Estee Lauder Companies Inc (EL)

Financial leverage ratio

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Total assets	US$ in thousands	19,892,000	21,677,000	23,415,000	20,910,000	21,971,000
Total stockholders’ equity	US$ in thousands	3,865,000	5,314,000	5,585,000	5,590,000	6,057,000
Financial leverage ratio		5.15	4.08	4.19	3.74	3.63

June 30, 2025 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $19,892,000K ÷ $3,865,000K
= 5.15

The financial leverage ratio of Estee Lauder Companies Inc. has demonstrated a general upward trend over the specified period from June 30, 2021, to June 30, 2025. Specifically, the ratio increased from 3.63 in fiscal year 2021 to 3.74 in 2022, indicating a slight rise in leverage. The ratio then continued to ascend more noticeably to 4.19 in 2023, reflecting an increased level of debt relative to shareholder equity. Although there was a marginal decline to 4.08 in 2024, the overall trend remained elevated. The ratio further increased to 5.15 in 2025, surpassing previous levels and suggesting a continued escalation in financial leverage.

This pattern indicates that over the analyzed period, the company has progressively relied more on debt financing relative to equity. The rise in the leverage ratio, particularly the notable jump in 2023 and a substantial increase by 2025, suggests an aggressive approach toward leveraging, which could be employed to finance growth initiatives, acquisitions, or share repurchases. However, increased leverage also implies higher financial risk, as the company's fixed obligations to service debt grow proportionally with the ratio.

In summary, Estee Lauder Companies Inc. has experienced a steady increase in its financial leverage ratio over the analyzed years, culminating in a significantly higher leverage position in 2025, which warrants consideration of the associated risk implications in its capital structure.