Colgate Palmolive Debt
| CL Stock | USD 95.34 0.42 0.44% |
At this time, Colgate Palmolive's Net Debt is quite stable compared to the past year. Debt To Equity is expected to rise to 14.74 this year, although the value of Short Term Debt will most likely fall to about 403.8 M. . Colgate Palmolive's financial risk is the risk to Colgate Palmolive stockholders that is caused by an increase in debt.
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 0.52150308 | Current Value 0.31 | Quarterly Volatility 0.08276591 |
Given that Colgate Palmolive's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Colgate Palmolive is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Colgate Palmolive to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Colgate Palmolive is said to be less leveraged. If creditors hold a majority of Colgate Palmolive's assets, the Company is said to be highly leveraged.
Non Current Liabilities Total is expected to rise to about 11.2 B this year, although the value of Total Current Liabilities will most likely fall to about 3.4 B. Colgate |
Colgate Palmolive Bond Ratings
Colgate Palmolive financial ratings play a critical role in determining how much Colgate Palmolive have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Colgate Palmolive's borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (2.83) | Unlikely Manipulator | View |
Colgate Palmolive Debt to Cash Allocation
Many companies such as Colgate Palmolive, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Colgate Palmolive reports 9.06 B of total liabilities. Colgate Palmolive has a current ratio of 1.15, indicating that it is in a questionable position to pay out its debt commitments in time. Note however, debt could still be an excellent tool for Colgate to invest in growth at high rates of return. Colgate Palmolive Total Assets Over Time
Colgate Palmolive Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Colgate Palmolive uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Colgate Palmolive Debt Ratio | 31.0 |
Colgate Palmolive Corporate Bonds Issued
Colgate Palmolive issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Colgate Palmolive uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt.
Colgate Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Colgate Palmolive Use of Financial Leverage
Leverage ratios show Colgate Palmolive's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Colgate Palmolive's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 9.1 B | 4.8 B | |
| Net Debt | 8.1 B | 8.5 B | |
| Short Term Debt | 425 M | 403.8 M | |
| Long Term Debt | 8.2 B | 5.4 B | |
| Long Term Debt Total | 10.1 B | 6.4 B | |
| Short and Long Term Debt | 330 M | 198.3 M | |
| Net Debt To EBITDA | 1.80 | 1.51 | |
| Debt To Equity | 14.04 | 14.74 | |
| Interest Debt Per Share | 10.68 | 11.21 | |
| Debt To Assets | 0.52 | 0.31 | |
| Long Term Debt To Capitalization | 0.93 | 0.53 | |
| Total Debt To Capitalization | 0.93 | 0.55 | |
| Debt Equity Ratio | 14.04 | 14.74 | |
| Debt Ratio | 0.52 | 0.31 | |
| Cash Flow To Debt Ratio | 0.44 | 0.39 |
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Is Household Products space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Colgate Palmolive. If investors know Colgate will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Colgate Palmolive listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.049 | Dividend Share 1.96 | Earnings Share 3.48 | Revenue Per Share 24.493 | Quarterly Revenue Growth 0.024 |
The market value of Colgate Palmolive is measured differently than its book value, which is the value of Colgate that is recorded on the company's balance sheet. Investors also form their own opinion of Colgate Palmolive's value that differs from its market value or its book value, called intrinsic value, which is Colgate Palmolive's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Colgate Palmolive's market value can be influenced by many factors that don't directly affect Colgate Palmolive's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Colgate Palmolive's value and its price as these two are different measures arrived at by different means. Investors typically determine if Colgate Palmolive is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Colgate Palmolive's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.