Colgate-Palmolive Co. (NYSE:CL)

The analysis of the financial ratios over the period from 2018 to 2022 reveals several notable trends and shifts in the company’s operational efficiency, liquidity, leverage, profitability, and returns.

Total Asset Turnover

The reported total asset turnover shows a decline from 1.28 in 2018 to around 1.03-1.04 in 2019 and 2020, indicating a decrease in the efficiency of asset use in generating revenue during those years. However, there is a recovery trend observed in 2021 and 2022, with ratios increasing to 1.16 and then slightly decreasing to 1.14, suggesting a partial improvement in asset utilization. The adjusted total asset turnover follows a similar pattern with slightly lower values in initial years but converging with reported figures in later periods.

Current Ratio

There is a general improvement in liquidity as reflected in the current ratio. The reported current ratio dropped below 1.0 in 2020 (0.99), which could indicate short-term liquidity pressure. However, it rebounds in 2021 and rises further in 2022 to 1.28, reflecting enhanced short-term financial health and a stronger ability to cover current liabilities. The adjusted current ratio similarly shows an initial decline but recovers and improves steadily to 1.34 by 2022, confirming this positive liquidity trend.

Debt to Equity Ratio

The reported debt to equity ratio exhibits high volatility and significant discrepancies, possibly due to data anomalies, as it spikes to an extreme value in 2019 (67.07) then significantly declines to around 10-22 range in subsequent years. Adjusted ratios provide a more stable and realistic view, showing a downward trend from 11.14 in 2018 to 5.78 in 2020, followed by a mild increase to 7.08 in 2022, indicating a generally controlled but slightly rising leverage position. This suggests cautious use of debt financing with some incremental increase in leverage recently.

Debt to Capital Ratio

Both reported and adjusted debt to capital ratios demonstrate a moderate and relatively stable leverage profile. Reported ratios decline from 1.02 in 2018 to about 0.91-0.92 in 2020-2021, before increasing to 0.96 in 2022. Adjusted figures follow a consistent downward pattern from 0.92 in 2018 to 0.85 in 2020, slightly rising thereafter to 0.88 in 2022. This indicates a balanced capital structure with controlled debt levels relative to total capital.

Financial Leverage

Reported financial leverage shows extreme volatility with an unusually high value in 2019 (128.5) and decreasing to more reasonable figures thereafter, but still relatively elevated at 39.23 in 2022. Adjusted financial leverage is more stable and lower, declining from 20.37 in 2018 to 11.11 in 2020 and maintaining slightly above 12 by 2022. This suggests a reduction in reliance on debt in asset financing over the period, despite some increase in the last two years.

Net Profit Margin

The net profit margin shows a declining trend from 2018 to 2022 in both reported and adjusted values. Reported margins decrease from 15.44% in 2018 to 9.93% in 2022, with a notable dip in 2021 (12.43%). Adjusted net profit margin follows a similar decline but remains relatively higher in 2022 (12.44%) than the reported figure. This downward trend points to reduced profitability, possibly due to increased costs or pricing pressure in recent years.

Return on Equity (ROE)

Reported ROE figures exhibit extreme and likely distorted values in the thousands during 2019 to 2022, suggesting potential data inconsistencies or the effect of non-operating items or adjustments. Adjusted ROE values depict a more credible trend, decreasing from 378.95% in 2018 to around 170.74% in 2022. Despite the decline, these adjusted figures remain exceptionally high, indicating strong returns on shareholders’ equity throughout the period but with a notable reduction in efficiency or profitability in equity utilization.

Return on Assets (ROA)

The reported ROA decreases from 19.74% in 2018 to 11.35% in 2022, suggesting declining asset profitability over time. Adjusted ROA shows a similar trajectory with less pronounced decline, moving from 18.6% to 14.13% across the same timeframe, reflecting a reduction in how effectively assets generate net income, albeit maintaining a relatively strong level of profitability compared to many industry benchmarks.

In summary, the company experiences moderate fluctuations in asset turnover and shows improvement in liquidity positions in recent years. Leverage ratios reveal a generally managed debt profile, though some volatility is evident in reported figures. Profitability indicators, including net profit margin, ROE, and ROA, display a declining trend but remain at healthy levels based on adjusted figures. These patterns suggest that while the company faces challenges in maintaining profitability margins and asset efficiency, it continues to sustain solid returns and maintain balanced financial health with cautious use of leverage.

The evaluation of the financial data over the five-year period reveals several key trends related to sales, asset base, and efficiency ratios.

Net Sales

Net sales demonstrate a consistent upward trajectory, increasing from US$15,544 million in 2018 to US$17,967 million in 2022. The growth is steady each year, with the most significant increase occurring between 2019 and 2020 as well as between 2020 and 2021, indicating a positive sales momentum.

Total Assets

Total assets exhibit variability over the period, starting at US$12,161 million in 2018 and peaking at US$15,920 million in 2020. Following this peak, there is a decline to US$15,040 million in 2021, before slightly increasing again to US$15,731 million in 2022. This pattern suggests some asset reallocation or divestment activities after 2020, before stabilization occurs.

Reported Total Asset Turnover

The reported total asset turnover ratio shows a decline from 1.28 in 2018 to a low of 1.03 in 2020, indicating reduced efficiency in using assets to generate sales during this period. However, improvement is noted from 2020 onwards, with the ratio recovering to 1.16 in 2021 and slightly decreasing to 1.14 in 2022, reflecting a partial restoration of asset utilization effectiveness.

Adjusted Total Assets

Adjusted total assets follow a trend similar to total assets, increasing from US$12,774 million in 2018 to a peak of US$15,783 million in 2020, then declining and stabilizing around US$15,000 million in the subsequent years. This adjustment suggests that the remeasurements or accounting realignments applied do not significantly alter the overall asset valuation trend.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio mirrors its reported counterpart, decreasing from 1.22 in 2018 to 1.04 in 2020, then improving to 1.16 in 2021 and slightly declining to 1.14 in 2022. This consistency indicates that adjustments to assets have a neutral impact on the assessment of asset utilization efficiency over time.

Overall, the data depicts a company experiencing steady sales growth alongside fluctuating asset levels, with asset turnover ratios indicating initial inefficiencies in asset use that gradually improve in recent years. The stabilization of asset values and turnover ratios toward the end of the period suggest that operational adjustments may have contributed to more effective asset management.

The analysis of the annual financial data reveals discernible trends in the liquidity position over the five-year period.

Current Assets

There is a consistent upward trend in current assets, rising from 3,793 million US dollars in 2018 to 5,113 million US dollars in 2022. This represents a significant increase, indicating growing resource availability within a year.

Current Liabilities

Current liabilities display a fluctuating pattern with an initial increase from 3,341 million to 4,404 million US dollars by 2020, followed by a gradual decline to 4,004 million US dollars by 2022. This suggests a reduction in short-term obligations in the latter years.

Reported Current Ratio

The reported current ratio decreases from 1.14 in 2018 to below 1.00 in 2020, precisely 0.99, indicating a brief period where current liabilities marginally exceeded current assets. However, it recovers thereafter to reach 1.28 in 2022, reflecting improving liquidity.

Adjusted Current Assets

Adjusted current assets follow a pattern similar to unadjusted current assets but show higher values throughout, increasing from 3,938 million in 2018 to 5,329 million US dollars in 2022. The adjustments likely reflect a more conservative or refined approach to asset valuation.

Adjusted Current Liabilities

Adjusted current liabilities are slightly lower than reported liabilities in all years, decreasing marginally from 3,193 million in 2018 to 3,965 million US dollars in 2022. This reveals that some liabilities have been discounted or excluded in the adjustment process.

Adjusted Current Ratio

The adjusted current ratio remains consistently above the reported ratio, starting at 1.23 in 2018, dipping to 1.02 in 2020, and then rising steadily to 1.34 in 2022. This indicates a stronger liquidity position when adjustments are accounted for, with a notable recovery and enhancement in recent years.

Overall, the data indicates an improving liquidity profile over the period, highlighted by increases in current assets and a rebound in both reported and adjusted current ratios after 2020. The adjustments suggest a more favorable liquidity position under refined accounting treatments, underscoring a strengthening short-term financial stability by the end of 2022.

The analyzed financial data reveal notable fluctuations and trends in the company’s capital structure over the five-year period ending in 2022.

Total Debt

The total debt in absolute terms displayed an overall upward trajectory. Starting from US$6,366 million at the end of 2018, it increased sharply to US$7,847 million in 2019. Although there was a slight decrease in the following two years to US$7,601 million in 2020 and US$7,245 million in 2021, the total debt surged again reaching US$8,766 million in 2022, marking the highest point within this period.

Total Shareholders’ Equity

Shareholders’ equity experienced a significant improvement from a negative US$102 million in 2018 to a positive US$117 million in 2019 and further to US$743 million in 2020. However, equity declined thereafter, dropping to US$609 million in 2021 and continuing down to US$401 million in 2022. The decline in equity after 2020 suggests some erosion of the company’s net assets despite earlier recovery.

Reported Debt to Equity Ratio

This ratio showed extreme volatility and high values indicating leverage concerns. No value is reported for 2018, but in 2019, the ratio spiked dramatically to 67.07, then dropped significantly to 10.23 in 2020 and slightly increased to 11.9 in 2021. The ratio doubled again in 2022 to 21.86. These fluctuations mainly reflect the combination of shrinking equity and rising debt, underlining high financial leverage and risk, especially in 2019 and 2022.

Adjusted Total Debt

The adjusted total debt mirrored the trend of reported debt but at consistently higher levels, starting at US$6,986 million in 2018 and rising to US$9,271 million in 2022. This adjustment suggests additional financial obligations considered beyond the reported figures, contributing to the overall leverage assessment.

Adjusted Total Equity

Adjusted equity showed continuous improvement from US$627 million in 2018 to a peak of US$1,421 million in 2020, followed by a slight decline to US$1,320 million in 2021 and US$1,309 million in 2022. While the adjusted equity figures are more stable and positively trending compared to reported equity, a mild decrease emerged in the last two years.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio steadily improved from 11.14 in 2018 to 5.78 in 2020, reflecting a better balance between debt and equity during this period. The ratio then edged upward slightly to 5.93 in 2021 and further to 7.08 in 2022, indicating some deterioration in the leverage position but not reaching the extremes observed in the reported debt to equity ratio. Overall, the adjusted ratio signals more moderate leverage than the reported ratio but reveals a trend toward increasing financial risk recently.

In summary, while the company increased its total leverage over the period, adjusted metrics suggest that the balance between debt and equity showed improvement through 2020 but reversed moderately thereafter. The disparity between reported and adjusted data emphasizes the importance of considering comprehensive adjustments when assessing financial stability and risk exposure. The trends point to growing debt obligations alongside declining or stable equity levels in recent years, underscoring the need for vigilance regarding leverage management.

The financial data reflects the evolution of debt and capital metrics over the five-year period ending in 2022.

Total Debt

The total debt exhibits an overall increasing trend, rising from $6,366 million in 2018 to $8,766 million in 2022. There was a peak in 2019 at $7,847 million, followed by a slight decrease until 2021, and then a notable increase in 2022.

Total Capital

Total capital also increased from $6,264 million in 2018 to $9,167 million in 2022. The capital grew steadily, with minor fluctuations, peaking in 2022 after a slight decline from 2020 to 2021.

Reported Debt to Capital Ratio

The reported debt to capital ratio shows a moderate downward trend from 1.02 in 2018 to a low of 0.91 in 2020, indicating a relative reduction in debt compared to capital. However, it increased slightly afterward to 0.96 by 2022, suggesting a modest rise in leverage.

Adjusted Total Debt

Adjusted total debt moved upward from $6,986 million in 2018 to $9,271 million in 2022, mirroring the trend in total debt but consistently higher, reflecting the adjustments made.

Adjusted Total Capital

This metric progressively rose from $7,613 million in 2018 to $10,580 million in 2022. The increase was steady throughout the period, indicating growth in capital once adjustments were considered.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio declined from 0.92 in 2018 to a low point of 0.85 in 2020, showing improved financial leverage. Subsequently, it slightly increased to 0.88 by 2022 but remained below the initial level, indicating a relatively stable but slightly higher leverage compared to the lowest point.

The analysis of the financial data over the five-year period reveals several important trends in the company's financial position and leverage metrics.

Total Assets

Total assets increased markedly from US$12,161 million in 2018 to a peak of US$15,920 million in 2020, followed by a decline in 2021 to US$15,040 million, and a subsequent slight recovery in 2022 to US$15,731 million. This indicates growth in asset base initially, with some volatility in the later years.

Total Shareholders' Equity

The traditional reported shareholders' equity exhibits significant fluctuations. It was negative in 2018 at -US$102 million, turned positive and increased sharply to US$743 million in 2020. After that, equity declined to US$609 million in 2021 and further to US$401 million in 2022. This volatility suggests substantial changes in the components of equity, possibly influenced by accounting adjustments or specific events affecting retained earnings or other equity elements.

Reported Financial Leverage

The reported financial leverage ratio, which relates total assets to shareholders' equity, exhibits extreme variability. It was not reported in 2018, surged to an exceptionally high 128.5 in 2019, and then dropped substantially to 21.43 in 2020, followed by increases to 24.7 in 2021 and 39.23 in 2022. Such volatility reflects the sharp changes in shareholders’ equity during the period and indicates fluctuations in the company's reliance on debt relative to equity.

Adjusted Total Assets

Adjusted total assets closely track the pattern of total assets, starting at US$12,774 million in 2018, rising to US$15,783 million in 2020, decreasing slightly to US$14,985 million in 2021, and increasing to US$15,812 million in 2022. These figures confirm the overall trend of asset growth with minor fluctuations in the latter years under adjusted accounting considerations.

Adjusted Total Equity

Adjusted equity demonstrates a consistent upward trend from US$627 million in 2018 to a peak of US$1,421 million in 2020, followed by a moderate decline and stabilization around US$1,300 million in 2021 and 2022. This steadier increase compared to reported equity suggests that the adjustments provide a more stable and positive view of the company's equity position over time.

Adjusted Financial Leverage

The adjusted financial leverage ratio shows a steady decline from a high of 20.37 in 2018 to 11.11 in 2020, indicating a reduction in leverage levels over this period. From 2020 onward, the ratio stabilizes around 11 to 12, suggesting a more conservative and balanced capital structure in recent years.

Overall, the data indicates that while total assets and adjusted equity have generally increased over the five-year span with some fluctuations, reported equity and reported financial leverage have been more volatile, potentially due to accounting factors or structural changes in the balance sheet. Adjusted metrics suggest a more stable and improving financial posture, particularly in terms of equity strength and leverage management.

The financial data reveals distinct trends in profitability and sales performance over the five-year period.

Net Income Attributable to the Company

The net income shows a general declining trend from 2018 to 2022. Initially, it slightly decreased from 2400 million USD in 2018 to 2367 million USD in 2019. However, it peaked at 2695 million USD in 2020, followed by a decline to 2166 million USD in 2021 and a further decrease to 1785 million USD in 2022.

Net Sales

Net sales consistently increased each year, growing from 15,544 million USD in 2018 to 17,967 million USD in 2022. This indicates steady revenue growth despite fluctuations in profitability.

Reported Net Profit Margin

The reported net profit margin decreased over the period. It fell gradually from 15.44% in 2018 to 15.08% in 2019, then rose to 16.36% in 2020. After this peak, the margin sharply declined to 12.43% in 2021 and further to 9.93% in 2022, indicating reduced profitability relative to sales.

Adjusted Net Income Including Noncontrolling Interests

Adjusted net income slightly decreased from 2376 million USD in 2018 to 2348 million USD in 2019 before rising to 2604 million USD in 2020. This was followed by a decline to 2218 million USD in 2021 but then a modest recovery to 2235 million USD in 2022, suggesting some adjustment effects on reported income figures.

Adjusted Net Profit Margin

The adjusted net profit margin shows a declining trend but is less pronounced than the reported margin. It decreased from 15.29% in 2018 to 14.96% in 2019, increased to 15.81% in 2020, then dropped to 12.73% in 2021 and slightly improved to 12.44% in 2022, showing some stabilization in profitability when adjustments are considered.

Overall, the company experienced consistent revenue growth during the period, but profitability peaked in 2020 and has declined since. The decline in net profit margins, both reported and adjusted, indicates increasing costs or other factors negatively impacting profitability. While net income reflects this downward trend, adjusted figures suggest some mitigating factors influencing the bottom line in recent years.

The analysis of the financial data reveals several notable trends and fluctuations over the five-year period.

Net Income Attributable to the Company

The net income demonstrated a peak in 2020 with a value of 2695 million USD, followed by a decline over the subsequent two years. From 2400 million USD in 2018, net income remained relatively stable in 2019, then increased significantly in 2020. However, it decreased to 2166 million USD in 2021 and further to 1785 million USD in 2022, indicating a downward trend in profitability after 2020.

Total Shareholders’ Equity

The reported total shareholders’ equity showed substantial growth between 2018 and 2020, rising from a negative value of -102 million USD in 2018 to 743 million USD in 2020. However, this metric then declined in the following years, dropping to 401 million USD by 2022. This pattern suggests an initial improvement in equity followed by a reduction in later periods, which could be indicative of changes in retained earnings, share buybacks, or other equity-related factors.

Reported Return on Equity (ROE)

Reported ROE displayed exceptionally high values starting from 2023.08% in 2019 and then slightly declining but remaining above 350% for the subsequent years. Such abnormally high ROE percentages typically imply very low or negative equity bases combined with positive net income, which aligns with the previously observed negative to low equity values, making the reported ROE less reliable as a performance measure in this context.

Adjusted Net Income Including Noncontrolling Interests

The adjusted net income figures closely mirrored the trends of the unadjusted net income but with a less pronounced decline after 2020. Adjusted net income peaked in 2020 at 2604 million USD, decreased to 2218 million USD in 2021, and then slightly increased to 2235 million USD in 2022, suggesting some stabilization of profitability when adjustments are considered.

Adjusted Total Equity

Adjusted total equity rose significantly from 627 million USD in 2018 to 1421 million USD in 2020, followed by a moderate decrease in the years after. The equity stood at 1309 million USD in 2022, indicating that the adjusted equity base is consistently higher and more stable than the reported equity, which may reflect a more comprehensive accounting approach.

Adjusted Return on Equity (ROE)

The adjusted ROE showed a declining trend from 378.95% in 2018 to around 170% in 2022. While still relatively high, the reduction in adjusted ROE over time indicates a diminishing efficiency in generating returns on equity, which may be a result of increasing equity levels not fully matched by income growth or other operational changes affecting profitability.

In summary, the data reveals that net income experienced a significant increase until 2020 followed by a downturn. Shareholders’ equity showed conflicting trends between reported and adjusted figures, with adjusted equity levels being more robust. Return on equity metrics are notably elevated due to low equity values, with the adjusted ROE indicating a gradual reduction in return efficiency over time. These patterns suggest that while profitability peaked in 2020, subsequent years experienced challenges in income generation and equity maintenance leading to altered financial performance indicators.

The financial data over the five-year period reveals several notable trends in profitability and asset utilization. Net income attributable to the company shows some volatility, peaking in 2020 at 2695 million USD before declining steadily in the subsequent years to 1785 million USD in 2022. This indicates a downward trend in reported earnings in recent years.

Total assets increased substantially from 12161 million USD in 2018 to 15920 million USD in 2020, before marginally declining in 2021 and slightly recovering in 2022. This variation in total assets suggests active asset management and possible adjustments in investment or divestment strategies throughout the period.

The reported Return on Assets (ROA) percentage follows the trajectory of net income but at a declining rate from 19.74% in 2018 to 11.35% in 2022. The decline in ROA indicates reduced efficiency in generating profit from the company’s asset base, a trend consistent with the decreasing net income.

Adjusted figures, which incorporate noncontrolling interests and provide an alternative view of operating performance, portray a somewhat more stable outlook. Adjusted net income shows less pronounced decline, reaching a low in 2021 at 2218 million USD but rebounding slightly to 2235 million USD in 2022. This suggests that the adjusted earnings may be less sensitive to some of the income fluctuations observed in the reported net income.

The adjusted total assets mirror the pattern observed in reported total assets, with an increase to a peak in 2020 followed by a slight reduction in 2021 and a recovery in 2022. This consistency implies that adjustments do not drastically alter the asset base figures but aim to provide a clearer picture of economic reality.

Adjusted ROA percentages, ranging from 18.6% in 2018 down to 14.13% in 2022, also reflect a decrease in asset efficiency though at consistently higher levels compared to reported ROA. This suggests that when considering the adjustments, the company demonstrates relatively better performance in utilizing assets to generate income than initially indicated by the reported ROA figures.

Profitability Trends:

Net income declined notably after 2020, indicating challenges in maintaining peak profit levels.

Adjusted net income declines were less severe, showing some resilience in operating earnings.

Asset Base Trends:

Total and adjusted assets increased notably up to 2020, followed by minor fluctuations in subsequent years.

Overall asset size remained relatively stable post-2020, indicating steady capital investment.

Return on Assets Trends:

Both reported and adjusted ROA declined over time, reflecting reduced return efficiency.

Adjusted ROA consistently outperformed reported ROA, implying favorable adjustments improve assessment of asset productivity.