Indicator Analysis for Cosmetics Companies: Evidence from L’Oréal, Shiseido and Estée Lauder

Abstract

The Chinese cosmetic market increases dramatically in the last five years, which may correspond with the worldwide consuming and investing trend. This paper refers to the profitability performance of three multinational cosmetics companies, i.e., L’Oréal, Shiseido, and Estée Lauder. The best way to illustrate their aspects is ratio analysis combined with visualizations. To be specific, profitability, liquidity as well as working capital indicators are utilized. As for profitability indicator, it includes net profit margin, return on capital employed. Liquidity indicators include current ratio or quick ratio while working capital indicators include inventory turnover period and cash flow. According to the analysis, P&G and L’Oréal are the best seller in the current market because their market proportion are over 50%. Then, the selling of Shiseido and Etsee lauder are ranked after L’Oréal. The strategy these companies chose is significant to get high sales volume, which includes online or offline sales modes etc. The reflection of the ratio also represents some shortage of their operating. These results shed light on guiding further exploration of the profitability and investment performance.