Estee Laude

Estée Lauder Companies

Business Description

Estée and Joseph Lauder founded The Estée Lauder Companies Inc. in 1946 and the headquarter is currently in New York City, New York . As of today, it is one of the world’s leading manufacturers and marketers of high quality skin care, makeup, fragrances, and hair products. The company produces products under well-known brand name such as Estée Lauder, Aramis, Clinique, M-A-C, Bobbi Brown, and Aveda. It also has the global license to sell fragrances and/or cosmetics under brand names such as Tommy Hilfiger, Donna Karan, Michael Kors, Tom Ford and Coach1. The company distributes its products in over 150 countries and territories with limited distribution channels. It has over 30,000 points of sales that consist primarily of upscale department stores, specialty retailers, single-brand stores, and prestige salons and spas1.

Performance Analysis

Estée Lauder’s liquidity ratios have been very high for the past 3 years. EXHIBIT X shows that the current and quick ratios are above one. However, the big difference in current and quick ratio can cause investors to wonder why the company holds so much inventory and not distributing them to distributors and sellers. This relates to the fluctuation of asset management ratios in the past 3 years. This is a sign to investors that the company has not been efficient in selling inventory and collecting its collectibles. However, the total asset turnover has been constant in the 1.40 range. Estée Lauder has been successful in utilizing its asset resources to generate sales, which aligns with its strategic strategy of investing in resources that will provide long-term sustainability. By looking at Estée Lauder’s debt management ratios, the company uses debt to finance its operation. The high interest coverage ratio is an indication that Estée Lauder can pay the interests.

Estée Lauder has been profitable in the last 3 years. All of its profitability ratios have been increasing...