Estee Lauder Companies Inc (EL)

Working capital turnover

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	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
Revenue (ttm)	US$ in thousands	14,326,000	14,786,000	15,176,000	15,451,000	15,608,000	15,346,000	15,157,000	15,498,000	15,910,000	15,862,000	16,356,000	17,275,000	17,737,000	18,112,000	17,731,000	17,045,000	16,215,000	14,709,000	14,190,000	13,961,000
Total current assets	US$ in thousands	7,069,000	7,017,000	6,896,000	7,215,000	7,922,000	8,534,000	8,915,000	8,585,000	9,139,000	11,247,000	9,367,000	8,866,000	9,298,000	9,500,000	9,955,000	9,486,000	9,768,000	10,997,000	10,291,000	8,795,000
Total current liabilities	US$ in thousands	5,435,000	4,964,000	5,031,000	5,486,000	5,702,000	5,416,000	6,574,000	5,914,000	6,240,000	7,700,000	5,655,000	5,271,000	5,815,000	5,414,000	5,762,000	5,319,000	5,298,000	5,197,000	5,420,000	4,744,000
Working capital turnover		8.77	7.20	8.14	8.94	7.03	4.92	6.47	5.80	5.49	4.47	4.41	4.81	5.09	4.43	4.23	4.09	3.63	2.54	2.91	3.45

June 30, 2025 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $14,326,000K ÷ ($7,069,000K – $5,435,000K)
= 8.77

The analysis of Estee Lauder Companies Inc.'s working capital turnover ratio over the period from September 2020 through June 2025 indicates significant fluctuations, reflecting changes in the company's efficiency in utilizing its working capital to generate sales.

From September 30, 2020, the ratio was 3.45, which then declined to 2.91 at year-end 2020 and further to 2.54 by the end of March 2021. This downward trend suggests that during this period, the company was less efficient in generating sales relative to its working capital. Various factors, such as increased working capital components or decreased sales efficiency, could have contributed to this decline.

Beginning in June 2021, the ratio experienced a recovery, rising to 3.63, and continued to improve into September 2021 (4.09) and December 2021 (4.23). The upward trend persisted throughout 2022, reaching 4.43 in March, 5.09 in June, and peaking at 5.80 in September 2023. This indicates a period of enhanced operational efficiency, with the company better leveraging its working capital to support sales activities.

However, a temporary decline was observed at the end of 2023 (6.47 in December 2023), followed by a notable decrease in the first quarter of 2024 (4.92). Subsequently, the ratio increased significantly to 7.03 in June 2024 and further to 8.94 in September 2024, marking a substantial improvement in working capital utilization. The ratio then stabilized at 8.14 in December 2024, with minor fluctuations, and remained relatively high through March 2025, ending at 7.20 in that quarter.

Overall, the company's working capital turnover ratio exhibits a cyclical pattern characterized by periods of decline coinciding with challenges in operational efficiency, followed by phases of robust recovery and growth. The recent upward trend suggests that Estee Lauder has been increasingly effective in managing its working capital to support sales, especially evident from mid-2024 onward. The substantial fluctuations highlight the dynamic nature of the company's operational environment and indicate ongoing efforts to optimize working capital management to enhance sales productivity.