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Sherwin-Williams
Global leaders in paints & coatings.
Company Background
Sherwin Williams products include
primers, paints, coatings, & floorcoverings, and
related products to professional, industrial,
commercial, and retail customers primarily in
North and South America and Europe. They are
the global leaders in paints and coatings.
By the end of 2020, Sherwin Williams had
operations in over 120 countries.
Balance Sheet
Total Assets = $20,401,600,000
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Uses LIFO inventory cost method
Intangible assets totalling at
$4,471,200,000
Natural resources include energy supplies
(including oil and natural gas) and raw
materials (including titanium dioxide and
petrochemical feedstock sources, such as
propylene and ethylene)
Uses straight line depreciation method
Total Liabilities = $16,790,800,000
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Total Stockholders’ Equity = $3,610,800,000
The balance sheet for this company is balanced, which tells me that the company has a well-kept record
of every transaction, recording every transaction in at least two places.
Income Statement
Net Sales/Revenue = $18,361,700,000
COGS = $9,679,100,000
Gross Profit/Margin = $8,682,600,000
Gross Profit/Margin Ratio = $8,682,600,000 / $18,361,700,000 = .47
Net Income/Loss = $2,030,400,000
The information gathered from the income statement tells me that this company makes avgross profit of
.47 cents for every dollar gained in sales.
Statement of Cash Flows
Net cash from Operating Activities = $3,408,600,000
Net cash from Investing Activities = ($322,400,000)
Net cash from Financing Activities = ($3,020,100,000)
Effect of exchange rate changes on cash = ($1,300,000)
Net Change in Cash = $64,800,000
The positive net change in cash tells me that this company has a gain of funds over time after paying debts. A
positive, negative, negative on a statement of cash flows tells me that this company is able to fully fund their
operations, they are investing their money back in themselves (like in capital expenditures and other
investments), and that the company is paying out capital (like retirement, paying off long-term debt, and/or making
dividend payments to stockholders).
Financial Ratios
ROI = $2,030,400,000 / (($20,401,600,000 + $20,496,200,000) / 2) = 9.93%
ROE = $2,030,400,000 / (($3,610,800,000 + $4,123,300,000) / 2) = 52.51%
Working Capital = $4,591,400,000 – $4,594,400,000 = -$3,000,000
Current Ratio = $4,591,400,000 / $4,594,400,000 = 1.00 (.9993)
EPS = $2,030,400,000 / 91,942,623 = 22.08 or $2,030,400,000 / 90,425,861 = 22.45
The normal range for an ROI for a manufacturing company is between 8% – 12% and Sherwin williams ROI is within that
range. Its ROE tells me that this company has a high return, meaning that for every $1 of shareholder’s equity the company
generated about 52.51 cents ($0.5251) in profit. However, this high ROE could also indicate a higher portion of debt. The
working capital tells me that the company may have incurred an increase in accounts payable as a result of a large
purchase of products and services from its vendors. The current ratio tells me that the company can just about pay off its
current debts. The EPS in 2018 was 11.92, in 2019 was 16.79, and in 2020 it was 22.45. This shows me that the company’s
EPS has a positive consistent growth, which means that this company is steadily growing a stronger profit growth.
Notes to the Financial Statements
● This company had a lead pigment and lead-based paint litigations in several
counties and entities.
● After 20 years of litigations, Sherwin Williams and two other defendants reach
an agreement principle with the plaintiffs to resolve the litigation. The
agreement provides that, in full and final satisfaction of any and all claims of
the plaintiffs, the Company and the other two defendants collectively shall pay
a total of $305.0 million.
● An example of a lawsuit involving Sherwin Williams is the plaintiff in Thomas
v. Lead industries Associations, et al., resulting Wisconsin Court of Appeals
affirmed the final judgment in favor of the Company and other defendants.
Other Information in Annual Report
● In the opinion of the independent registered Public Accounting firm, the
consolidated financial statements presented fairly and conformed with U.S.
GAAP.
● They mentioned that there were long and short term accruals related of
environmental related activities, and the biggest one was located in Gibbsboro,
New Jersey. They disclosed that they had a difficult time auditing this because it
required complex judgment due to challenges of identities of future remedies for
reasonably estimable and probable losses.
● In my opinion, I think that the investors should invest in this company. This
company presents its financial statements in accordance with U.S. GAAP, they
pay off their long-term debts, they have a positive net cash flow able to cover their
cost by almost 1.5, and they pay their shareholders’ dividends and their
employees retirement and pensions.
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