Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Colgate-Palmolive Co. (NYSE:CL)

Financial Reporting Quality: Aggregate Accruals

Advanced level

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Colgate-Palmolive Co., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Operating Assets
Total assets 15,034  12,161  12,676  12,123  11,958 
Less: Cash and cash equivalents 883  726  1,535  1,315  970 
Operating assets 14,151  11,435  11,141  10,808  10,988 
Operating Liabilities
Total liabilities 14,476  11,964  12,433  12,106  12,002 
Less: Notes and loans payable 260  12  11  13 
Less: Current portion of long-term debt 254  —  —  —  298 
Less: Long-term debt, excluding current portion 7,333  6,354  6,566  6,520  6,269 
Operating liabilities 6,629  5,598  5,856  5,573  5,431 
 
Net operating assets1 7,522  5,837  5,285  5,235  5,557 
Balance-sheet-based aggregate accruals2 1,685  552  50  (322)
Financial Ratio
Balance-sheet-based accruals ratio3 25.23% 9.93% 0.95% -5.97%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Estée Lauder Cos. Inc. -13.55% -11.79% 33.48% 16.53%
Kimberly-Clark Corp. 8.21% -11.14% 12.73% -6.19%
Nike Inc. -6.42% -17.96% 12.43% 9.62%
Balance-Sheet-Based Accruals Ratio, Sector
Personal Goods 3.88% -9.33% 14.41% 2.94%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Goods 0.69% 4.92% 2.73% -0.74%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-18).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 14,1516,629 = 7,522

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 7,5225,837 = 1,685

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,685 ÷ [(7,522 + 5,837) ÷ 2] = 25.23%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Colgate-Palmolive Co. deteriorated earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Colgate-Palmolive Co., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income attributable to Colgate-Palmolive Company 2,367  2,400  2,024  2,441  1,384 
Less: Net cash provided by operations 3,133  3,056  3,054  3,141  2,949 
Less: Net cash used in investing activities (2,099) (1,170) (471) (499) (685)
Cash-flow-statement-based aggregate accruals 1,333  514  (559) (201) (880)
Financial Ratio
Cash-flow-statement-based accruals ratio1 19.96% 9.24% -10.63% -3.72%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Estée Lauder Cos. Inc. -23.23% -18.62% 31.15% 14.50%
Kimberly-Clark Corp. 6.40% -8.96% 2.74% -4.74%
Nike Inc. -19.84% -35.83% 17.03% 20.10%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Personal Goods -3.74% -16.21% 10.65% 7.03%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Goods -3.33% -1.05% 4.39% 3.97%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-18).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,333 ÷ [(7,522 + 5,837) ÷ 2] = 19.96%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Colgate-Palmolive Co. deteriorated earnings quality from 2018 to 2019.