Question

1. In 2013 and 2012, Net income attributable to Colgate-Palmolive Company included after-tax charges related to the 2012 Restructuring Program. In 2013, 2012 and 2011, Net income attributable to Colgate-Palmolive Company included after-tax costs related to the sale of land in Mexico. In 2013, Net income attributable to Colgate-Palmolive Company also included a one-time after-tax charge for the impact of the devaluation in Venezuela and a charge for a competition law matter in France related to the home care and personal care sectors. Excluding the items described above in all applicable years, Net income attributable to Colgate-Palmolive Company increased 4% to $2,665 in 2013 and Earnings per common share, diluted increased 6% to $2.84. Net income attributable to Colgate-Palmolive Company increased to $2,574 in 2012, as compared to $2,473 in 2011, and Earnings per common share diluted increased 7% to $2.68 in 2012.

Colgate reported Diluted EPS of $2.38 in accordance with GAAP. How much higher would EPS be if Colgate ignored the impact of restructuring and other one-time charges during the period?

Answer 1

EPS will be higher than $2.38

Explanation:

• The Earnings per share is the value available to shareholders of the company after the deduction of all the expense and taxes.
• Restructuring expense are one time charges and they are reported as other operating expenses in the Income Statement.
• The inclusion of restructuring and other one-time charges during the period in the Income Statement results in lower Earnings before Tax and will ultimately result in reduced net profit.
• If these cost are excluded, then the earning will rise which will give rise to EPS of the company.