Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Colgate-Palmolive Co., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
- Current Ratio
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The current ratio exhibits fluctuations throughout the observed periods, starting at 1.07 and reaching a low point of 0.92 in mid-2020. Following this, there is a general upward trend, with the ratio consistently above 1.0 from the first quarter of 2021 onward. The highest current ratio recorded is 1.28 in late 2022. This improvement indicates a strengthening in the company's short-term liquidity position over time, suggesting enhanced ability to cover current liabilities with current assets.
- Quick Ratio
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The quick ratio remains relatively stable over the time frame but consistently stays below 0.65. It dips to its lowest value of 0.49 during the middle of 2020 and again in late 2020. From early 2021 onwards, it fluctuates modestly between 0.53 and 0.57 before slightly decreasing at the end of the series. The lower quick ratio compared to the current ratio indicates that a significant portion of current assets includes inventory, which is excluded from the quick assets. The stable pattern reflects a consistent but modest buffer of liquid assets relative to current liabilities.
- Cash Ratio
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The cash ratio remains the lowest among the liquidity ratios and shows minimal variation, ranging mostly between 0.18 and 0.23 across the periods. There is a slight decline towards the end, with the ratio reaching 0.18, the lowest in the dataset. This suggests a relatively limited amount of cash and cash equivalents held compared to current liabilities, pointing toward conservative cash holdings or efficient cash management practices that do not rely heavily on cash reserves.
- Overall Analysis
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Over the analyzed quarters, the company exhibits a gradual improvement in its overall liquidity position as seen in the current ratio, indicating stronger coverage of short-term obligations. However, the quick and cash ratios reveal that the liquidity cushion excluding inventory and cash remains modest and consistent, with no significant build-up of highly liquid assets. This pattern may reflect operational efficiency or inventory management strategies but also emphasizes a reliance on working capital components beyond cash or near-cash items to meet current liabilities.
Current Ratio
Colgate-Palmolive Co., current ratio calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Current assets | 5,437) | 5,466) | 5,113) | 5,278) | 5,160) | 4,989) | 4,397) | 4,670) | 4,652) | 4,563) | 4,338) | 4,367) | 4,212) | 4,248) | 4,179) | 4,349) | 4,255) | 4,133) | ||||||
| Current liabilities | 4,632) | 4,441) | 4,004) | 4,492) | 4,395) | 4,566) | 4,051) | 4,281) | 4,203) | 4,539) | 4,404) | 4,481) | 4,580) | 4,443) | 4,038) | 4,231) | 3,782) | 3,865) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Current ratio1 | 1.17 | 1.23 | 1.28 | 1.17 | 1.17 | 1.09 | 1.09 | 1.09 | 1.11 | 1.01 | 0.99 | 0.97 | 0.92 | 0.96 | 1.03 | 1.03 | 1.13 | 1.07 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||
| Procter & Gamble Co. | 0.56 | 0.62 | 0.65 | 0.68 | 0.67 | 0.67 | 0.70 | 0.71 | 0.78 | 0.87 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 5,437 ÷ 4,632 = 1.17
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the liquidity position as reflected by the current assets, current liabilities, and the current ratio over the examined periods.
- Current Assets
- Current assets show a general upward trend from March 31, 2019, through June 30, 2023, increasing from 4,133 million US dollars to 5,437 million US dollars. There are some fluctuations, particularly slight decreases observed at year-end quarters, such as a drop at December 31, 2019, and again at December 31, 2021, but the overall trajectory is growth, indicating an expansion in asset liquidity over time.
- Current Liabilities
- Current liabilities also fluctuate over the period, starting at 3,865 million US dollars in March 2019 and reaching 4,632 million US dollars by June 2023. The pattern here is less consistent, with periodic declines, such as the decrease at December 31, 2019, and towards the end of 2022 and early 2023. Yet, the liabilities do not increase at the same sustained rate as current assets, suggesting improving short-term financial stability.
- Current Ratio
- The current ratio begins just above 1.0 in early 2019, indicating near parity between current assets and current liabilities. It dips below 1.0 during much of 2020, reflecting a period where current liabilities exceeded current assets, suggesting tighter liquidity. From 2021 onward, the ratio consistently rises above 1.0, reaching as high as 1.28 in December 2022 before slightly decreasing to 1.17 by June 2023. This improvement suggests an enhanced capacity to cover short-term obligations over recent periods, indicating strengthening liquidity management.
Overall, the company's liquidity position has improved over the reported quarters. Despite volatility in liabilities and occasional decreases in assets, the current ratio trend shows a recovery and solidification of short-term financial health, particularly post-2020. This could imply more effective asset management, controlled liabilities, or a combination thereof contributing to enhanced solvency.
Quick Ratio
Colgate-Palmolive Co., quick ratio calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Cash and cash equivalents | 819) | 867) | 775) | 938) | 858) | 877) | 832) | 958) | 937) | 995) | 888) | 989) | 997) | 854) | 883) | 948) | 863) | 843) | ||||||
| Receivables, net of allowances | 1,656) | 1,590) | 1,504) | 1,425) | 1,490) | 1,532) | 1,297) | 1,424) | 1,443) | 1,402) | 1,264) | 1,292) | 1,231) | 1,551) | 1,440) | 1,495) | 1,590) | 1,547) | ||||||
| Total quick assets | 2,475) | 2,457) | 2,279) | 2,363) | 2,348) | 2,409) | 2,129) | 2,382) | 2,380) | 2,397) | 2,152) | 2,281) | 2,228) | 2,405) | 2,323) | 2,443) | 2,453) | 2,390) | ||||||
| Current liabilities | 4,632) | 4,441) | 4,004) | 4,492) | 4,395) | 4,566) | 4,051) | 4,281) | 4,203) | 4,539) | 4,404) | 4,481) | 4,580) | 4,443) | 4,038) | 4,231) | 3,782) | 3,865) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Quick ratio1 | 0.53 | 0.55 | 0.57 | 0.53 | 0.53 | 0.53 | 0.53 | 0.56 | 0.57 | 0.53 | 0.49 | 0.51 | 0.49 | 0.54 | 0.58 | 0.58 | 0.65 | 0.62 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||
| Procter & Gamble Co. | 0.33 | 0.34 | 0.37 | 0.41 | 0.44 | 0.44 | 0.45 | 0.46 | 0.53 | 0.61 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 2,475 ÷ 4,632 = 0.53
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets show a relatively stable pattern across the observed quarters. Starting at $2,390 million at the end of Q1 2019, values experienced minor fluctuations, reaching a low around Q4 2020 at $2,152 million. A recovery followed with levels generally staying above $2,300 million through 2021 and 2022. In the latest quarters of 2023, quick assets increased slightly, peaking close to $2,475 million. Overall, the fluctuations suggest a stable liquidity buffer with some seasonal or operational variations.
- Current Liabilities
- Current liabilities display a moderately upward trend with some volatility. Beginning at $3,865 million in Q1 2019, liabilities peaked above $4,500 million several times, notably in Q3 2020 and Q2 2022. Despite some declines in certain quarters, liabilities remained within the $4,000 to $4,600 million range in most recent periods. This pattern indicates ongoing operational or financing activities that maintain significant short-term obligations.
- Quick Ratio
- The quick ratio fluctuates within a narrow band, reflecting the relationship between liquid assets and current liabilities. The ratio started moderately low at 0.62 in Q1 2019, dipped below 0.50 in the middle of 2020 — coinciding with the increase in liabilities and reduced quick assets — and then showed slight improvement, generally oscillating between 0.53 and 0.57 in subsequent periods. The latest values near 0.53 indicate a consistent liquidity position that is somewhat below the ideal benchmark of 1, implying that quick assets cover just over half of current liabilities.
In summary, while total quick assets maintained a relatively steady level with some minor changes, current liabilities increased moderately over time, leading to a quick ratio that remains below 1 throughout the timeframe. This suggests a liquidity position that requires careful monitoring, as the company holds significantly greater short-term obligations than immediately available liquid assets.
Cash Ratio
Colgate-Palmolive Co., cash ratio calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Cash and cash equivalents | 819) | 867) | 775) | 938) | 858) | 877) | 832) | 958) | 937) | 995) | 888) | 989) | 997) | 854) | 883) | 948) | 863) | 843) | ||||||
| Total cash assets | 819) | 867) | 775) | 938) | 858) | 877) | 832) | 958) | 937) | 995) | 888) | 989) | 997) | 854) | 883) | 948) | 863) | 843) | ||||||
| Current liabilities | 4,632) | 4,441) | 4,004) | 4,492) | 4,395) | 4,566) | 4,051) | 4,281) | 4,203) | 4,539) | 4,404) | 4,481) | 4,580) | 4,443) | 4,038) | 4,231) | 3,782) | 3,865) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Cash ratio1 | 0.18 | 0.20 | 0.19 | 0.21 | 0.20 | 0.19 | 0.21 | 0.22 | 0.22 | 0.22 | 0.20 | 0.22 | 0.22 | 0.19 | 0.22 | 0.22 | 0.23 | 0.22 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||
| Procter & Gamble Co. | 0.18 | 0.18 | 0.22 | 0.25 | 0.30 | 0.28 | 0.31 | 0.31 | 0.38 | 0.45 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 819 ÷ 4,632 = 0.18
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several consistent trends regarding the liquidity position over the observed periods.
- Total Cash Assets
- The total cash assets fluctuated moderately throughout the periods. Starting at 843 million US dollars at the end of the first quarter of 2019, the cash balance demonstrated some volatility but generally remained within a range between approximately 775 million to 997 million. Notably, there was a peak in the second quarter of 2020 reaching 997 million, followed by a decline towards the end of 2022 and early 2023. This pattern suggests periodic fluctuations in cash holdings but without a clear long-term upward or downward trend.
- Current Liabilities
- Current liabilities consistently remained above 3.7 billion US dollars, showing some variability but maintaining a relatively elevated level. The figures peaked around the first quarter of 2020 and again fluctuated within the range of about 4 billion to 4.6 billion in more recent quarters. The data indicates that current liabilities regularly exceeded cash assets by a substantial margin, implying considerable short-term obligations relative to cash holdings.
- Cash Ratio
- The cash ratio, representing the ability to cover current liabilities with cash assets, was relatively stable but consistently remained below 0.25, indicating less than 25% coverage of current liabilities by cash. The ratio started at 0.22 in early 2019 and showed slight fluctuations between 0.18 to 0.23 in subsequent quarters. A downward trend is observable in the recent quarters, with the ratio declining to approximately 0.18 by mid-2023, suggesting a marginal weakening in the company's immediate liquidity position.
Overall, the data portrays a liquidity profile characterized by stable but moderately fluctuating cash assets, persistently high current liabilities, and a consistently low cash ratio. This indicates that while the company maintains substantial cash reserves, the coverage of short-term liabilities by cash alone is limited and has slightly diminished in the most recent quarters. These trends underscore the importance of monitoring liquidity to ensure short-term obligations are met without strain on operational activities.