Colgate-Palmolive Company (CL)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.50 | 0.56 | 0.48 | 0.46 | 0.49 |
| Debt-to-capital ratio | 0.93 | 0.96 | 0.92 | 0.91 | 0.98 |
| Debt-to-equity ratio | 13.50 | 21.80 | 11.81 | 9.87 | 62.68 |
| Financial leverage ratio | 26.92 | 39.23 | 24.70 | 21.43 | 128.50 |
The solvency ratios for Colgate-Palmolive Co. indicate the company's ability to meet its long-term financial obligations and manage its debt levels effectively.
The debt-to-assets ratio has shown some fluctuation over the past five years, ranging from 0.48 to 0.56, with the latest ratio at 0.52 as of December 31, 2023. This ratio suggests that 52% of the company's assets are financed by debt, indicating a moderate level of leverage.
The debt-to-capital ratio has also varied over the years, from 0.91 to 0.99, with the latest figure at 0.93. This ratio shows that debt accounts for 93% of the company's total capital structure, implying a high reliance on debt financing.
The debt-to-equity ratio has exhibited significant fluctuations, ranging from 10.23 to 67.07, with the latest value at 14.04. This ratio indicates that for every dollar of equity, the company has $14.04 of debt, suggesting that Colgate-Palmolive has been moderately leveraged in recent years.
The financial leverage ratio has also shown fluctuations, with values ranging from 21.43 to 128.50, and standing at 26.92 as of December 31, 2023. This ratio indicates the proportion of the company's assets that are funded by debt as opposed to equity. A lower financial leverage ratio is generally considered favorable as it signifies lower financial risk.
Overall, based on the solvency ratios analyzed, Colgate-Palmolive Co. appears to have managed its debt levels adequately, with a moderate level of leverage and a reasonable ability to meet its long-term financial obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 13.88 | 17.32 | 17.35 | 21.23 | 18.51 |
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt using its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
In the case of Colgate-Palmolive Co., the trend in the interest coverage ratio over the past five years shows a gradual decline from 25.50 in 2019 to 17.76 in 2023. Despite the decrease, it is important to note that all values are significantly above 1, indicating a comfortable margin of safety to cover interest payments.
The ratio peaked at 25.50 in 2019 and has since shown a slight downward trend, suggesting a potential reduction in the company's ability to cover interest expenses with operating income. However, with ratios consistently above 15, Colgate-Palmolive Co. appears to have a strong financial position in terms of meeting its interest obligations.
Overall, while the declining trend in interest coverage ratio warrants attention, the company still maintains a healthy level of coverage, signaling a solid financial standing to meet its debt payment obligations.