MANAG

GROUP
COST ANALYSIS A
C

COMPAN
 MANAGEMENT ACCOUNTING
GROUP PROJECT ASSIGNMENT
ST ANALYSIS AND COST ESTIMATIONS BASED ON
COST BEHAVIOURS

COMPANY : COLGATE PALMOLIVE

GROUP - 4
Name Roll No. Section
Dinkle Khushalani N20212223 B
Divyansha Rathore N20211029 B
Gunjan Bhajipale N20211031 B
Harshit Nayak N20211034 B
 OBJECTIV

Ob

1. To understand cost function and breakdow

2. To know how cost allocation is used to pre
3. To forecast in future based on cost behavi
4. To know how much margin is available to f
5. To know about the non-1 value added acti

Method

The methodology used in this project is secondary data

STEPS INVOLVED
1 Firstly from the company’s website the annual reports
2. Next what products and services do the company offe
3. Then the income statement of the last four financial y
 OBJECTIVE AND METHODOLOGY

Objective of the Project

n and breakdown of cost depending on resources.

n is used to predict economic effects and used to make decisions.
on cost behaviour and cost driver.
is available to forecast the margin of safety.
alue added activities.

Methodology of the steps involved

is secondary data has been taken from the company’s website.

he annual reports of the last four financial years has been downloaded.
the company offer to the customer has been studied.
ast four financial years and the notes of accounts has been entered into the next sheet.
ns.

ext sheet.
 COMPANY PROFILE
BRIEF SYNOPSIS
NAME OF THE COMPANY : colgate Palmolive
HEADQUARTER : 300 Park avenue New York, United States
INDUSTRY : Consumer goods
PRODUCTS : Cleaning agents, personal care and pet foods
 
Colgate-Palmolive (India) Limited is India’s leading provider of scientifically proven Oral Care products.
toothbrushes and mouthwashes under the ‘Colgate’ brand as well as a specialized range of dental ther
Colgate is working hard to re-imagine a healthier future for all people, their pets and our planet. To rein
a set of policies to communicate their dedication to doing the right thing, these policies are divided int
include Anti-Bribery policy, Non-Retaliation policy, Product research policy, procurement policy and su
oils , soy procurement policy and policy on Ingredient safety.
 
BACKGROUND
From a modest start in 1937, when handcarts were used to distribute Colgate Dental cream toothpaste
logistical marvel that makes Colgate available in almost 6.28 plus million retail outlets across the count
outstanding record of enhancing value for its strong shareholder base. The Company leads the 10,500 c
Indian Dental Association (IDA) to spread the message of oral hygiene to children across the country un
successfully reached more than 162 million school children between the age 6-14 years across 4,31,336
Colgate has been ranked as India’s no.1 most trusted oral care brand for nine consecutive years from 20
Nielsen. Colgate has also been ranked as the Most Trusted Oral Hygiene Brand by TRA’s Brand Trust Ind
 

MAIN PEOPLE.( PROMOTERS) BEHIND THE BUSINESS

Noel Wallace ( CHAIRMAN, PRESIDENT AND CEO)
Stanley J. Sutula ( CFO)
William colgate
Burdett J. Johnson( Palmolive)
William J. Peet and
Robert Peet ( Peet brothers)

OTHER RELEVANT KEY INFORMATION

VISION
The vision statement for Colgate-Palmolive Company is its strategic plan for the future – it defines wha
statement for Colgate-Palmolive Company is a document identifying the goals of Colgate-Palmolive Co
 
MISSION
The mission statement for Colgate-Palmolive Company is a public document that details the values and
Palmolive Company also identifies the purpose of the organization existence, highlighting the services
organization’s operational goals for Colgate-Palmolive Company, the processes the company uses to ac
 
GOALS
Organizational goals are those business and strategic objectives that define the purpose of Colgate-Pal
Company wants to achieve over a period of time. This time period is generally long term. The goals of C
directing the operations of the business in the short term.
 
 
MISSION
The mission statement for Colgate-Palmolive Company is a public document that details the values and
Palmolive Company also identifies the purpose of the organization existence, highlighting the services
organization’s operational goals for Colgate-Palmolive Company, the processes the company uses to ac
 
GOALS
Organizational goals are those business and strategic objectives that define the purpose of Colgate-Pal
Company wants to achieve over a period of time. This time period is generally long term. The goals of C
directing the operations of the business in the short term.
 
 
How to develop goals
1. Strategic evaluation
Assess and review the vision statement
Based on the vision statement and company values, decide where Colgate-Palmolive Company should
2. Brainstorming
Brainstorm goals that will help Colgate-Palmolive Company achieve its long term direction
Group goals according to themes
Cluster the goals, and briefly describe each group and cluster
Set long term goals for the company according to different clusters and groups
3. Prioritization
Prioritize different clusters and groups
Set and define long term goals based on prioritization
Prioritization should be based on how soon the different defined goal groups and clusters will help Col
or so to develop a successful vision statement
 
 
 
 
 
 PROFILE

oven Oral Care products. It is founded in 1806, 216 years ago. The range includes toothpaste, tooth powder,
alized range of dental therapies under the banner of Colgate Oral Pharmaceuticals.
ets and our planet. To reinforce and guide the way they fulfil this purpose around the world, they have designed
se policies are divided into two categories i.e Company policies and Sustainability policies. Company policies
rocurement policy and sustainability policies include policy on no deforestation, sustainable sourcing of palm

e Dental cream toothpaste, Colgate-Palmolive (India) today has one of the widest distribution networks in India - a
il outlets across the country. The Company has grown to a 4,500 plus crore rupees organization with an
ompany leads the 10,500 crore plus Indian toothpaste market. Colgate has worked in close partnership with the
dren across the country under its ‘ Bright Smile Bright futures’ schools dental education program.This program has
6-14 years across 4,31,336 schools in urban and rural India across the country since its launch.
consecutive years from 2011-2019 by economic times - Brand Equity - Most Trusted Brands Survey, conducted by
d by TRA’s Brand Trust India Study Report for the ninth consecutive year, from 2011-2019 .

he future – it defines what and where Colgate-Palmolive Company Company wants to be in the future. The vision
s of Colgate-Palmolive Company to facilitate its strategic, managerial, as well as general decision making processes

that details the values and strategic aims of Colgate-Palmolive Company. The mission statement of Colgate-
highlighting the services and the products it offers. Further, the mission statement also identifies the
es the company uses to achieve those, the target customer groups, and the region where the company operates.

he purpose of Colgate-Palmolive Company. Organizational goals are strategic targets that Colgate-Palmolive
y long term. The goals of Colgate-Palmolive Company help direct its employee behaviour, as well as help in
that details the values and strategic aims of Colgate-Palmolive Company. The mission statement of Colgate-
highlighting the services and the products it offers. Further, the mission statement also identifies the
es the company uses to achieve those, the target customer groups, and the region where the company operates.

he purpose of Colgate-Palmolive Company. Organizational goals are strategic targets that Colgate-Palmolive
y long term. The goals of Colgate-Palmolive Company help direct its employee behaviour, as well as help in

almolive Company should be in the next five years

erm direction

ps

and clusters will help Colgate-Palmolive Company progress and achieve its desired position in the next five years
Milestone - 1
Income Statement of Colgate (Rs. In Lakhs)
Particulars 2020
Revenue from contracts with customers 452508.34
Other Income 4924.27
Total Income 457432.61
Expenses
Cost of Materials Consumed 135033.47
Purchases of Stock-in-Trade 24410.57
Changes in inventories of Finished Goods, Stockin-Trade and Work-in-Progress -2155.89
Excise Duty 0.00
Employee Benefits Expense 33228.45
Finance Costs 961.55
Depreciation and Amortisation Expense 19794.04
Other Expenses 141824.59
Total Expense 353096.78
Profit Before Exceptional Item and Tax 104335.83
Exceptional Items 0.00
Profit Before Tax 104335.83
Tax Expense:
Current Tax 24750.04
Deferred Tax -2060.81
Total Tax Expense 22689.23
Profit for the year 81646.60
Other Comprehensive Income (net of Tax)
Items that will not be reclassified to Profit and Loss
Re-measurement (gains) on defined benefit plans 2074.80
Tax adjustment on above -522.19
Re-measurement (gains) on defined benefit plans (Net of tax) 1552.61
Total Comprehensive Income 80093.99
EARNING PER EQUITY SHARE ATTRIBUTABLE TO THE OWNER OF THE COMNPANY
BASIC AND DILUTED 38.07
SIGNIFICANT ACCOUNTING POLICIES
s. In Lakhs)
2019 2018 2017
446243.18 432842.44 452019.82
3765.54 3882.05 4112.43
450008.72 436724.49 456132.25

132847.32 118896.97 115599.43

25458.22 28442.88 31475.29
-2447.67 1667.98 558.4
0 14044.65 53838.05
29590.34 30593.49 28850.25
249.53 0 0
15916.83 15651 13324.28
137189.16 127959.3 127343.62
338803.73 337256.27 370989.32
111204.99 99468.22 85142.93
-3050.52 1165.07 0
114255.51 98303.15 85142.93

37168.69 30218.54 25345.64

-470.06 747.12 2054.05
36698.63 30965.66 27399.69
77556.88 67337.49 57743.24

-14.72 -164.59 790.67

5.09 56.96 -273.64
-9.63 -107.63 517.03
77566.51 67445.12 57226.21

30.02 24.76 21.23

 Allocati
COLGAT
Particulars
Manufacturing ,Contruction and Operting Expenses
Materials consumed:
Cost of Materials Consumed

Excise duty
Purchase of stock-in-trade

Changes in inventories of finished goods,work-in-progress, stock-in-trade and property development:

Opening stock:
– Finished goods
– Stock -in-trade
– Work-in-progress

Less: Closing stock:

– Finished goods
– Stock-in-trade
– Work-in-progress

Increase/Decrease in Excise duty on Finished goods

Employee benefits expense

Salaries, wages and bonus
Contribution to and provision for:
– Provident funds, Gratuity and Other funds
– Share Based Payments to Employees
– Compensated Absences
– Staff Welfare Expenses

Other expenses
Consumption of Stores and Spares
Processing Charges
Power and fuel
Freight and Forwarding Charges
Lease Rentals
Rates and taxes
Insurance
Repairs and Maintenance:-
Plant and Machinery
Buildings
Others
Advertising
Directors‘ fees
Auditors' Remuneration
Royalty:-
– Expense (Net of withholding tax)
– Withholding Tax on Royalty
Expenditure towards Corporate Social Responsibility
Bad debts written off
Provision for doubtful debts
Net loss on disposal of property, plant and equipment
Foreign Exchange loss (Net)
Travel and Conference Expenses
Outside Services
Miscellaneous expenses

Finance costs
Finance charges payable under finance leases
Interest expenses on Income Tax

Income Tax Expenses

Current Tax
Current Tax on the profit for the year
Adjustments for current tax of prior periods
Total current tax expeses
Deferred Tax
Relating to origination and reversal of temporary differences
Income Tax Expenses

Reconciliation of tax expense and the accounting profit multiplied by India's tax rate
Profit before income tax expense
Tax at the Indian tax rate of 34.944% [March 31,2018 - 34.608%]
Tax effect of amounts which are not deductible [allowable] in calculating taxable income:
Expenses not deductible for tax purposes
Income claimed exempt for tax purposes
Item with special rate considered separate other than normal rate
Income considered under separate head of income
Adjustments for current tax of prior periods
Impact of differential rate used for deferreed tax
Income tax expenses

Amounts Recognised directly in Equity

Current tax impact arising in the reporting period in rspect of distribution of employee stock option directly recognis

Current tax assets [Net]

Current tax assests [Net] [net of provisions of tax ₹980,44.15 lakhs, March 31,2018 : ₹1,351,94.68 lakhs]

Current tax liabilities [Net]

Current tax liabilities [Net] [Net of advance tax payments ₹1,307,52.67 lakhs, March 31, 2018 : ₹573,38.22 lakhs]
Cost Drivers
OLIVE (Rs. In lakhs)
Cost Driver Cost Behavior 2020 2019 2018

Direct Cost Variable 135033.47 132847.32 118896.97

135033.47 132847.32 118896.97

Volume of sales Variable 14044.65

Volume of sales Variable 24410.57 25458.22 28442.88
24410.57 25458.22 42487.53

Volume of sales Variable

Direct Cost Variable 12666.9 10475.88 16935.7

Direct Cost Variable 3379.18 3645.11 4460.05
Direct Cost Variable 1708.4 1185.82 1265.31
17754.48 15306.81 22661.06

Direct Cost Variable 14049.9 12666.9 10475.88

Direct Cost Variable 3379.83 3379.18 3645.11
Direct Cost Variable 2480.64 1708.4 1185.82
19910.37 17754.48 15306.81
0 0 -5686.27
-2155.89 -2447.67 1667.98

No. of Employee Fixed 28600.26 25857.92 26236.86

No. of Employee Fixed 2191.16 2055.93 2194.52

No. of Employee Fixed 974.45 806.77 941.64
No. of Employee Fixed 792.4 107.89 256.59
No. of Employee Fixed 670.18 761.83 963.88
4628.19 3732.42 4356.63
33228.45 29590.34 30593.49

Machine Hr Variable 2348.12 2212.14 2328.54

Volume of sales Variable 1414.79 1423.2 810.14
Kilo Watt Hr Variable 4534.52 4645.02 4416.06
kilometers (distance) Variable 14909.2 15222.72 13154.45
Area Fixed 533.11 4154.09 4140.59
Sales Fixed 160.24 165.38 486.81
Value of Insured asset Fixed 457.19 413.46 397.69

Machine Hr Fixed 3642.41 3181.93 3136.9

Period Fixed 212.77 218.31 131.84
Other Expenses Fixed 68.93 67.53 107.32
Sales Fixed 62601.81 56470.59 52683.13
No of directors Fixed 148.00 106.38 104.15
No of policies Fixed 123.83 114.67 106.18

Sales Volume Fixed 19569.78 19617.09 18487.71

Sales Volume Fixed 2398.99 2404.79 2241.91
Profit percentage Variable 1981.23 1821.35 1672.38
Sales Volume Variable 9.5 0 53.32
Unallocated Variable 0 406.87 15.30
- 0 0 16.59
N/A Variable 0 4.23 103.19
Km/type of vehicle Fixed 2655.32 3149.35 3277.47
N/A Fixed 14361.31 13044.89 11462.72
Direct machine hour Fixed 9693.54 8345.17 8624.91
141824.59 137189.16 127959.3

Amount of loan Fixed

No of years/month Fixed 961.55 168.22 0
No of years/month Fixed 0 81.31 0
961.55 249.53 0

27848.56 40435 33668.48

-3098.52 -3266.31 -3449.94
24750.04 37168.69 30218.54

-2060.81 -470.06 747.12

22689.23 36698.63 30965.66

104335.83 114255.51 98303.15

26259.2416944 39925.445 34020.754152

705.85 818.81 710.69

 -54.65 -405.69 -347.27
0 604.43 0
-18.63 -978.06 -19.43
-3098.52 -3266.31 -3449.94
-1104.06 0 50.86
22689.2316944 36698.625 30965.664152

62.56 198.9 172.72

22473.3 15031.88 10215.7

5083.41 5083.41 4735.75

 2017

115599.43

115599.43

53838.05
31475.29
85313.34

16575.84
4768.81
1574.33
22918.98

16935.7
4460.05
1265.31
22661.06
300.48
558.4

24602.06

1958.62
885.7
454.16
949.71
4248.19
28850.25

1993.26
907.01
4404.44
 14236.87
4056.25
1181.95
372.67

2618.78
116.48
71.1
51173.03
86.85
149.5

20851.32

1558.07
37.21

3025.75
10999.56
9503.52
127343.62

0
0
0

26963.2
-1617.56
25345.64

2054.05
27399.69

85142.93
29466.265214
 -1154.04

-1617.56
0
26694.665214

250.16

8144.82

7361.07
Milestone - 2
Income Statement of Colgate (Rs. In Lakhs)
Particulars
Sales
Less: Variable Expenses
Cost Of Material Consumed
Excise Duty
Purchase of stock-in-trade
Changes in inventories of finished goods,work-in-progress, stock-in-trade and property development
Consumption of stores and spares
processing charges
power and fuel
freight and forwarding charges
provision for doubtful debts
foreign exchange loss (net)
Expenditure towards Corporate Social Responsibility
Bad debts written off
Current Tax
Deferred Tax
Total Variable Cost
Contribution
Contribution Margin
Less: Fixed Expenses
Depreciation and Amortisation Expense
Salaries, wages and bonus
Contibution to Provident funds, Gratuity and Other funds
Share Based Payments to Employees
Compensated Absences
Staff Welfare Expenses
lease rentals
rates and taxes
insurance
plant and machinary
building
others
advertising
director's fees
auditors remuneration
expense( net of withholding tax)
withholding tax on royalty
travel and conference expenses
outside services
miscellaneous expenses
Finance Cost
Exceptional Items
Total Fixed Cost

Profit
Break Even
Break Even Percentage (in %)
Margin of safety
Margin of safety Percentage (in%)
Operating Leverage
In Lakhs)
2020 2019 2018 2017
457432.61 450008.72 436724.49 456132.25

Variable 135033.47 132847.32 118896.97 115599.43

Variable 0 0 14044.65 53838.05
Variable 24410.57 25458.22 28442.88 31475.29
Variable -2155.89 -2447.67 1667.98 558.4
Variable 2348.12 2212.14 2328.54 1993.26
Variable 1414.79 1423.2 810.14 907.01
Variable 4534.52 4645.02 4416.06 4404.44
Variable 14909.2 15222.72 13154.45 14236.87
Variable 0 406.87 15.3 0
Variable 0 4.23 103.19 0
Variable 1981.23 1821.35 1672.38 1558.07
Variable 9.5 0 53.32 37.21
Variable 24750.04 37168.69 30218.54 25345.64
Variable -2060.81 -470.06 747.12 2054.05
205174.74 218292.03 216571.52 252007.72
252257.87 231716.69 220152.97 204124.53
0.55 0.51 0.50 0.45

Fixed 19794.04 15916.83 15651.00 13324.28

Fixed 28600.26 25857.92 26236.86 24602.06
Fixed 2191.16 2055.93 2194.52 1958.62
Fixed 974.45 806.77 941.64 885.7
Fixed 792.4 107.89 256.59 454.16
Fixed 670.18 761.83 963.88 949.71
Fixed 533.11 4154.09 4140.59 4056.25
Fixed 160.24 165.38 486.81 1181.95
Fixed 457.19 413.46 397.69 372.67
Fixed 3642.41 3181.93 3136.9 2618.78
Fixed 212.77 218.31 131.84 116.48
Fixed 68.93 67.53 107.32 71.1
Fixed 62601.81 56470.59 52683.13 51173.03
Fixed 148 106.38 104.15 86.85
Fixed 123.83 114.67 106.18 149.5
Fixed 19569.78 19617.09 18487.71 20851.32
Fixed 2398.99 2404.79 2241.91 0
Fixed 2655.32 3149.35 3277.47 3025.75
Fixed 14361.31 13044.89 11462.72 10999.56
Fixed 9693.54 8345.17 8624.91 9503.52
Fixed 961.55 249.53 0 0
0.00 -3050.52 1165.07 0.00
170611.27 154159.81 151633.82 146381.29

81646.60 77556.88 68519.15 57743.24

309378.49 299388.27 300800.86 327100.46
67.63 66.53 68.88 71.71
148054.12 150620.45 135923.63 129031.79
32.37 33.47 31.12 28.29
3.09 2.99 3.21 3.54
Milestone - 3
FOR
Contribution Statement of Colgate (Rs. In Lakh
Particulars
Sales
Less: Variable Expenses
Cost Of Material Consumed
Excise Duty
Purchase of stock-in-trade
Changes in inventories of finished goods,work-in-progress, stock-in-trade and property development
Consumption of stores and spares
processing charges
power and fuel
freight and forwarding charges
provision for doubtful debts
foreign exchange loss (net)
Expenditure towards Corporate Social Responsibility
Bad debts written off
Current Tax
Deferred Tax
Total Variable Cost
Contribution
Contribution Margin
Less: Fixed Expenses
Depreciation and Amortisation Expense
Salaries, wages and bonus
Contibution to Provident funds, Gratuity and Other funds
Share Based Payments to Employees
Compensated Absences
Staff Welfare Expenses
lease rentals
rates and taxes
insurance
plant and machinary
building
others
advertising
director's fees
auditors remuneration
expense( net of withholding tax)
withholding tax on royalty
travel and conference expenses
outside services
miscellaneous expenses
Finance Cost
Exceptional Items
Total Fixed Cost

Profit
Break Even
Break Even Percentage (in %)
Margin of safety
Margin of safety Percentage (in%)
Operating Leverage

ASSUMPTIONS
1. The forecasted figures of variable expenses is calculated on the % of variable expenses on the sales forecasted figures
2. The fixed cost is calculated as an average of the last 4 years.
3. The sales will grow at Compunded annual growth rate (CAGR) of last 4 years.
 FORECAST
s. In Lakhs) Forecast
2020 2019 2018 2017 Total % of Sales 2021
457432.61 450008.72 436724.49 456132.25 1800298.07 100% 457758.28

Variable 135033.47 132847.32 118896.97 115599.43 502377.19 27.91% 127738.47

Variable 0 0 14044.65 53838.05 67882.7 3.77% 17260.40
Variable 24410.57 25458.22 28442.88 31475.29 109786.96 6.10% 27915.32
Variable -2155.89 -2447.67 1667.98 558.4 -2377.18 -0.13% -604.44
Variable 2348.12 2212.14 2328.54 1993.26 8882.06 0.49% 2258.42
Variable 1414.79 1423.2 810.14 907.01 4555.14 0.25% 1158.23
Variable 4534.52 4645.02 4416.06 4404.44 18000.04 1.00% 4576.84
Variable 14909.2 15222.72 13154.45 14236.87 57523.24 3.20% 14626.32
Variable 0 406.87 15.3 0 422.17 0.02% 107.34
Variable 0 4.23 103.19 0 107.42 0.01% 27.31
Variable 1981.23 1821.35 1672.38 1558.07 7033.03 0.39% 1788.27
Variable 9.5 0 53.32 37.21 100.03 0.01% 25.43
Variable 24750.04 37168.69 30218.54 25345.64 117482.91 6.53% 29872.15
Variable -2060.81 -470.06 747.12 2054.05 270.3 0.02% 68.73
205174.74 218292.03 216571.52 252007.72 892046.01 49.55% 226818.80
252257.87 231716.69 220152.97 204124.53 908252.06 50.45% 230939.48
0.55 0.51 0.50 0.45 2.017992632 0.000112% 0.51
0
Fixed 19794.04 15916.83 15651.00 13324.28 64686.15 3.59% 16171.54
Fixed 28600.26 25857.92 26236.86 24602.06 105297.1 5.85% 26324.28
Fixed 2191.16 2055.93 2194.52 1958.62 8400.23 0.47% 2100.06
Fixed 974.45 806.77 941.64 885.7 3608.56 0.20% 902.14
Fixed 792.4 107.89 256.59 454.16 1611.04 0.09% 402.76
Fixed 670.18 761.83 963.88 949.71 3345.6 0.19% 836.40
Fixed 533.11 4154.09 4140.59 4056.25 12884.04 0.72% 3221.01
Fixed 160.24 165.38 486.81 1181.95 1994.38 0.11% 498.60
Fixed 457.19 413.46 397.69 372.67 1641.01 0.09% 410.25
Fixed 3642.41 3181.93 3136.9 2618.78 12580.02 0.70% 3145.01
Fixed 212.77 218.31 131.84 116.48 679.4 0.04% 169.85
Fixed 68.93 67.53 107.32 71.1 314.88 0.02% 78.72
Fixed 62601.81 56470.59 52683.13 51173.03 222928.56 12.38% 55732.14
Fixed 148 106.38 104.15 86.85 445.38 0.02% 111.35
Fixed 123.83 114.67 106.18 149.5 494.18 0.03% 123.55
Fixed 19569.78 19617.09 18487.71 20851.32 78525.9 4.36% 19631.48
Fixed 2398.99 2404.79 2241.91 0 7045.69 0.39% 1761.42
Fixed 2655.32 3149.35 3277.47 3025.75 12107.89 0.67% 3026.97
Fixed 14361.31 13044.89 11462.72 10999.56 49868.48 2.77% 12467.12
Fixed 9693.54 8345.17 8624.91 9503.52 36167.14 2.01% 9041.79
Fixed 961.55 249.53 0 0 1211.08 0.07% 302.77
0.00 -3050.52 1165.07 0.00 -1885.45 -0.10% -471.36
170611.27 154159.81 151633.82 146381.29 622786.19 34.59% 155987.82

81646.60 77556.88 68519.15 57743.24 285465.87 15.86% 74951.66

309378.49 299388.27 300800.86 327100.46 304004.01
67.63 66.53 68.88 71.71 66.41%
148054.12 150620.45 135923.63 129031.79 153754.27
32.37 33.47 31.12 28.29 33.59%
3.09 2.99 3.21 3.54 3.08
Forecast
CAGR
0.07%
 INTERPRETATI

Comment on Operating Leverage          

Operating Leverage measures sensitivity of net operations and income is to perce
  High leverage tells us small percentage increase in sales, and low leverage tells u

  Operating Leverage = Contribution Margin / Net Operating Income.      

          
  Colgate Palmolive operating leverage is increasing with lower rate of percentage

Comment on Breakeven Sales    

Breakeven sales where there is no profit no loss, it determines the no of sales ne
And it calculates the minimum no of units to sale and the sales volume needs to
Breakeven Sales = Total Fixed Cost / Contribution Margin                      

  Breakeven Sales of Colgate Palmolive is decreasing means there is decrease in fi

Always, a low break-even is desirable.                      

Comment on Contribution Margin

  Contribution Margin represents total earning available to pay for fixed expenses

  Contribution Margin = Sales - Variable Cost.          

 
Contribution Margin of Colgate Palmolive is increasing from year 2017 to 2020 wh
significantly.

Comment on Forecast
As, we can see that the BEP has decreased in FY2021, which is in favour of the co
gain more earnings.

In FY 2021 Margin of Safety has increased which shows that the risk is lower for t
Comment on Forecast
As, we can see that the BEP has decreased in FY2021, which is in favour of the co
gain more earnings.
In FY 2021 Margin of Safety has increased which shows that the risk is lower for t

Operating leverage of the company is also decreasing every year, thus we can say
Therefore, for every 1% change in Contribution, EBIT will increase by 3.08%.
ERPRETATION

s and income is to percentage change in sales.  

and low leverage tells us high percentage increase in sales.

ng Income.      
ower rate of percentage which shows that there is increase in sales of 5-10%.                    

mines the no of sales need to recover all variable and fixed cost.
e sales volume needs to pay, all expenses before making a profit.  
n           

ns there is decrease in fixed cost and expenses from 2017 to 2020.  

o pay for fixed expenses to generate the profit.    

m year 2017 to 2020 which means Sales are increasing and Variable costs are reducing

ich is in favour of the company becuase always a low BEP is desirable so that company can

hat the risk is lower for the company.

ich is in favour of the company becuase always a low BEP is desirable so that company can

hat the risk is lower for the company.

ry year, thus we can say that the company is now less volatile.
increase by 3.08%.
    

ng
 INTERPRETATION AND ANALYSIS
The CAGR of Colgate Palmolive Ltd. is