Estee Lauder Companies Inc (EL)

Financial leverage ratio

		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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Total assets	US$ in thousands	21,677,000	22,700,000	23,283,000	22,650,000	23,415,000	22,715,000	20,731,000	19,989,000	20,910,000	21,359,000	22,078,000	21,580,000	21,971,000	19,900,000	19,595,000	17,903,000	17,781,000	18,363,000	17,937,000	15,431,000
Total stockholders’ equity	US$ in thousands	5,314,000	5,744,000	5,712,000	5,342,000	5,585,000	5,877,000	5,902,000	5,517,000	5,590,000	6,150,000	6,218,000	6,081,000	6,057,000	5,528,000	5,421,000	4,452,000	3,935,000	4,329,000	4,574,000	4,530,000
Financial leverage ratio		4.08	3.95	4.08	4.24	4.19	3.87	3.51	3.62	3.74	3.47	3.55	3.55	3.63	3.60	3.61	4.02	4.52	4.24	3.92	3.41

June 30, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $21,677,000K ÷ $5,314,000K
= 4.08

Estee Lauder Companies Inc's financial leverage ratio has shown fluctuations over the past few quarters, ranging from a low of 3.41 to a high of 4.52. The financial leverage ratio measures the extent to which the company relies on debt to finance its operations, with a higher ratio indicating higher levels of debt relative to equity.

The company's financial leverage ratio has generally been on the higher side, exceeding 4 multiple times in the recent periods. This suggests that Estee Lauder has been relatively highly leveraged, relying significantly on debt financing. Higher leverage can amplify returns on equity when business is booming, but it also increases financial risk, especially in times of economic uncertainty or downturns.

It's worth noting the downward trend in the financial leverage ratio in the most recent quarters, dropping from 4.19 in June 2023 to 3.95 in March 2024, and then slightly rising to 4.08 in June 2024. This could indicate that the company has been actively managing its debt levels or potentially increasing its equity base to reduce leverage.

Overall, Estee Lauder Companies Inc's financial leverage ratio reveals its reliance on debt financing, with recent signs of potential efforts to moderate leverage levels. Investors and analysts should closely monitor these trends to assess the company's financial risk and stability over time.