Estee Lauder Companies Inc (EL)

Activity ratios

Short-term

Turnover ratios

	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Inventory turnover	1.80	2.03	1.53	1.47	1.53
Receivables turnover	9.36	9.04	10.96	10.89	9.53
Payables turnover	2.49	3.07	2.73	2.36	2.27
Working capital turnover	8.77	7.03	5.49	5.09	3.63

The analysis of Estee Lauder Companies Inc.'s activity ratios over the period from June 30, 2021, to June 30, 2025, reveals notable trends in the company's operational efficiency.

Inventory Turnover:
The inventory turnover ratio remained relatively stable between June 2021 and June 2023, fluctuating marginally from 1.53 to 1.47. However, a significant improvement is observed in June 2024, where the ratio increases to 2.03, indicating a more efficient inventory management and quicker inventory turnover. This positive trend continues into June 2025 with a ratio of 1.80, reflecting sustained efficiency in inventory utilization, though slightly decreased compared to the peak in 2024.

Receivables Turnover:
The receivables turnover ratio shows a general upward trend from 9.53 in June 2021 to a peak of 10.96 in June 2023. This suggests the company became more effective in collecting receivables during this period. In June 2024, the ratio declines to 9.04, but then slightly increases again to 9.36 in June 2025, indicating a relatively stable but slightly fluctuating receivables collection efficiency.

Payables Turnover:
The payables turnover ratio steadily increased from 2.27 in June 2021 to 2.73 in June 2023, reflecting that the company is paying its suppliers more frequently within the period, possibly to manage supply chain relations or optimize cash flow. The ratio further rises to 3.07 in June 2024 before decreasing to 2.49 in June 2025, which may indicate a shift towards longer payment periods or changes in supplier terms.

Working Capital Turnover:
Working capital turnover exhibits a consistent upward trend across the four-year span. It moved from 3.63 in June 2021 to 8.77 in June 2025. This significant increase suggests improved utilization of working capital to generate sales, indicating enhanced operational efficiency and possibly better inventory management, receivables collection, or overall working capital management.

Summary:
Collectively, these activity ratios illustrate a trend of increasing operational efficiency for Estee Lauder Companies Inc. over the specified period. The notable improvement in inventory turnover points to more effective inventory management, while the stable receivables turnover indicates effective credit and collection policies. The fluctuations in payables turnover suggest strategic management of payment practices, and the consistent rise in working capital turnover reflects overall enhanced productivity in asset utilization.

Average number of days

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Days of inventory on hand (DOH)	days	203.01	179.45	238.24	247.57	238.48
Days of sales outstanding (DSO)	days	38.98	40.39	33.31	33.52	38.31
Number of days of payables	days	146.53	118.81	133.56	154.48	161.08

The activity ratios of Estee Lauder Companies Inc., as reflected in the provided data, exhibit several noteworthy trends over the period from June 30, 2021, to June 30, 2025.

Days of Inventory on Hand (DOH):
The company’s inventory holding period increased from approximately 238.48 days in 2021 to a peak of 247.57 days in 2022, indicating a longer duration of inventory retention during that year. Subsequently, there was a slight decrease to 238.24 days in 2023. A significant reduction occurred in 2024, with DOH dropping to 179.45 days, suggesting improved inventory management or a strategic reduction in inventory levels. The figure then marginally increased to 203.01 days in 2025, implying a modest extension in inventory holding but remaining well below the 2022 peak.

Days of Sales Outstanding (DSO):
The receivables collection period decreased from 38.31 days in 2021 to 33.52 days in 2022, reflecting an improvement in receivables management. This downward trend continued marginally into 2023, reaching 33.31 days. However, in 2024, the DSO increased to 40.39 days, indicating a lengthening of the receivables collection cycle. The figure then slightly decreased to 38.98 days in 2025, returning toward earlier levels but still indicating a somewhat elongated receivables period relative to the 2021-2023 period.

Number of Days of Payables:
The company’s payables period demonstrated a decreasing trend from 161.08 days in 2021 to 133.56 days in 2023, reflecting a shorter timeframe to settle payables with suppliers. After reaching this low point in 2023, there was a further reduction to 118.81 days in 2024, suggesting expedited payments. Conversely, in 2025, the payables period increased again to 146.53 days, indicating a deliberate extension of payment terms, possibly to optimize cash flow or negotiate better terms with suppliers.

Summary:
Overall, Estee Lauder’s activity ratios reveal efforts toward optimizing operational efficiency and cash management. The notable reduction in Days of Inventory on Hand in 2024 indicates improved inventory turnover. The fluctuating Days of Sales Outstanding suggest periods of more efficient receivables collection, though the increase in 2024 signals a potential slowdown. Changes in Days of Payables reflect a strategic adjustment in payment timing, with a temporary acceleration in payments after 2023 followed by a deliberate extension in 2025 to manage liquidity. Collectively, these trends underscore a dynamic approach to managing inventory, receivables, and payables, balancing operational efficiency with cash flow considerations.

Long-term

	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Fixed asset turnover	—	3.14	5.00	3.86	3.63
Total asset turnover	0.72	0.72	0.68	0.85	0.74

The analysis of Estee Lauder Companies Inc.'s long-term activity ratios reveals insights into the company's efficiency in utilizing its assets over the specified period. The Fixed Asset Turnover ratio, which measures how effectively the company generates sales from its fixed assets, shows an upward trend from 3.63 in fiscal year 2021 to a peak of 5.00 in 2023. This indicates a notable improvement in the utilization of fixed assets, suggesting increased efficiency or more effective asset management during this period. However, there is a decline in this ratio to 3.14 in 2024, reflecting a reduction in the sales generated per dollar invested in fixed assets, which could imply a temporary decrease in asset utilization efficiency or strategic changes in asset deployment.

The Total Asset Turnover ratio, which assesses the overall efficiency in using total assets to generate sales, exhibits a more moderate fluctuation over the same period. The ratio increased from 0.74 in 2021 to 0.85 in 2022, denoting improved efficiency. It then decreased slightly to 0.68 in 2023, followed by stabilization at 0.72 in both 2024 and 2025. This pattern suggests that while the company initially enhanced its overall asset productivity, there was a temporary decline, but by 2024 and 2025, asset utilization returned to a relatively stable level.

Overall, the long-term activity ratios indicate that Estee Lauder has experienced a period of improved asset efficiency, particularly in fixed assets, between 2021 and 2023, followed by some fluctuation and stabilization in subsequent years. These trends may reflect strategic shifts, operational changes, or external market factors impacting asset utilization.