Short-term (Operating) Activity Analysis

Difficulty: Beginner


Ratios (Summary)

Colgate-Palmolive Co., short-term (operating) activity ratios

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Turnover Ratios
Inventory turnover 5.06 5.19 5.62 5.19 5.07
Receivables turnover 10.44 10.77 11.24 11.13 10.65
Payables turnover 5.09 5.40 5.98 5.82 5.38
Working capital turnover 12.55 14.71 18.86 18.84 49.49
Average No. of Days
Average inventory processing period 72 70 65 70 72
Add: Average receivable collection period 35 34 32 33 34
Operating cycle 107 104 97 103 106
Less: Average payables payment period 72 68 61 63 68
Cash conversion cycle 35 36 36 40 38

Source: Based on data from Colgate-Palmolive Co. Annual Reports

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Colgate-Palmolive Co.'s inventory turnover deteriorated from 2015 to 2016 and from 2016 to 2017.
Receivables turnover An activity ratio equal to revenue divided by receivables. Colgate-Palmolive Co.'s receivables turnover deteriorated from 2015 to 2016 and from 2016 to 2017.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Colgate-Palmolive Co.'s payables turnover declined from 2015 to 2016 and from 2016 to 2017.
Working capital turnover An activity ratio calculated as revenue divided by working capital. Colgate-Palmolive Co.'s working capital turnover deteriorated from 2015 to 2016 and from 2016 to 2017.
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Colgate-Palmolive Co.'s average inventory processing period deteriorated from 2015 to 2016 and from 2016 to 2017.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. Colgate-Palmolive Co.'s average receivable collection period deteriorated from 2015 to 2016 and from 2016 to 2017.
Operating cycle Equal to average inventory processing period plus average receivables collection period. Colgate-Palmolive Co.'s operating cycle deteriorated from 2015 to 2016 and from 2016 to 2017.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Colgate-Palmolive Co.'s average payables payment period increased from 2015 to 2016 and from 2016 to 2017.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.

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Inventory Turnover

Colgate-Palmolive Co., inventory turnover calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Cost of sales 6,174  6,072  6,635  7,168  7,219 
Inventories 1,221  1,171  1,180  1,382  1,425 
Ratio
Inventory turnover1 5.06 5.19 5.62 5.19 5.07
Benchmarks
Inventory Turnover, Competitors
Kimberly-Clark Corp. 6.54 6.88 6.27 6.89 6.23
Nike Inc. 3.77 3.60 3.81 3.89 4.16
Inventory Turnover, Sector
Personal Goods 4.58 4.56 4.73 4.92 4.99
Inventory Turnover, Industry
Consumer Goods 7.39 7.55 7.60 7.66 7.38

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Inventory turnover = Cost of sales ÷ Inventories
= 6,174 ÷ 1,221 = 5.06

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Colgate-Palmolive Co.'s inventory turnover deteriorated from 2015 to 2016 and from 2016 to 2017.

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Receivables Turnover

Colgate-Palmolive Co., receivables turnover calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Net sales 15,454  15,195  16,034  17,277  17,420 
Receivables, net of allowances 1,480  1,411  1,427  1,552  1,636 
Ratio
Receivables turnover1 10.44 10.77 11.24 11.13 10.65
Benchmarks
Receivables Turnover, Competitors
Kimberly-Clark Corp. 7.89 8.36 8.15 8.87 8.31
Nike Inc. 9.34 9.99 9.11 8.10 8.12
Receivables Turnover, Sector
Personal Goods 9.11 9.63 9.23 8.99 8.75
Receivables Turnover, Industry
Consumer Goods 13.40 13.52 14.03 12.82 13.19

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Receivables turnover = Net sales ÷ Receivables, net of allowances
= 15,454 ÷ 1,480 = 10.44

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. Colgate-Palmolive Co.'s receivables turnover deteriorated from 2015 to 2016 and from 2016 to 2017.

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Payables Turnover

Colgate-Palmolive Co., payables turnover calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Cost of sales 6,174  6,072  6,635  7,168  7,219 
Accounts payable 1,212  1,124  1,110  1,231  1,343 
Ratio
Payables turnover1 5.09 5.40 5.98 5.82 5.38
Benchmarks
Payables Turnover, Competitors
Kimberly-Clark Corp. 4.13 4.43 4.58 4.99 5.35
Nike Inc. 9.30 7.94 7.76 7.95 8.67
Payables Turnover, Sector
Personal Goods 6.06 5.91 6.00 6.16 6.34
Payables Turnover, Industry
Consumer Goods 4.87 5.12 5.59 6.06 6.03

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Payables turnover = Cost of sales ÷ Accounts payable
= 6,174 ÷ 1,212 = 5.09

Ratio Description The company
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Colgate-Palmolive Co.'s payables turnover declined from 2015 to 2016 and from 2016 to 2017.

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Working Capital Turnover

Colgate-Palmolive Co., working capital turnover calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Current assets 4,639  4,338  4,384  4,863  4,822 
Less: Current liabilities 3,408  3,305  3,534  3,946  4,470 
Working capital 1,231  1,033  850  917  352 
Net sales 15,454  15,195  16,034  17,277  17,420 
Ratio
Working capital turnover1 12.55 14.71 18.86 18.84 49.49
Benchmarks
Working Capital Turnover, Competitors
Kimberly-Clark Corp. 30.13
Nike Inc. 3.24 3.35 3.17 3.21 2.61
Working Capital Turnover, Sector
Personal Goods 6.09 6.60 6.82 7.27 5.94
Working Capital Turnover, Industry
Consumer Goods 19.23 22.86 15.33 72.46

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Working capital turnover = Net sales ÷ Working capital
= 15,454 ÷ 1,231 = 12.55

Ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital. Colgate-Palmolive Co.'s working capital turnover deteriorated from 2015 to 2016 and from 2016 to 2017.

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Average Inventory Processing Period

Colgate-Palmolive Co., average inventory processing period calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Inventory turnover 5.06 5.19 5.62 5.19 5.07
Ratio (no. of days)
Average inventory processing period1 72 70 65 70 72
Benchmarks (no. of days)
Average Inventory Processing Period, Competitors
Kimberly-Clark Corp. 56 53 58 53 59
Nike Inc. 97 101 96 94 88
Average Inventory Processing Period, Sector
Personal Goods 80 80 77 74 73
Average Inventory Processing Period, Industry
Consumer Goods 49 48 48 48 49

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 5.06 = 72

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Colgate-Palmolive Co.'s average inventory processing period deteriorated from 2015 to 2016 and from 2016 to 2017.

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Average Receivable Collection Period

Colgate-Palmolive Co., average receivable collection period calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Receivables turnover 10.44 10.77 11.24 11.13 10.65
Ratio (no. of days)
Average receivable collection period1 35 34 32 33 34
Benchmarks (no. of days)
Average Receivable Collection Period, Competitors
Kimberly-Clark Corp. 46 44 45 41 44
Nike Inc. 39 37 40 45 45
Average Receivable Collection Period, Sector
Personal Goods 40 38 40 41 42
Average Receivable Collection Period, Industry
Consumer Goods 27 27 26 28 28

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 10.44 = 35

Ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. Colgate-Palmolive Co.'s average receivable collection period deteriorated from 2015 to 2016 and from 2016 to 2017.

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Operating Cycle

Colgate-Palmolive Co., operating cycle calculation, comparison to benchmarks

No. of days

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Average inventory processing period 72 70 65 70 72
Average receivable collection period 35 34 32 33 34
Ratio
Operating cycle1 107 104 97 103 106
Benchmarks
Operating Cycle, Competitors
Kimberly-Clark Corp. 102 97 103 94 103
Nike Inc. 136 138 136 139 133
Operating Cycle, Sector
Personal Goods 120 118 117 115 115
Operating Cycle, Industry
Consumer Goods 76 75 74 76 77

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= 72 + 35 = 107

Ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period. Colgate-Palmolive Co.'s operating cycle deteriorated from 2015 to 2016 and from 2016 to 2017.

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Average Payables Payment Period

Colgate-Palmolive Co., average payables payment period calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Payables turnover 5.09 5.40 5.98 5.82 5.38
Ratio (no. of days)
Average payables payment period1 72 68 61 63 68
Benchmarks (no. of days)
Average Payables Payment Period, Competitors
Kimberly-Clark Corp. 88 82 80 73 68
Nike Inc. 39 46 47 46 42
Average Payables Payment Period, Sector
Personal Goods 60 62 61 59 58
Average Payables Payment Period, Industry
Consumer Goods 75 71 65 60 61

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 5.09 = 72

Ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Colgate-Palmolive Co.'s average payables payment period increased from 2015 to 2016 and from 2016 to 2017.

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Cash Conversion Cycle

Colgate-Palmolive Co., cash conversion cycle calculation, comparison to benchmarks

No. of days

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Average inventory processing period 72 70 65 70 72
Average receivable collection period 35 34 32 33 34
Average payables payment period 72 68 61 63 68
Ratio
Cash conversion cycle1 35 36 36 40 38
Benchmarks
Cash Conversion Cycle, Competitors
Kimberly-Clark Corp. 14 15 23 21 35
Nike Inc. 97 92 89 93 91
Cash Conversion Cycle, Sector
Personal Goods 60 56 56 56 57
Cash Conversion Cycle, Industry
Consumer Goods 1 4 9 16 16

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 72 + 35 – 72 = 35

Ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.

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