Stock Analysis on Net

Colgate-Palmolive Co. (NYSE:CL)

This company has been moved to the archive! The financial data has not been updated since July 28, 2023.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Colgate-Palmolive Co., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net operating profit after taxes (NOPAT)1 2,048 2,361 2,814 2,572 2,711
Cost of capital2 8.31% 8.34% 8.28% 8.30% 8.44%
Invested capital3 14,460 13,505 13,943 13,859 11,791
 
Economic profit4 847 1,235 1,659 1,422 1,715

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,0488.31% × 14,460 = 847

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Colgate-Palmolive Co. economic profit decreased from 2020 to 2021 and from 2021 to 2022.

Net Operating Profit after Taxes (NOPAT)

Colgate-Palmolive Co., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net income attributable to Colgate-Palmolive Company 1,785 2,166 2,695 2,367 2,400
Deferred income tax expense (benefit)1 (163) (37) (143) 19 53
Increase (decrease) in allowance for doubtful accounts and estimated returns2 (8) (11) 13 (6) 5
Increase (decrease) in LIFO reserve3 86 (5) 3 (1)
Increase (decrease) in restructuring accrual4 30 (22) (69) (102) (32)
Increase (decrease) in equity equivalents5 (55) (75) (196) (90) 26
Interest expense 167 117 183 192 193
Interest expense, operating lease liability6 20 24 26 26 17
Adjusted interest expense 187 141 209 218 210
Tax benefit of interest expense7 (39) (30) (44) (46) (44)
Adjusted interest expense, after taxes8 147 111 165 172 166
Interest income (14) (17) (19) (47) (50)
Investment income, before taxes (14) (17) (19) (47) (50)
Tax expense (benefit) of investment income9 3 4 4 10 11
Investment income, after taxes10 (11) (13) (15) (37) (40)
Net income (loss) attributable to noncontrolling interest 182 172 165 160 158
Net operating profit after taxes (NOPAT) 2,048 2,361 2,814 2,572 2,711

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts and estimated returns.

3 Addition of increase (decrease) in LIFO reserve. See details »

4 Addition of increase (decrease) in restructuring accrual.

5 Addition of increase (decrease) in equity equivalents to net income attributable to Colgate-Palmolive Company.

6 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 505 × 3.90% = 20

7 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 187 × 21.00% = 39

8 Addition of after taxes interest expense to net income attributable to Colgate-Palmolive Company.

9 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 14 × 21.00% = 3

10 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Colgate-Palmolive Co. NOPAT decreased from 2020 to 2021 and from 2021 to 2022.

Cash Operating Taxes

Colgate-Palmolive Co., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Provision for income taxes 693 749 787 774 906
Less: Deferred income tax expense (benefit) (163) (37) (143) 19 53
Add: Tax savings from interest expense 39 30 44 46 44
Less: Tax imposed on investment income 3 4 4 10 11
Cash operating taxes 892 812 970 791 887

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Colgate-Palmolive Co. cash operating taxes decreased from 2020 to 2021 but then increased from 2021 to 2022 not reaching 2020 level.

Invested Capital

Colgate-Palmolive Co., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Notes and loans payable 11 39 258 260 12
Current portion of long-term debt 14 12 9 254
Long-term debt, excluding current portion 8,741 7,194 7,334 7,333 6,354
Operating lease liability1 505 588 613 636 620
Total reported debt & leases 9,271 7,833 8,214 8,483 6,986
Total Colgate-Palmolive Company shareholders’ equity 401 609 743 117 (102)
Net deferred tax (assets) liabilities2 248 202 135 330 83
Allowance for doubtful accounts and estimated returns3 70 78 89 76 82
LIFO reserve4 146 60 65 62 63
Restructuring accrual5 39 9 31 100 202
Equity equivalents6 503 349 320 568 430
Accumulated other comprehensive (income) loss, net of tax7 4,055 4,386 4,345 4,273 4,188
Noncontrolling interests 405 362 358 441 299
Adjusted total Colgate-Palmolive Company shareholders’ equity 5,364 5,706 5,766 5,399 4,815
Marketable securities8 (175) (34) (37) (23) (10)
Invested capital 14,460 13,505 13,943 13,859 11,791

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of LIFO reserve. See details »

5 Addition of restructuring accrual.

6 Addition of equity equivalents to total Colgate-Palmolive Company shareholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of marketable securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Colgate-Palmolive Co. invested capital decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Cost of Capital

Colgate-Palmolive Co., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 60,427 60,427 ÷ 69,127 = 0.87 0.87 × 9.21% = 8.05%
Debt3 8,195 8,195 ÷ 69,127 = 0.12 0.12 × 2.50% × (1 – 21.00%) = 0.23%
Operating lease liability4 505 505 ÷ 69,127 = 0.01 0.01 × 3.90% × (1 – 21.00%) = 0.02%
Total: 69,127 1.00 8.31%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 66,525 66,525 ÷ 74,803 = 0.89 0.89 × 9.21% = 8.19%
Debt3 7,690 7,690 ÷ 74,803 = 0.10 0.10 × 1.51% × (1 – 21.00%) = 0.12%
Operating lease liability4 588 588 ÷ 74,803 = 0.01 0.01 × 4.00% × (1 – 21.00%) = 0.02%
Total: 74,803 1.00 8.34%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 66,799 66,799 ÷ 75,845 = 0.88 0.88 × 9.21% = 8.11%
Debt3 8,433 8,433 ÷ 75,845 = 0.11 0.11 × 1.67% × (1 – 21.00%) = 0.15%
Operating lease liability4 613 613 ÷ 75,845 = 0.01 0.01 × 4.20% × (1 – 21.00%) = 0.03%
Total: 75,845 1.00 8.28%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 65,213 65,213 ÷ 74,165 = 0.88 0.88 × 9.21% = 8.10%
Debt3 8,316 8,316 ÷ 74,165 = 0.11 0.11 × 1.99% × (1 – 21.00%) = 0.18%
Operating lease liability4 636 636 ÷ 74,165 = 0.01 0.01 × 4.10% × (1 – 21.00%) = 0.03%
Total: 74,165 1.00 8.30%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 57,474 57,474 ÷ 64,540 = 0.89 0.89 × 9.21% = 8.20%
Debt3 6,446 6,446 ÷ 64,540 = 0.10 0.10 × 2.78% × (1 – 21.00%) = 0.22%
Operating lease liability4 620 620 ÷ 64,540 = 0.01 0.01 × 2.78% × (1 – 21.00%) = 0.02%
Total: 64,540 1.00 8.44%

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Colgate-Palmolive Co., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit1 847 1,235 1,659 1,422 1,715
Invested capital2 14,460 13,505 13,943 13,859 11,791
Performance Ratio
Economic spread ratio3 5.86% 9.14% 11.90% 10.26% 14.55%
Benchmarks
Economic Spread Ratio, Competitors4
Procter & Gamble Co. 7.84% 7.41% 5.10% -3.36% 1.87%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 847 ÷ 14,460 = 5.86%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Colgate-Palmolive Co. economic spread ratio deteriorated from 2020 to 2021 and from 2021 to 2022.

Economic Profit Margin

Colgate-Palmolive Co., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit1 847 1,235 1,659 1,422 1,715
Net sales 17,967 17,421 16,471 15,693 15,544
Performance Ratio
Economic profit margin2 4.72% 7.09% 10.07% 9.06% 11.04%
Benchmarks
Economic Profit Margin, Competitors3
Procter & Gamble Co. 9.18% 9.26% 7.27% -4.46% 2.58%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Economic profit. See details »

2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 847 ÷ 17,967 = 4.72%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Colgate-Palmolive Co. economic profit margin deteriorated from 2020 to 2021 and from 2021 to 2022.