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Estee Lauder Financial Ratio Analysis

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Estee Lauder Financial Ratio Analysis
LIntroduction
The purpose of this report is to highlight and assess the financial strength of Estee Lauder. This report will cover Estee Lauder’s Profitability, Liquidity, Leverage and Activity Ratios, which will be 19 key ratios. Secondly, these ratios will be interpreted to evaluate the current performance of the company with its historic figures of prior three years. Lastly, all these ratios will be compared with Cosmetics and Beauty Industry average and its competitor L’Oreal in 2012.

Table # 1 Summary of Key Financial Ratios of Estee Lauder Estee Lauder Financial Ratios | RATIOS | (MRQ)2012 | FY 2011 | FY 2010 | Industry | L’Oreal SA. | Profitability Ratios % | | | | | | Gross Profit Margin | 80.40% | 78.01% | 76.53% | 49.16% | 71.24% | Operating Profit Margin | 13.50% | 12.37% | 10.13% | 13.76% | 15.71% | Net Profit Margin | 8.82% | 7.95% | 6.14% | 10.75% | 11.99% | Return on Total Assets | 13.32% | 12.07% | 9.10% | 1.83% | 9.58% | Return on Equity | 31.96% | 30.62% | 26.66% | 3.14% | 16.72% | Return on Invested Capital | 21.78% | 19.95% | 15.33% | 2.58% | 14.61% | Liquidity Ratios | | | | | | Current Ratio | 1.81 | 1.90 | 1.99 | 0.50 | 1.08 | Quick Ratio | 1.35 | 1.13 | 1.19 | 0.39 | 0.67 | Inventory to Net Working Capital | 3.47 | 4.35 | 2.66 | 8.02 | 6.34 | Leverage Ratios | | | | | | Long-term Debt to Equity | 0.38 | 0.40 | 0.61 | 5.67 | 0.32 | Total Debt to Equity | 47.13 | 46.02 | 62.50 | 7.14 | 6.61 | Financial Leverage | 0.39 | 0.41 | 0.62 | | 1.52 | Equity to Total Asset | 0.41 | 0.42 | 0.36 | 0.58 | 0.65 | Activity (Efficiency) Ratios | | | | | | Days Sales Outstanding | 37.69 | 35.05 | 37.44 | 31.22 | 50.97 | Receivables Turnover | 9.69 | 10.41 | 9.75 | 11.53 | 7.16 | Days in Inventory | 180.98 | 171.69 | 161.77 | 133.12 | 120.46 | Inventory Turnover | 1.70 | 2.26 | 2.11 | 1.17 | 3.10 | Fixed Assets Turnover | 8.18 | 8.13 | 7.60 | 5.21 | 7.32 | Assets Turnover |


References: Investopedia. (2012a). Profitability Ratios. Retrieved from http://www.investopedia.com/terms/p/profitabilityratios.asp#axzz29YvV5w2I Investopedia
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