Colgate-Palmolive Company (CL)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	16,393,000	15,731,000	15,040,000	15,920,000	15,034,000
Total stockholders’ equity	US$ in thousands	609,000	401,000	609,000	743,000	117,000
Financial leverage ratio		26.92	39.23	24.70	21.43	128.50

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $16,393,000K ÷ $609,000K
= 26.92

The financial leverage ratio measures the extent to which a company relies on debt financing rather than equity to support its operations and growth.

Based on the data provided, Colgate-Palmolive Co.'s financial leverage ratio has fluctuated over the past five years. In 2023, the ratio stood at 26.92, indicating that the company had a lower reliance on debt compared to equity in financing its assets and operations. This represents a decrease from the ratio in 2022 of 39.23, suggesting that Colgate-Palmolive Co. reduced its debt levels relative to equity in the most recent year.

The significant decline in the financial leverage ratio from 128.50 in 2019 to 26.92 in 2023 is particularly noteworthy. This indicates a substantial reduction in the company's debt burden relative to equity over this period, reflecting a more conservative approach to financing its activities.

Overall, the trend in Colgate-Palmolive Co.'s financial leverage ratio suggests a move towards a healthier balance between debt and equity financing, which may enhance the company's financial stability and flexibility in the long term.