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Essay / Research Paper Abstract
This 4 page paper examines the capital structure of Colgate Palmolive, looking at the debt and equity levels and the debt equity ratio as well as the efficiency with which the assets and equity are used as well as the company’s short term liquidity within the company. The bibliography cites 2 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEcolpam.rtf
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Unformatted sample text from the term paper:
there is a greater level of capital from secured sources, meaning a higher level of borrowing, it is seen as higher risk, as there is less security in the company
that will be free to be distributed to the shareholders should the company fail. Colgate Palmolive is a well established company and is seen by many as having a strong
capital structure than places the company is a strong position. All figures are taken form the 2001 Colgate Palmolive annual report. This is used as the 2002 report is not
yet available. In looking at the capital stricture of a company the main measure may be that of the debt equity ratio. This is a ratio that can be
used to assess the capital structure of a company. The way this is calculated is the long term debt, which in this case will usually include any preferences shares that
have been issued, which is then expressed as a percentage of the total equity. This gives us an indication of the approach of the company and also the debt burden,
Where there are higher ratios it is usually expected that there will be higher returns to justify the higher borrowing. Borrowing usually occurs in order to enrich a company and
take advantage of opportunities to create more value for shareholders. However, highly geared companies; companies with a high debt equity ratio may also be seen as more risky investments as
less of the company is owned by the shareholders. To undertake an expansion of the debt equity ratio there is the need to look at the total debt and
also the equity. The first stage is to look at the component parts of this calculation. The 2001 figures give the current assets of $2.2 billion and long-term assets
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