Colgate-Palmolive Company (CL)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.92 | 1.11 | 1.28 | 1.09 | 0.99 |
| Quick ratio | 0.48 | 0.58 | 0.61 | 0.53 | 0.50 |
| Cash ratio | 0.22 | 0.24 | 0.24 | 0.21 | 0.21 |
Colgate-Palmolive Company's liquidity ratios have shown a generally positive trend over the five-year period from 2020 to 2024.
1. Current Ratio:
- The current ratio, which indicates the company's ability to meet short-term obligations with its current assets, increased from 0.99 in 2020 to 1.28 in 2022, reflecting an improvement in liquidity. However, there was a slight decrease to 1.11 in 2023 and a further decrease to 0.92 in 2024, which may signify a potential decrease in the company's ability to cover its short-term liabilities with current assets.
2. Quick Ratio:
- The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, followed a similar trend. It rose from 0.50 in 2020 to 0.61 in 2022, showing an improvement in the company's ability to cover immediate liabilities. However, it declined to 0.48 in 2024, indicating that Colgate-Palmolive may have a lower ability to meet short-term obligations without relying on inventory.
3. Cash Ratio:
- The cash ratio, which measures a company's ability to cover short-term liabilities with cash and cash equivalents, remained relatively stable over the years, ranging from 0.21 in 2020 to 0.24 in 2022, and then slightly decreased to 0.22 in 2024. This indicates that while the company's cash position improved initially, it slightly declined in 2024.
In conclusion, Colgate-Palmolive Company's liquidity position strengthened overall during the period under review, with slight fluctuations in 2023 and 2024. The company has been able to maintain a healthy liquidity position despite some variations in individual ratios, but it may need to closely monitor its current assets and short-term obligations to ensure continued financial stability.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 35.99 | 40.35 | 55.28 | 38.21 | 43.85 |
The cash conversion cycle of Colgate-Palmolive Company has varied over the past five years. As of December 31, 2020, the company's cash conversion cycle was 43.85 days, showing the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
By December 31, 2021, the cash conversion cycle had improved to 38.21 days, indicating a more efficient management of working capital. However, there was a reversal in the trend by December 31, 2022, with the cash conversion cycle increasing to 55.28 days, potentially signaling challenges in managing inventory turnover or collections from customers.
The following year, as of December 31, 2023, the cash conversion cycle decreased to 40.35 days, which could suggest improvements in managing accounts receivable or inventory levels. By December 31, 2024, the cycle further decreased to 35.99 days, continuing the trend of efficiency in the conversion of resources into cash.
Overall, fluctuations in the cash conversion cycle can indicate changes in operational efficiency, working capital management, or market conditions. Colgate-Palmolive Company's ability to maintain or improve its cash conversion cycle over time can be crucial for its financial health and performance.