Obtain a copy of Colgate’s annual report from the Ashford Online Library or from

Question

Obtain a copy of Colgate’s annual report from the Ashford Online Library or from a valid academic source found elsewhere on the Internet. Use this information to answer the following questions. If researching online, go to the Colgate company website (http://www.colgate.com). Use the ratios discussed in Chapter 11 (dividend payout ratio and return on common stockholders’ equity) to evaluate Colgate’s dividend and earnings performance from a stockholder’s perspective. Your answer should illustrate understanding of dividend ratios and return on equity ratios, an analysis of financial statements.

Explanation / Answer

Ten-year Highlights

colgate palmolive

Lacs

Net Profit After Tax

SHAREHOLDERS’ FUNDS

2005-06

13760

27107

2006-07

16017

28052

2007-08

23171

16221

2008-09

29022

21630

2009-10

42326

32611

2010-11

40258

38405

2011-12

44647

43539

2012-13

49675

48959

2013-14

53987

59988

2014-15

55598

77032

Earnings Per Share (

`

Lacs

2005-06

7.5

10.12

2006-07

9.5

11.78

2007-08

13

17.04

2008-09

15

21.34

2009-10

20

31.12

2010-11

22

29.6

2011-12

25

32.83

2012-13

28

36.53

2013-14

27

39.7

2014-15

24

41.1

Ten-year Highlights

colgate palmolive

Lacs

Net Profit After Tax

SHAREHOLDERS’ FUNDS

return on equity growth

2005-06

13760

27107

50.7617958

2006-07

16017

28052

57.0975332 12.48%

2007-08

23171

16221

142.845694 150.18%

2008-09

29022

21630

134.174757 -6.07%

2009-10

42326

32611

129.790561 -3.27%

2010-11

40258

38405

104.824893 -19.24%

2011-12

44647

43539

102.544845 -2.18%

2012-13

49675

48959

101.462448 -1.06%

2013-14

53987

59988

89.9963326 -11.30%

2014-15

55598

77032

72.1751999 -19.80% Colgate palmolive return on equity has decreased over the year if you will observe you will find that growth rate in return on equity is negative due to icrease in shareholders fund and not due to decrease in profits. Growth in shareholders funds is higher in comparison of growth of net profit after taxe

Earnings Per Share (

`

Lacs

dividend EPS dividend payout ratio growth

2005-06

7.5

10.12

74.1106719

2006-07

9.5

11.78

80.6451613 8.82%

2007-08

13

17.04

76.2910798 -5.40%

2008-09

15

21.34

70.2905342 -7.87%

2009-10

20

31.12

64.2673522 -8.57%

2010-11

22

29.6

74.3243243 15.65%

2011-12

25

32.83

76.1498629 2.46%

2012-13

28

36.53

76.6493293 0.66%

2013-14

27

39.7

68.0100756 -11.27%

2014-15

24

41.1

58.3941606 -14.14% company dividend payout ratio has increased over the year except in the year of 13-14 & 14-15 due to the increase in number of issued common stock. in general we can say that it is a good investment in the share of colgative palmolive from the study of dividend payout ratio and return on equity for an investor

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