (quarterly data)
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= ÷ =
- Total Debt (Including Operating Lease Liability)
-
Total debt exhibited an overall increasing trend from September 2018 through June 2023. Starting at $3,544 million in September 2018, the total debt level initially remained relatively stable until mid-2019, after which a marked increase occurred, reaching a peak above $8,800 million by March 2020. This sharp rise aligns with the period leading into the pandemic.
Subsequently, total debt showed slight fluctuations but generally stabilized around the $7,500 to $8,500 million range from late 2020 through late 2022. However, from the end of 2022 into mid-2023, another pronounced increase is observed, with total debt rising to over $10,000 million by June 2023, the highest point in the observed period.
- Total Assets
-
Total assets consistently increased over the reported periods, demonstrating growth and expansion. Starting at approximately $12,543 million in September 2018, assets rose steadily to reach nearly $23,415 million by June 2023.
The growth was relatively consistent without large declines, although some slower growth or slight decreases are noted intermittently, such as minor dips in late 2022. Despite these, the overall trajectory is upward, indicating expansion in asset base across the timeframe.
- Debt to Assets Ratio (Including Operating Lease Liability)
-
The debt to assets ratio exhibited variability in line with changes in debt levels and asset growth. Initially hovering around 0.26 to 0.28 from late 2018 through mid-2019, the ratio increased substantially to about 0.44–0.49 by early 2020, in parallel with the surge in debt.
Following this spike, the ratio decreased gradually through 2021 and 2022, reaching a lower band around 0.36 to 0.37, reflecting moderate deleveraging or asset growth outpacing debt increments.
However, the ratio increased again notably in early 2023, reaching levels near 0.42 to 0.43 by mid-year, corresponding with the renewed rise in total debt relative to assets.
- Summary
-
The financial data indicate a general pattern of increased leverage accompanied by asset growth. Total debt rose sharply during 2019–2020, likely reflective of strategic financing activities or responses to economic conditions around that time. Although some stabilization and slight deleveraging occurred afterwards, debt levels surged again in early 2023.
Total assets displayed a more stable and continuous growth pattern, contributing to a moderating effect on the debt to assets ratio during certain periods. The variations in the debt to assets ratio predominantly reflect changes in debt rather than asset contraction.
Overall, the financial position shows increased borrowing alongside asset accumulation, with periodic adjustments in leverage ratios that suggest active management of financial structure in response to external or internal corporate factors.
Financial Leverage
Estée Lauder Cos. Inc., financial leverage calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||
| Stockholders’ equity, The Estée Lauder Companies Inc. | ||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||||
| Procter & Gamble Co. | ||||||||||||||||||||||||||
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
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Total assets displayed a generally upward trajectory from late 2018 through mid-2023. Beginning at approximately $12.5 billion in September 2018, assets increased steadily, reaching a peak near $22 billion during 2021. There was some fluctuation observed thereafter, with a slight decline around mid-2022, before assets resumed growth, culminating at approximately $23.4 billion by June 2023.
- Stockholders’ Equity
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Stockholders' equity showed modest increases from late 2018 through late 2021, rising from about $4.3 billion to over $6 billion. A notable peak occurred around December 2020 and maintained high levels into 2021. Following this period, equity levels generally retraced slightly, declining to roughly $5.6 billion by mid-2023. This indicates some reduction in equity value in recent quarters compared to the peak levels.
- Financial Leverage
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Financial leverage ratios exhibited a rising trend starting from about 2.85 in late 2018, increasing sharply up to over 4 by mid-2020. After hitting this peak, leverage decreased slightly but remained elevated in the range of approximately 3.5 to 4 through 2021 and 2022. Toward mid-2023, there was an uptick again, with leverage reaching near 4.2. The pattern suggests the company has increasingly utilized debt financing relative to equity over the period, with some cyclical fluctuations.
- Overall Analysis
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The company’s asset base substantially expanded from 2018 to 2023, reflecting growth or acquisitions. Stockholders’ equity grew in early years but showed a decline relative to its peak in recent times, which may suggest share repurchases, dividend payments, or changes in retained earnings. The upward trend in financial leverage indicates a growing reliance on debt, raising considerations about capital structure risk. The interplay of rising assets and leverage alongside a somewhat declining equity base points to a strategic increase in debt financing to support growth or other financial activities.
Interest Coverage
Estée Lauder Cos. Inc., interest coverage calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | |||||||
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| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||
| Net earnings (loss) attributable to The Estée Lauder Companies Inc. | ||||||||||||||||||||||||||
| Add: Net income attributable to noncontrolling interest | ||||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||||
| Add: Interest expense | ||||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||||
| Procter & Gamble Co. | ||||||||||||||||||||||||||
Based on: 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30).
1 Q4 2023 Calculation
Interest coverage
= (EBITQ4 2023
+ EBITQ3 2023
+ EBITQ2 2023
+ EBITQ1 2023)
÷ (Interest expenseQ4 2023
+ Interest expenseQ3 2023
+ Interest expenseQ2 2023
+ Interest expenseQ1 2023)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT values demonstrate considerable volatility over the examined periods. From September 2018 through December 2019, EBIT exhibited a generally upward trend, increasing from 667 million USD to a peak of 849 million USD. However, a sharp decline is observed in the first half of 2020, including a notably negative EBIT of -556 million USD in June 2020, indicative of significant operational challenges during that time. Subsequent quarters show a recovery trajectory, with EBIT reaching a new high of 1,430 million USD in December 2021. Post that peak, EBIT figures again show a decline, trending downward through mid-2023, with values dropping to as low as 51 million USD by June 2023.
- Interest Expense
- Interest expense remained relatively stable between 2018 and early 2020, fluctuating narrowly from 32 to 42 million USD. From mid-2020 onwards, there is a discernible ascending trend in interest expenses, increasing steadily from 45 million USD in September 2020 to 99 million USD by June 2023. This increase suggests rising borrowing costs or higher debt levels over the later periods.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the ability to cover interest payments from operating earnings, follows a pattern consistent with EBIT fluctuations. Initially, the ratio is strong, peaking above 19 from mid-2018 to late 2019. Thereafter, a significant decline occurs in early to mid-2020, with the ratio dipping to as low as 6.5 in September 2020, coinciding with the negative EBIT period. A pronounced recovery is observed through the end of 2021, reaching a maximum ratio of approximately 25.18 in March 2022. Following this peak, the coverage ratio declines once more, falling to around 6.48 by mid-2023, reflecting both the increased interest expenses and decreased EBIT in recent quarters.
- Summary Insights
- The analyzed data reveals that the company experienced a significant earnings challenge in the first half of 2020, likely linked to external adverse conditions. Although a robust recovery was achieved through late 2021 and early 2022, both EBIT and interest coverage ratio have tapered off since, suggesting emerging pressures on profitability and interest servicing capability. The steady rise in interest expenses exacerbates these pressures, reducing financial flexibility. The declining interest coverage ratio in the most recent quarters signals an increasing risk regarding the firm's ability to comfortably meet interest obligations going forward.