Colgate-Palmolive Co (CL) - Assignment Example

Some of the famous brands that the company owns include Colgate, Palmolive, Irish Spring, Ajax, Speed Stick, Suavitel, and Fabuloso. The financial statements of the company with a trend analysis for the last three years are illustrated below. The net margin of Colgate-Palmolive in 2012 was 14.47%. A net margin measures the profitability of a company. The debt ratio of the firm was 0.79. This metric measures the solvency of the company. The current ratio shows the ability of a company to pay off its short term debt.

Colgate-Palmolive’s current ratio of 1.22 is acceptable due to the fact that is above one. The firm’s working capital was $820 million. Working capital measures the ability of a company of paying its short term debt solely using its current assets. The asset/sales ratio of the firm in 2012 was 81.91%. In 2012 the EPS of the company was $5.19. The return on assets and return on equity of Colgate-Palmolive in 2012 were 17.66% and 103.43% respectively. The table below shows a comparison of five financial ratios of Colgate-Palmolive versus the industry.

The net margin of the company is much better than the industry standard which is a desirable outcome. The firm’s debt ratio shows that the company has a bit more debt than the industry standard. The liquidity position of the company as reflected by its current ratio is below the norm. The efficiency ratio of assets/sales reflects that the company is doing better than the industry. Information regarding the market value ratio of the industry was not readily