Estee Lauder Companies Inc (EL)

Cash ratio

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Cash and cash equivalents	US$ in thousands	2,921,000	3,395,000	4,029,000	3,957,000	4,958,000
Short-term investments	US$ in thousands	—	—	—	24,000	15,000
Total current liabilities	US$ in thousands	5,435,000	5,702,000	6,240,000	5,815,000	5,298,000
Cash ratio		0.54	0.60	0.65	0.68	0.94

June 30, 2025 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($2,921,000K + $—K) ÷ $5,435,000K
= 0.54

The cash ratio of Estee Lauder Companies Inc. demonstrates a notable downward trend over the analyzed period from June 30, 2021, to June 30, 2025. In 2021, the cash ratio was 0.94, indicating that the company's cash and cash equivalents were nearly sufficient to cover its current liabilities without relying on other current assets. By June 30, 2022, this ratio decreased significantly to 0.68, reflecting a reduction in liquidity available solely from cash and its equivalents in relation to current liabilities. The decline continued gradually in subsequent years, with the ratio reaching 0.65 in 2023 and further decreasing to 0.60 in 2024. The projection for June 30, 2025, indicates a ratio of 0.54, suggesting a continued relative decrease in cash coverage of current liabilities.

This declining trend in the cash ratio indicates that over the period, the company's capacity to meet its short-term obligations purely through its cash holdings has diminished. While the ratio remains below 1.0 throughout, suggesting that cash alone is insufficient to cover all current liabilities, the decreasing trend warrants attention. It may reflect strategic shifts toward utilizing cash reserves for investments or operational needs, or a broader change in working capital management practices. Overall, the trend underscores a gradual reduction in immediate liquidity, emphasizing the importance of further analysis into the company's liquidity management and operational cash flows.