Estee Lauder Companies Inc (EL)

Cash conversion cycle

		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
Cash conversion cycle	days	95.46	101.03	138.00	126.62	115.71

June 30, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 203.01 + 38.98 – 146.53
= 95.46

The cash conversion cycle (CCC) of Estee Lauder Companies Inc. demonstrates notable fluctuations over the examined period from June 30, 2021, to June 30, 2025. At the outset, in 2021, the CCC was 115.71 days, indicating the average time span from the outlay of cash for inventory purchases to the collection of cash from sales. This metric increased significantly in 2022, reaching 126.62 days, reflecting a longer period to convert investments into cash inflows.

The upward trend persisted into 2023, with the CCC extending to 138.00 days. This suggests that the company faced increased operational or financial delays, possibly due to factors such as extended inventory turnover, longer receivables collection periods, or shifts in the supply chain or credit policies.

However, the trend reversed markedly in 2024, where the CCC declined to 101.03 days, representing a substantial reduction and hinting at improved efficiencies in inventory management, receivables collection, or payables management. The decline continued into 2025, with the CCC reaching 95.46 days, nearing pre-2021 levels and signaling an overall enhancement in cash conversion efficiency.

This evolving pattern may be attributed to strategic adjustments in operational practices, improvements in supply chain responsiveness, or better credit terms with customers and suppliers. The overall reduction in the cash conversion cycle from a peak of 138.00 days in 2023 to approximately 95.46 days in 2025 suggests a concerted effort towards optimizing working capital management, thereby potentially strengthening the company's liquidity position and operational effectiveness over the given period.