Buisan, Lejhanie A.

BSA-IIIA

Procter & Gamble Company

Financial Analysis

HORIZONTAL ANALYIS
Consolidated Statements of Earnings
Change in Percentage
Amounts in millions except per share amounts; Years ended June30 2016 2015 Change in Amount %
NET SALES 65,299 70,749 -5450 -7.703289092
Cost of products sold 32,909 37,056 -4147 -11.19117012
Selling, general and administrative expense 18,949 20,616 -1667 -8.085952658
Venezuela deconsolidation charge 0 2,028 -2028 -100
OPERATING INCOME 13,441 11,049 2392 21.64901801
Interest expense 579 626 -47 -7.50798722
Interest income 182 149 33 22.14765101
Other non-operating income, net 325 440 -115 -26.13636364
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 13,369 11,012 2357 21.40392299
Income taxes on continuing operations 3,342 2,725 617 22.64220183
NET EARNINGS FROM CONTINUING OPERATIONS 10,027 8,287 1740 20.99674188
NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS 577 -1,143 1720 -150.4811899
NET EARNINGS 10,604 7,144 3460 48.43225084
Less: Net earnings attributable to noncontrolling interests 96 108 -12 -11.11111111
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE 10,508 7,036 3472 49.34621944
HORIZONTAL ANALYIS
Consolidated Balance Sheets
Change in Percentage
Amounts In millions; Years ended June30 2016 2015 Change in Amount %
Assets
CURRENT ASSETS
Cash and cash equivalents 7,102 6,836 266 3.891164424
Available-for-sale investment securities 6,246 4,767 1,479 31.02580239
Accounts receivable 4,373 4,568 -195 -4.26882662
INVENTORIES
Materials and supplies 1,188 1,266 -78 -6.161137441
Work in process 563 525 38 7.238095238
Finished goods 2,965 3,188 -223 -6.994981179
Total inventories 4,716 4,979 -263 -5.282185178
Deferred income taxes 1,507 1,356 151 11.13569322
Prepaid expenses and other current assets 2,653 2,708 -55 -2.031019202
Current assets held for sale 7,185 4,432 2,753 62.11642599
TOTAL CURRENT ASSETS 33,782 29,646 4,136 13.95129191
PROPERTY, PLANT AND EQUIPMENT, NET 19,385 19,655 -270 -1.37369626
GOODWILL 44,350 44,622 -272 -0.609564789
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET 24,527 25,010 -483 -1.931227509
NONCURRENT ASSETS HELD FOR SALE 0 5,204 -5,204 -100
OTHER NONCURRENT ASSETS 5,092 5,358 -266 -4.964539007
TOTAL ASSETS 127,136 129,495 -2,359 -1.821691957
 Change in Percentage
2016 2015 Change in Amount %
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable 9,325 8,138 1,187 14.58589334
Accrued and other liabilities 7,449 8,091 -642 -7.934742306
Current liabilities held for sale 2,343 1,543 800 51.8470512
Debt due within one year 11,653 12,018 -365 -3.037111
TOTAL CURRENT LIABILITIES 30,770 29,790 980 3.289694528
LONG-TERM DEBT 18,945 18,327 618 3.372073989
DEFERRED INCOME TAXES 9,113 9,179 -66 -0.719032574
NONCURRENT LIABILITIES HELD FOR SALE 0 717 -717 -100
OTHER NONCURRENT LIABILITIES 10,325 8,432 1,893 22.45018975
TOTAL LIABILITIES 69,153 66,445 2,708 4.075551208
SHAREHOLDERS' EQUITY
Convertible Class A preferred stock, 1,038 1,077 -39 -3.621169916
stated value $ 1 per share (600 shares authorized)
Non-Voting Class B preferred stock,
stated value $ 1 per share (200 shares authorized) 0 0 0
Common stock, stated value $ 1 per share (10,000 shares authorized;
shares issued: 2016 - 4,009.2, 2015 - 4,009.2 ) 4,009 4,009 0 0
Additional paid-in capital 63,714 63,852 -138 -0.216124789
Reserve for ESOP debt retirement -1,290 -1,320 30 -2.272727273
Accumulated other comprehensive income/(loss) -15,907 -12,780 -3,127 24.46791862
Treasury stock, at cost (shares held: 2016-1, 341.2, 2015-1, 294.7) -82,176 -77,226 -4,950 6.409758372
Retained earnings 87,953 84,807 3,146 3.709599443
Noncontrolling interest 642 631 11 1.743264659
TOTAL SHAREHOLDERS' EQUITY 57,983 63,050 -5,067 -8.036478985
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 127,136 129,495 -2,359 -1.821691957
VERTICAL ANALYSIS
Consolidated Statements of Earnings
Amounts in millions except per share amounts; Years ended June30 2016 Percentage %
NET SALES 65,299 100
Cost of products sold 32,909 50.39740272
Selling, general and administrative expense 18,949 29.01882112
Venezuela deconsolidation charge 0 0
OPERATING INCOME 13,441 20.58377617
Interest expense 579 0.886690455
Interest income 182 0.278717898
Other non-operating income, net 325 0.497710532
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 13,369 20.47351414
Income taxes on continuing operations 3,342 5.117995681
NET EARNINGS FROM CONTINUING OPERATIONS 10,027 15.35551846
NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS 577 0.883627621
NET EARNINGS 10,604 16.23914608
Less: Net earnings attributable to noncontrolling interests 96 0.147016034
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE 10,508 16.09213005
VERTICAL ANALYSIS
Consolidated Balance Sheets
Amounts In millions; Years ended June30 2016 Percentage %
Assets
CURRENT ASSETS
Cash and cash equivalents 7,102 5.586143972
Available-for-sale investment securities 6,246 4.912849232
Accounts receivable 4,373 3.43962371
INVENTORIES
Materials and supplies 1,188 0.934432419
Work in process 563 0.442832872
Finished goods 2,965 2.332148251
Total inventories 4,716 3.709413541
Deferred income taxes 1,507 1.185344828
Prepaid expenses and other current assets 2,653 2.086741757
Current assets held for sale 7,185 5.651428392
TOTAL CURRENT ASSETS 33,782 26.57154543
PROPERTY, PLANT AND EQUIPMENT, NET 19,385 15.24745155
GOODWILL 44,350 34.88390385
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET 24,527 19.29193934
NONCURRENT ASSETS HELD FOR SALE 0 0
OTHER NONCURRENT ASSETS 5,092 4.005159829
TOTAL ASSETS 127,136 100
 2016 Percentage %
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable 9,325 7.33466524
Accrued and other liabilities 7,449 5.85908004
Current liabilities held for sale 2,343 1.842908382
Debt due within one year 11,653 9.165775233
TOTAL CURRENT LIABILITIES 30,770 24.2024289
LONG-TERM DEBT 18,945 14.90136547
DEFERRED INCOME TAXES 9,113 7.167914674
NONCURRENT LIABILITIES HELD FOR SALE 0 0
OTHER NONCURRENT LIABILITIES 10,325 8.121224515
TOTAL LIABILITIES 69,153 54.39293355
SHAREHOLDERS' EQUITY
Convertible Class A preferred stock, 1,038 0.816448528
stated value $ 1 per share (600 shares authorized)
Non-Voting Class B preferred stock,
stated value $ 1 per share (200 shares authorized) 0 0
Common stock, stated value $ 1 per share (10,000 shares authorized;
shares issued: 2016 - 4,009.2, 2015 - 4,009.2) 4,009 3.153316134
Additional paid-in capital 63,714 50.11483765
Reserve for ESOP debt retirement -1,290 -1.014661465
Accumulated other comprehensive income/(loss) -15,907 -12.51179839
Treasury stock, at cost (shares held: 2016-1, 341.2, 2015-1, 294.7) -82,176 -64.63629499
Retained earnings 87,953 69.18024792
Noncontrolling interest 642 0.504971055
TOTAL SHAREHOLDERS' EQUITY 57,983 45.60706645
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 127,136 100
RATIO ANALYSIS
Liquidity Ratios:
Net Working Capital = Current Assets - Current Liabilities
= 33, 782-30,770
=3012

Current Ratio =Current Assets / Current Liabilities

=33,782 / 30,770
=1.097887553x

Quick, Acid Test Ratio = (Current Assets - Inventories - Prepayments) / Current Liabilities
= (33,782 - 4,716 - 2,653) / 30, 770
=0.85840104x

Asset Management
Ratios:
Inventory Turnover = Cost of Sales / Average Inventory
=32,909 / 4,847.5
=6.788860237x

Receivable Turnover =Credit Sales / Average Receivables

=65,299 / 4,470.5
=14.60664355x

Fixed Asset Turnover =Sales / Average Fixed Assets

=65,299 / 96,601.5
=0.6759625886x
Total Asset Turnover =Sales / Average Total Assets
=65,299 / 128,315.5
=0.5088940931x

Days Sales Outstanding =365 / Receivable Turnover

=365 / 14.60664355
=24.98862923 days

Debt Management
Ratios:
Debt Ratio =Total Debt / Total Assets
=69,153 / 127,136
=0.5439293355

Debt to Equity Ratio =Total Debt / Total Equity

=69,153 / 57,983
=1.192642671

Time Interest Earned

Ratio =EBIT / Interest Payments
=13,441 / 579
=23.21416235

Profitability Ratios:
Gross Margin = (Gross Profit / Sales) *100%
= (32,390 / 65,299) *100%
=49.60259728%
Profit Margin = (Net Income / Sales) *100%
= (10,508 / 65,299) *100%
=16.09213005%

Operating Margin = (EBIT / Sales) *100%

= (13,441 / 65,299) *100%
=20.58377617%

Return on Assets =Net Income / Average Total Assets

=10,508 / 128,315.5
=0.08189189926 or 8.189189926%

Return on Equity =Profit Marin * Total Asset Turnover * Equity Multiplier

=0.1609213005 x 0.5088940931 * (127,136 / 57,983)
=0.1795596728 or 17.95596728%

=Return on Asset * Equity Multiplier

=0.08189189926 * 2.192642671
=0.1795596727 or 17.95596727%

=Net Income / Average Shareholder's Equity

=10,508 / 60,516.5
=0.1736385944 or 17.36385944 %

Basic Earning Power =EBIT / Average Total Assets

=13,441 / 128, 315.5
=0.1047496211
Market Value Ratios:
Book Value Per Share =Common Equity / Share Outstanding
=57,983 / 2,668.074
=21.73215585

= (Net Income - Dividends to Preferred Shares) / No. of Outstanding

Earnings Per Share Shares
= (10,508-259)/2,668.074
=3.841347729