Estee Lauder Companies Inc (EL)
Solvency ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 5.15 | 4.08 | 4.19 | 3.74 | 3.63 |
The solvency ratios for Estee Lauder Companies Inc. over the period from June 2021 to June 2025 present a noteworthy trend. The debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio are consistently reported as zero across all these years, indicating that the company maintains no reported debt in its financial structure during this period. This suggests a reliance solely on equity or internal funds for financing operations and investments, positioning the firm as entirely equity-financed with no leverage from debt.
In contrast, the financial leverage ratio exhibits a gradual increase over the same timeframe. It rises from 3.63 in June 2021 to 5.15 in June 2025. The financial leverage ratio reflects the proportion of total assets relative to equity, serving as an indicator of the degree of financial leverage employed by the company. An increasing ratio implies a rising level of assets relative to equity, likely due to retained earnings or other internal growth mechanisms rather than additional debt issuance.
Overall, the data suggests that Estee Lauder Companies Inc. maintains a highly conservative or debt-free capital structure, with no leverage derived from debt instruments. The rising financial leverage ratio indicates asset growth without reliance on external debt, emphasizing an equity-based model of financing which could imply lower financial risk but also potentially limited leverage-driven growth opportunities.
Coverage ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Interest coverage | -4.00 | 3.06 | 6.34 | 18.40 | 20.25 |
The interest coverage ratio for Estee Lauder Companies Inc. has demonstrated a significant decline over the assessed period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the ratio stood at 20.25, indicating a robust capacity to meet interest obligations from earnings before interest and taxes (EBIT). This proportion remained relatively high through June 30, 2022, with a slight decrease to 18.40, suggesting sustained, strong earnings relative to interest expenses.
However, a marked deterioration is observed by June 30, 2023, when the ratio sharply declined to 6.34. This decline signals a substantial reduction in earnings relative to interest obligations, though the company still maintained a positive coverage, implying continuity in interest payments. The downward trend continues into June 30, 2024, with the ratio diminishing further to 3.06, nearing the threshold where interest obligations become more strained relative to earnings.
By June 30, 2025, the ratio turns negative at -4.00, indicating that the company's earnings before interest and taxes are no longer sufficient to cover interest expenses, and suggesting potential difficulties in meeting interest commitments without additional earnings, asset sales, or refinancing. This negative coverage ratio reflects a significant deterioration in financial health concerning interest obligations and warrants close attention regarding the company's liquidity position and overall financial stability.