Colgate-Palmolive Co. (NYSE:CL)

The data reveals a consistent upward trend in the total net inventories over the five-year period. The net inventories increased from 1,250 million US dollars in 2018 to 2,222 million US dollars in 2022, indicating a substantial growth in inventory holdings.

Examining the components of inventories, raw materials and supplies exhibited a marked increase, growing from 253 million US dollars in 2018 to 666 million US dollars by the end of 2022. This growth suggests a significant accumulation of basic inputs possibly in anticipation of increased production or to mitigate supply chain risks.

Work-in-process inventory values showed fluctuation within a narrower range, rising from 37 million US dollars in 2018 to a peak of 49 million in 2019, then declining and slightly recovering to 48 million in 2022. This pattern might reflect variations in production scheduling or efficiency over the years.

Finished goods inventory increased steadily from 960 million US dollars in 2018 to 1,508 million US dollars in 2022, demonstrating an overall accumulation of completed products awaiting sale. The growth aligns with the broader increase in total inventories, possibly suggesting either an expansion in sales capacity or slower inventory turnover.

The reported non-current inventory values moved into negative territory starting in 2019 and deepened through 2022, reaching -148 million US dollars. This negative figure may indicate reclassifications or write-downs of long-term inventory assets, which could reflect changes in asset valuation or inventory management strategies.

Current inventories grew consistently over the period, from 1,250 million US dollars in 2018 to 2,074 million US dollars in 2022, closely mirroring the trend of total net inventories while excluding the impact of non-current inventory adjustments.

Overall, the increasing inventory levels suggest expanded operational capacity or stockpiling strategies, while the negative non-current inventory adjustments could point to evolving classification or valuation practices that merit further analysis for potential impacts on financial positioning.

Raw materials and supplies

Increased significantly, indicating accumulation of inputs.

Work-in-process

Fluctuated but remained relatively stable, suggesting production variations.

Finished goods

Steady growth, pointing to higher inventories of completed products.

Inventories, net

Consistent increase, reflecting overall growth in inventory holdings.

Non-current inventory, net

Negative values emerging and deepening, potentially reflecting reclassifications or write-downs.

Current inventories, net

Steadily rising, closely matching total net inventories excluding non-current adjustments.

The annual data reveals several key trends in the reported and inventory LIFO reserve adjusted financial metrics over the five-year period from 2018 through 2022.

Inventories and Current Assets

Both reported and adjusted current inventories demonstrate a consistent upward trend year-over-year, indicating growth in inventory levels. Reported current inventories increased from 1,250 million US dollars in 2018 to 2,074 million in 2022, while adjusted current inventories, which account for LIFO reserves, followed a similar pattern, rising from 1,313 million to 2,220 million within the same period. This suggests that inventory valuation adjustments for LIFO have a modest but consistent impact, with adjusted inventories remaining slightly higher than reported figures.

Current assets also increased steadily. Reported current assets rose from 3,793 million in 2018 to 5,113 million in 2022, and their adjusted counterparts increased from 3,856 million to 5,259 million. The adjustments for LIFO reserves have a relatively small but persistent upward effect on current asset values.

Total Assets

Total assets experienced a rise followed by fluctuations. Reported total assets peaked in 2020 at 15,920 million before dropping substantially in 2021 to 15,040 million, then slightly recovered to 15,731 million in 2022. Adjusted total assets mirrored this behavior with figures following nearly the same path: a peak at 15,985 million in 2020, a decline to 15,100 million in 2021, and a moderate increase to 15,877 million in 2022. The LIFO reserve adjustment consistently increases total asset values by a relatively small margin each year.

Shareholders’ Equity

The shareholders' equity attributable to Colgate-Palmolive Company reveals significant volatility. Beginning with negative equity in 2018 (-102 million reported, -39 million adjusted), figures turned positive in 2019 and subsequently grew substantially in 2020 (reported: 743 million, adjusted: 808 million). However, growth was not sustained as equity declined in 2021 (609 million reported, 669 million adjusted) and further in 2022 (401 million reported, 547 million adjusted). The LIFO reserve adjustment somewhat mitigates the decline in shareholders’ equity relative to reported values throughout the time frame.

Net Income

Reported net income attributable to Colgate-Palmolive declined from 2,400 million in 2018 to 1,785 million in 2022, with a peak in 2020 at 2,695 million and a notable drop in 2021 to 2,166 million. Adjusted net income closely tracks these trends, with minor differences that slightly increase reported net income in the later years. Specifically, adjusted figures reached 2,871 million in 2022, slightly above reported amount, indicating small but positive inventory valuation impacts on profitability.

Overall, inventory and current assets consistently increased, reflecting growth and investment in working capital. Total assets displayed a cyclical trend with a peak in 2020, followed by a partial retreat. Equity figures highlight volatility and some erosion of shareholder value in recent years despite earlier gains. Net income followed a peak-and-decline pattern with minor positive adjustments from inventory valuation differences. The impact of LIFO reserve adjustments across all metrics is modest but consistently acts to increase asset and equity values as well as net income relative to reported numbers.

Current Ratio Trends

The reported current ratio showed a declining trend from 1.14 in 2018 to a low of 0.99 in 2020, indicating a slight reduction in short-term liquidity during this period. However, it improved thereafter, reaching 1.28 by the end of 2022. The adjusted current ratio, which accounts for LIFO reserve effects, follows a similar pattern but with marginally higher values each year, suggesting that inventory adjustments slightly enhance the liquidity position.

Net Profit Margin Analysis

Both the reported and adjusted net profit margins exhibited a decrease over the five-year span. Beginning at approximately 15.44% in 2018, the margin peaked slightly in 2020 at around 16.36% (reported) and 16.38% (adjusted), followed by a consistent decline to 9.93% and 10.41%, respectively, in 2022. This decline may point to pressure on profitability during the latter years.

Total Asset Turnover Evaluation

The total asset turnover ratios, both reported and adjusted, decreased significantly from 1.28 and 1.27 in 2018 to about 1.03 in 2020, indicating less efficient use of assets in generating sales. Post-2020, there was some recovery with values rising to approximately 1.14 (reported) and 1.13 (adjusted) in 2022, which suggests gradual improvement in asset utilization.

Financial Leverage Observations

Financial leverage figures show notable volatility. The reported leverage increased sharply from 21.43 in 2020 to 39.23 in 2022 after an anomalous value in 2019 (128.5) that may be an outlier or error. Adjusted leverage values are consistently lower than reported, reflecting the impact of LIFO reserve adjustment, and similarly increase over time, reaching 29.03 in 2022. The rising leverage indicates increasing use of debt or other liabilities relative to equity.

Return on Equity (ROE) Insights

ROE values present some extreme fluctuations. Starting with an unusually high reported ROE of 2023.08% in 2019, it then falls to the 300-400% range in subsequent years. Adjusted ROE is lower but still highly elevated, with a decreasing trend from 1321.79% in 2019 to 342.05% in 2022. Such high values imply potential data anomalies or unique financial events influencing equity returns during the period.

Return on Assets (ROA) Patterns

Both reported and adjusted ROA decreased gradually from around 19.7% in 2018 to about 11.3% (reported) and 11.8% (adjusted) in 2022. This downward trend indicates reduced effectiveness in generating profits from total assets over time.

General Observations

Adjusted metrics consistently differ slightly but systematically from reported figures, reflecting the impact of the inventory LIFO reserve on financial ratios. The overall trends highlight improving liquidity towards 2022 but declining profitability indicators such as net margin and ROA. Asset efficiency showed a dip around 2020 but some improvement thereafter. Leverage and ROE figures display significant variability which may warrant further investigation to understand underlying factors.

The financial data reflects the evolution of current assets and current ratios over a five-year period, with adjustments made for inventory LIFO reserves to better represent true asset liquidity.

Current Assets (Reported vs. Adjusted)

Reported current assets exhibit a steady increase from 3,793 million USD in 2018 to 5,113 million USD in 2022. The adjusted figures, which account for inventory LIFO reserves, consistently show slightly higher values, starting at 3,856 million USD in 2018 and reaching 5,259 million USD in 2022. This upward trend indicates a gradual increase in short-term asset holdings across the period.

Current Ratio (Reported vs. Adjusted)

Reported current ratios fluctuate over the period, starting at 1.14 in 2018 and hitting a low of 0.99 in 2020 before recovering to 1.28 in 2022. The adjusted current ratios follow a similar pattern but remain marginally higher throughout, beginning at 1.15 in 2018, reaching a low of 1.00 in 2020, and rising to 1.31 by 2022. This indicates an overall improvement in short-term liquidity, with 2020 as a year of tighter working capital management or increased current liabilities relative to assets.

Trend Analysis

Both the reported and adjusted data show consistent growth in current assets and an improving current ratio after a dip in 2020. The adjustment for the LIFO reserve slightly enhances the apparent liquidity position of the company throughout all years, suggesting that inventory valuation under LIFO may understate current asset values and, consequently, liquidity ratios. The peak in 2022 of the current ratio, surpassing previous levels, suggests a stronger liquidity position at the end of the period.

Insights

The data signals a strengthening liquidity profile post-2020, possibly reflecting improved operational efficiency or changes in asset-liability management. The procurement of more current assets and the resulting enhanced current ratios may provide the company with greater short-term financial flexibility. The consistent positive impact of LIFO adjustment emphasizes the importance of considering inventory accounting methods when analyzing liquidity.

The financial data displays trends in net income and net profit margin over a five-year period. Both reported and adjusted net income figures reflect variability, with an initial increase followed by a decline in the later years.

Net Income Trends

Reported net income grew from 2,400 million US dollars in 2018 to a peak of 2,695 million in 2020, indicating a period of improved profitability. However, net income decreased significantly in the subsequent years, falling to 2,166 million in 2021 and further to 1,785 million in 2022.

The adjusted net income follows a similar pattern, rising from 2,400 million in 2018 to 2,698 million in 2020, then declining to 2,161 million in 2021 and slightly recovering to 1,871 million in 2022. The adjustments slightly moderate the decrease seen in the reported figures for 2022.

Net Profit Margin Trends

The reported net profit margin corresponds closely with the net income trend, starting at 15.44% in 2018, increasing to 16.36% in 2020, and then experiencing a substantial decline to 12.43% in 2021 and further to 9.93% in 2022. This indicates that profitability relative to sales was highest in 2020 and weakened significantly thereafter.

The adjusted net profit margin mirrors this behavior, with a max of 16.38% in 2020 and a decline to 12.4% and 10.41% in 2021 and 2022 respectively. The adjustments maintain a slightly higher margin than the reported figures in 2022, suggesting some underlying factors affecting reported results.

Overall, the data indicates a peak in profitability in 2020, followed by a downward trend in both net income and profit margins. The adjustments related to inventory LIFO reserves have a modest effect on the financial outcomes, slightly cushioning the declines observed in the later periods.

Total Assets

Reported total assets exhibited an overall upward trend from 2018 to 2022, rising from 12,161 million US dollars to 15,731 million US dollars. A notable increase occurred between 2018 and 2019, followed by a moderate rise in 2020. However, there was a slight decline in 2021 before assets increased again in 2022. The LIFO reserve adjusted total assets followed a similar pattern, starting at 12,224 million US dollars in 2018 and reaching 15,877 million in 2022, consistently slightly higher than the reported figures due to adjustments.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios showed a declining trend from 2018 to 2020, dropping from approximately 1.28 to 1.03. This indicates a reduction in efficiency in generating sales from assets during this period. The ratio then improved in 2021 and slightly declined again in 2022, ending near 1.14 (reported) and 1.13 (adjusted). The adjusted turnover ratios closely mirrored the reported figures, suggesting that inventory accounting adjustments had minimal effect on turnover measurement.

Overall Observations

The increase in total assets over the years, combined with a decrease and subsequent partial recovery in asset turnover, suggests that although the company expanded its asset base, its asset utilization efficiency had weakened somewhat before showing signs of improvement. The close alignment between reported and adjusted figures for both assets and turnover implies limited impact from LIFO reserve adjustments on the company's asset valuation and efficiency metrics.

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

Total Assets

The reported total assets increased consistently from 12,161 million US dollars at the end of 2018 to a peak of 15,920 million in 2020. A decline followed in 2021 to 15,040 million, with a subsequent recovery to 15,731 million in 2022. The adjusted total assets, which account for inventory LIFO reserve adjustments, mirror this pattern closely but with slightly higher values each year, indicating the impact of inventory accounting adjustments on asset valuation.

Shareholders’ Equity

The reported total shareholders' equity experienced a significant turnaround from a negative position of -102 million US dollars in 2018 to positive figures from 2019 onward. The equity rose sharply to 743 million in 2020, then decreased to 609 million in 2021 and further to 401 million in 2022. The adjusted shareholders' equity follows a similar trajectory but with higher values, suggesting that the adjustments for inventory LIFO reserves positively affect equity figures. This pattern indicates stronger equity positions post-adjustment but also highlights volatility in equity across the years.

Financial Leverage

Financial leverage ratios exhibit considerable variability over the analyzed period. The reported financial leverage is missing for 2018 but shows a dramatic decrease from 128.5 in 2019 to 21.43 in 2020, followed by gradual increases to 24.7 in 2021 and 39.23 in 2022. The adjusted financial leverage ratio, accounting for inventory adjustments, presents a similar trend but consistently at lower levels compared to the reported figures, ranging from 84.34 in 2019 down to 19.78 in 2020, with subsequent increases to 22.57 in 2021 and 29.03 in 2022. This indicates that the adjustments reduce the leverage ratios, reflecting a relatively stronger equity base when inventory valuation adjustments are considered.

Net Income Trends

Reported net income attributable to the company exhibited fluctuation over the period analyzed. After a slight decline from 2400 million USD in 2018 to 2367 million USD in 2019, net income increased notably in 2020, reaching 2695 million USD. However, a downward trend followed, with net income decreasing to 2166 million USD in 2021 and further to 1785 million USD in 2022. Adjusted net income followed a similar pattern, with minor variations. It rose to 2698 million USD in 2020, remained relatively stable compared to reported figures, and then declined to 1871 million USD in 2022.

Shareholders' Equity Patterns

Reported shareholders’ equity showed significant improvement from a negative value in 2018 (-102 million USD) to a positive balance, reaching 743 million USD in 2020. However, subsequent years showed a decline, with equity decreasing to 609 million USD in 2021 and further to 401 million USD in 2022. Adjusted equity data mirrored this trend but reflected slightly higher values in each corresponding year, starting from -39 million USD in 2018 and peaking at 808 million USD in 2020, followed by declines in the later years.

Return on Equity (ROE) Analysis

Reported ROE was not provided for 2018 but showed extremely high values in subsequent years: 2023.08% in 2019, decreasing to 362.72% in 2020, then slightly down to 355.67% in 2021, followed by an increase to 445.14% in 2022. Adjusted ROE exhibited a similar pattern but consistently at lower magnitudes than reported ROE. It started at 1321.79% in 2019, decreased to 333.91% in 2020 and 323.02% in 2021, before rising moderately to 342.05% in 2022. These unusually elevated ROE values suggest the presence of very low or negative equity bases affecting the ratio's calculation.

Overall Insights

The data indicates that net income, after a peak in 2020, has been on a declining trajectory through 2022. Shareholders’ equity values, while improving significantly from negative to positive between 2018 and 2020, have been declining since then. The high ROE percentages are likely reflective of the low equity base rather than operational effectiveness alone, suggesting that caution is warranted when interpreting profitability based solely on ROE. The slight difference between reported and adjusted figures suggests adjustments related to inventory LIFO reserve have limited but notable impacts on the financial metrics.

Net Income Trends

The reported net income attributable to the company showed a fluctuating but generally declining trend over the observed period. It started at 2400 million USD in 2018 and slightly decreased to 2367 million USD in 2019. It then increased noticeably to 2695 million USD in 2020 before declining sharply to 2166 million USD in 2021 and further to 1785 million USD in 2022. The adjusted net income followed a similar pattern, with values closely aligned to the reported figures, indicating minimal impact of LIFO reserve adjustments on net income. The adjusted net income peaked in 2020 at 2698 million USD and fell thereafter to 1871 million USD in 2022.

Total Assets Trends

The reported total assets exhibited growth from 2018 to 2020, increasing from 12161 million USD to 15920 million USD, followed by a slight decline to 15040 million USD in 2021, and then a marginal recovery to 15731 million USD in 2022. When adjusted for the LIFO reserve, total assets maintained a similar trend but at consistently higher levels, beginning at 12224 million USD in 2018 and reaching 15877 million USD by 2022. The adjustments reflect an increase of roughly 60 to 70 million USD annually due to inventory valuation methodology.

Return on Assets (ROA) Patterns

Both reported and adjusted ROA percentages displayed a downward trend over the period. Reported ROA decreased from 19.74% in 2018 to 11.35% in 2022, signifying reduced profitability relative to asset base. Adjusted ROA closely mirrored this pattern, moving from 19.63% in 2018 to 11.78% in 2022. The negligible differences between reported and adjusted ROA suggest that inventory accounting adjustments had a minor effect on the company's profitability metrics.

Overall Insights

Across the five years, the company experienced peak profitability in 2020, followed by a notable decline in both net income and efficiency as measured by ROA. Total assets increased markedly during the first part of the period before stabilizing in the later years. Adjustments for LIFO reserve consistently increased asset values slightly but did not materially alter profitability insights. The downward trajectory in profitability ratios implies potential challenges in maintaining earnings relative to asset growth in the most recent years analyzed.