Analysis of Long-term (Investment) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
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Long-term Activity Ratios (Summary)
Estée Lauder Cos. Inc., long-term (investment) activity 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), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
The analysis of the financial ratios over the observed periods indicates several notable trends in asset and equity utilization.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio shows a general declining trend from 7.51 in September 2017 to 5.00 by June 2023. Initially, the ratio increased slightly during the early part of the period and peaked around mid-2019 at approximately 7.7. From that point onward, there is a gradual but consistent decrease, which suggests a reduction in efficiency in generating revenue from fixed assets over time.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- This adjusted ratio starts at the same level as the basic net fixed asset turnover ratio but diverges significantly starting in late 2018, dropping sharply to approximately 3.36 and remaining relatively stable thereafter. While minor fluctuations occur, the ratio oscillates near the low 3 range through mid-2023. This change likely reflects the adoption or increased recognition of operating leases as right-of-use assets, which has a substantial impact on the asset base considered, thereby reducing the turnover ratio when including these assets.
- Total Asset Turnover
- The total asset turnover ratio exhibits a downward trajectory over the entire period under review. From peaks near 1.13 in 2018, the ratio steadily declines to a low of 0.68 by mid-2023. This indicates a decreasing ability to generate sales from total assets. The drop begins around late 2018 and continues progressively, suggesting potential increases in asset investments not matched by proportional increases in revenue or possible challenges in asset utilization efficiency.
- Equity Turnover
- Equity turnover demonstrates more volatility but maintains a general range between approximately 2.6 and 3.6. There is an increase from around 2.92 in late 2017, peaking near 3.63 by the end of 2019, followed by a drop in 2020 to levels below 2.7. Afterward, it recovers gradually, reaching about 2.85 by mid-2023. The initial rise and subsequent drop may be linked to changes in net income or equity balances, potentially influenced by the broader economic environment, including the impacts starting in 2020.
Overall, the data reflect a decrease in asset turnover efficiencies, both at the fixed asset and total asset levels, particularly notable when accounting for right-of-use assets. Meanwhile, equity turnover shows resilience with moderate fluctuations but without a clear long-term directional trend. These patterns could indicate shifts in operational strategy, investments in long-term assets, or external economic factors influencing the utilization of capital and assets over the period reviewed.
Net Fixed Asset Turnover
Estée Lauder Cos. Inc., net fixed asset turnover 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 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||||||||||
| Property, plant and equipment, net | |||||||||||||||||||||||||||||||
| Long-term Activity Ratio | |||||||||||||||||||||||||||||||
| Net fixed asset turnover1 | |||||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||||
| Net Fixed Asset Turnover, 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), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
1 Q4 2023 Calculation
Net fixed asset turnover
= (Net salesQ4 2023
+ Net salesQ3 2023
+ Net salesQ2 2023
+ Net salesQ1 2023)
÷ Property, plant and equipment, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data demonstrates varied trends across the analyzed periods, reflecting the company's operational and asset utilization dynamics.
- Net Sales
- Net sales exhibit a generally fluctuating pattern with notable seasonal variations. The data shows peaks in December quarters, suggesting strong holiday or year-end sales, exemplified by the December 2019 figure reaching 4,624 million USD and December 2021 reaching 5,539 million USD. There is a pronounced dip in mid-2020, particularly in June 2020 where sales dropped to 2,430 million USD, likely influenced by external economic disruptions during that period. Following this downturn, net sales recovered and exhibited growth through 2021, reaching new highs in December 2021. Subsequently, from 2022 onwards, the sales trend shows increased volatility, with quarterly figures oscillating between approximately 3,500 million USD and 4,600 million USD, without a clear upward or downward trajectory.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment consistently increased over the entire period under review. Starting at 1,695 million USD in September 2017, it rose steadily to 3,179 million USD by June 2023. This indicates continuous capital investment and expansion in fixed assets, with no periods of significant asset reduction or impairment. The trend suggests an ongoing commitment to maintaining and growing the production base or operational infrastructure.
- Net Fixed Asset Turnover
- This ratio, indicative of the efficiency in using fixed assets to generate sales, was reported sporadically but shows a declining trend from early values around 7.5 in 2018 to about 5 by mid-2023. The initial high ratio suggests effective asset utilization, with sales generated being multiple times the value of fixed assets. The gradual decline over the years points to a reduced efficiency in fixed asset use, which could arise from increased asset base outpacing sales growth or less efficient deployment. This decline deserves attention as it may indicate operational inefficiencies or strategic challenges in generating revenue from invested capital.
Overall, while net sales demonstrate resilience with recovery post-2020 downturn and seasonal strength, the continuous rise in fixed assets alongside declining turnover ratio may signal a need to evaluate asset productivity. Management should consider investigating the causes behind the asset utilization decrease to ensure that capital investments translate into proportional sales growth and value creation.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Estée Lauder Cos. Inc., net fixed asset turnover (including operating lease, right-of-use asset) 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), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
1 Q4 2023 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset)
= (Net salesQ4 2023
+ Net salesQ3 2023
+ Net salesQ2 2023
+ Net salesQ1 2023)
÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= ( + + + )
÷ =
The quarterly data reveals several notable trends in sales, asset levels, and asset efficiency over the analyzed periods.
- Net Sales
-
Net sales exhibit a general upward trajectory from late 2017 through 2019, rising from approximately $3.27 billion to a peak of around $4.62 billion by December 2019. This growth indicates positive sales momentum prior to 2020. However, the onset of 2020 coincides with a significant decline in sales, dropping sharply to approximately $2.43 billion in the second quarter of 2020, likely reflecting external disruptions during that period.
A rebound occurs in the second half of 2020 and into 2021, with sales climbing back above $4 billion and eventually surpassing $5.5 billion by the end of 2021. In 2022, sales fluctuate, showing decreases in some quarters such as mid-2022 but rebound again towards the end of the year. The first half of 2023 presents a somewhat mixed pattern with sales around $3.6 to $3.7 billion, indicating some variability but no clear strong upward or downward trend.
- Property, Plant and Equipment, Net (Including Operating Lease, Right-of-Use Assets)
-
The net book value of property, plant, and equipment remains relatively stable with a gradual increase over the entire period. Starting around $1.7 billion in late 2017, the assets’ value rises modestly each quarter, reaching over $4.9 billion by mid-2023. A notable jump is observed between mid-2019 and the end of 2019, where the value more than doubles from approximately $2.1 billion to $4.6 billion, possibly due to reclassification or adoption of new accounting standards regarding lease assets.
Following this adjustment, asset levels maintain a steady increase, indicating ongoing investment or acquisition of fixed assets, which supports operations and future growth capacity.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
-
This ratio measures the efficiency of fixed asset use in generating sales. Data is available starting from March 2018. Initially, the asset turnover ratio holds values around 7.5 to 7.7, signaling efficient utilization of assets relative to sales volume.
A sharp drop occurs in the second half of 2019, declining to approximately 3.3 by the end of that year. This decline coincides with the significant increase in reported fixed assets, suggesting that assets grew faster than sales during this period, reducing turnover efficiency.
Post-2019, the turnover ratio fluctuates between roughly 3.1 and 4.0. There is a modest upward trend through 2021 and into early 2022, signaling some improvement in asset usage efficiency, before tapering off slowly in the later quarters. The levels remain markedly lower than the pre-2019 spike but show relative stability.
In summary, net sales experienced strong growth through 2019, suffered a notable decline in early 2020, and then rebounded thereafter with some volatility. Fixed asset values saw a major increase near the end of 2019, likely reflecting accounting changes, followed by consistent incremental growth. Correspondingly, fixed asset turnover declined sharply during that transition but has since stabilized, indicating a recalibration of asset use efficiency in relation to sales trends.
Total Asset Turnover
Estée Lauder Cos. Inc., total asset turnover 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 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||
| Long-term Activity Ratio | |||||||||||||||||||||||||||||||
| Total asset turnover1 | |||||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||||
| Total Asset Turnover, 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), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
1 Q4 2023 Calculation
Total asset turnover
= (Net salesQ4 2023
+ Net salesQ3 2023
+ Net salesQ2 2023
+ Net salesQ1 2023)
÷ Total assets
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends and patterns over the analyzed periods.
- Net Sales
- Net sales exhibit a fluctuating but generally increasing trend from September 2017 through December 2021, peaking at 5,539 million US dollars in December 2021. The data shows seasonal or cyclical variations with notable increases in December quarters, reflecting potential holiday season effects. From March 2020 onwards, there is a visible decline in net sales in the mid-2020 quarters, likely influenced by external factors impacting market conditions. However, starting in September 2020, net sales recover robustly, reaching new highs in late 2021. In 2022 and early 2023, net sales experience some volatility but maintain a relatively strong level above 3,500 million, though below the peak observed in 2021.
- Total Assets
- Total assets demonstrate a steady upward trajectory over the entire period, increasing from 12,202 million US dollars in September 2017 to 23,415 million in June 2023. The significant and consistent asset growth suggests ongoing investments, acquisitions, or capital expansions. Noteworthy acceleration in asset growth is apparent from late 2018 onwards, with a particularly marked increase from early 2021 onward, indicating substantial asset accumulation during this period. The rise in total assets outpaces growth in net sales in some quarters, which may affect returns and efficiency metrics.
- Total Asset Turnover Ratio
- The total asset turnover ratio starts at 1.09 in March 2018, indicating strong efficiency in using assets to generate sales. This ratio improves slightly to around 1.13 by mid-2019 but then declines steadily from late 2019, reaching a low of 0.68 in June 2023. This declining asset turnover suggests that asset growth has outstripped sales growth, resulting in reduced efficiency in asset utilization. The downward trend may reflect changes in business strategy, investment in long-term assets, or challenges in converting assets into revenue at previous levels of efficiency. Some periods show minor rebounds, but the overall trajectory remains negative.
In summary, while the company’s net sales have generally increased with cyclicality and some disruptions around 2020, total assets have grown significantly, leading to a declining asset turnover ratio. This implies that the business is investing heavily in assets but is facing challenges maintaining proportional sales growth relative to asset size, which could impact operational efficiency going forward.
Equity Turnover
Estée Lauder Cos. Inc., equity turnover 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 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||||||||||
| Stockholders’ equity, The Estée Lauder Companies Inc. | |||||||||||||||||||||||||||||||
| Long-term Activity Ratio | |||||||||||||||||||||||||||||||
| Equity turnover1 | |||||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||||
| Equity Turnover, 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), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
1 Q4 2023 Calculation
Equity turnover
= (Net salesQ4 2023
+ Net salesQ3 2023
+ Net salesQ2 2023
+ Net salesQ1 2023)
÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several noteworthy trends in net sales, stockholders’ equity, and equity turnover ratios over the presented periods.
- Net Sales
- Net sales demonstrate a generally positive trajectory with notable fluctuations, reflecting seasonality and market conditions. From September 2017 through December 2019, net sales exhibited an overall upward movement, increasing from $3,274 million to a peak of $4,624 million at year-end 2019.
- During the early months of 2020, corresponding with broader economic disruptions, net sales declined markedly, reaching a low of $2,430 million in June 2020. Following this trough, sales rebounded strongly, peaking again at $5,539 million in December 2021, the highest reported figure in the dataset.
- Subsequent quarters show a gradual decline from this peak, with net sales decreasing to $3,609 million by June 2023. This trend suggests a partial normalization or adjustment phase after the significant recovery period.
- Stockholders’ Equity
- Stockholders’ equity values exhibit a general stability with moderate growth over the full timeframe. Starting at $4,731 million in September 2017, equity experienced a slight decline through 2018, reaching a low around $4,306 million in December 2018.
- From 2019 onward, a progressive increase is apparent, with equity crossing $6,200 million by December 2021. The equity level appears to stabilize thereafter, fluctuating around the $5,800 million mark through mid-2023, suggesting consolidation in the company’s capital structure after growth phases.
- Equity Turnover Ratio
- The equity turnover ratio, a measure of sales generated per unit of equity, shows a relatively stable pattern with some periodic variations. Initial values in early 2018 start around 2.92 and increase slightly, peaking near 3.63 in December 2020.
- Following this peak, the ratio declines to around 2.62 in the first quarter of 2021, then modestly recovers and stabilizes within a tight range between 2.7 and 3.17 up to mid-2023. This indicates that the efficiency of equity use for generating sales improved over time but experienced some volatility amidst market fluctuations.
Overall, the data reflects growth in sales with significant seasonal and economic impacts. Equity growth supports increased operational scale, while equity turnover efficiency demonstrates variability corresponding to these broader trends. The post-2021 period suggests stabilization in core financial metrics following periods of rapid expansion and market recovery.