Ratio Analysis: Estee Lauder vs. L'Oreal
Profitability
Return on Investment Estee Lauder - 482.4/1965.4 = 24.5% L’oreal - 2242/14865.8 = 15.1%
Return on Capital Employed Estee Lauder – 789.9/1965.4+1798 = 21% L’oreal – 3056.9/14865.8+2596.6 = 17.5%
Operating Margin Estee Lauder – 789.9/7795.8 = 10.1% L’Oreal – 3056.9/19495.8 = 15.7%
Gross Margin Estee Lauder – 5966.4/7795.8 = 76.5% L’Oreal – 13799.3/19495.8 = 70.8%
Sales Growth Estee Lauder – 7795.8-7323.8/7323.8 = 6.4% L’Oreal – 19495.8-17472.6/17472.6 = 11.6%
Liquidity
Working Capital Estee Lauder – 3121/1572.2 = 198.5% L’Oreal – 6996.3/6582.1 = 106.3%
Acid Test Estee Lauder – 3121-826.6-427.5/1572.2 = 118.7% L’Oreal – 6996.3-1810.1/6582.1 = 78.8%
Activity
Asset Turnover Estee Lauder – 7795.8/5335.6 = 146.1% L’Oreal – 19495.8/24044.5 = 81.1%
Receivables Turnover Estee Lauder – 7795.8/(746.2+853.3)/2 = 9.75 L’Oreal – 19495.8/(2685.3+2442.3)/2 = 7.6
Coverage
Debt to Total Assets Estee Lauder – 1572.2+1798/5335.6 = 63.2% L’Oreal – 2596.6+6582.1/24044.5 = 38.2%
Cash Debt Coverage Ratio Estee Lauder – 956.7/(3370.2+3512.6)/2 = 27.8% L’Oreal – 3303.6/(9178.7+9693.1)/2 = 35% Profitability measure a company’s ability to generate profits. The Return on Investment for Estee Lauder is larger than L’Oreal’s, meaning Estee Lauder is more efficient with its investments. The return on capital employed indicates the efficiency and profitability of capital investments. Estee Lauder seems to have a better efficiency of capital investments than L’Oreal by about three percent. Operating Margin is a measurement of what amount of revenues is left over after paying for variable costs. L’Oreal makes about 16 cents on the dollar where Estee Lauder makes about 10 cents on the dollar. L’Oreal is more efficient with their pricing strategy and earning more per dollar of sales. Gross margin is the ratio of a dollar revenue that is used to cover costs and obligations. Both companies have relatively
Return on Investment Estee Lauder - 482.4/1965.4 = 24.5% L’oreal - 2242/14865.8 = 15.1%
Return on Capital Employed Estee Lauder – 789.9/1965.4+1798 = 21% L’oreal – 3056.9/14865.8+2596.6 = 17.5%
Operating Margin Estee Lauder – 789.9/7795.8 = 10.1% L’Oreal – 3056.9/19495.8 = 15.7%
Gross Margin Estee Lauder – 5966.4/7795.8 = 76.5% L’Oreal – 13799.3/19495.8 = 70.8%
Sales Growth Estee Lauder – 7795.8-7323.8/7323.8 = 6.4% L’Oreal – 19495.8-17472.6/17472.6 = 11.6%
Liquidity
Working Capital Estee Lauder – 3121/1572.2 = 198.5% L’Oreal – 6996.3/6582.1 = 106.3%
Acid Test Estee Lauder – 3121-826.6-427.5/1572.2 = 118.7% L’Oreal – 6996.3-1810.1/6582.1 = 78.8%
Activity
Asset Turnover Estee Lauder – 7795.8/5335.6 = 146.1% L’Oreal – 19495.8/24044.5 = 81.1%
Receivables Turnover Estee Lauder – 7795.8/(746.2+853.3)/2 = 9.75 L’Oreal – 19495.8/(2685.3+2442.3)/2 = 7.6
Coverage
Debt to Total Assets Estee Lauder – 1572.2+1798/5335.6 = 63.2% L’Oreal – 2596.6+6582.1/24044.5 = 38.2%
Cash Debt Coverage Ratio Estee Lauder – 956.7/(3370.2+3512.6)/2 = 27.8% L’Oreal – 3303.6/(9178.7+9693.1)/2 = 35% Profitability measure a company’s ability to generate profits. The Return on Investment for Estee Lauder is larger than L’Oreal’s, meaning Estee Lauder is more efficient with its investments. The return on capital employed indicates the efficiency and profitability of capital investments. Estee Lauder seems to have a better efficiency of capital investments than L’Oreal by about three percent. Operating Margin is a measurement of what amount of revenues is left over after paying for variable costs. L’Oreal makes about 16 cents on the dollar where Estee Lauder makes about 10 cents on the dollar. L’Oreal is more efficient with their pricing strategy and earning more per dollar of sales. Gross margin is the ratio of a dollar revenue that is used to cover costs and obligations. Both companies have relatively