P&g report

1. PROCTERAND GAMBLE FINANCIAL RATIO ANALYSIS
 The higher the quick ratio, the better the company's liquidity position. But a much
higher quick ratio means that the company is not able to utilize it liquid cash in a
productive way. The company has too much spare cash, it may consider investing the
surplus funds in new ventures and in case company is out of investment options.
 Current ratio (current assets/ current liabilities) is generally used as the indicator of
working capital. A current ratio of 2: 1 is generally considered ideal
 Return on net worth is useful as a measure of how well a company is utilizing the
shareholder investment to create returns for them.
 Net Profit margin of ideally 15% + is consider to be ideal, P&G is nearer to that mark
but can do better by minimizing its cost further
 The AssetTurnover ratio can often be used as an indicator of the efficiencywith which
a company is deploying its assets in generating revenue. Higher the asset turnover
ratio better for the company. P&G have a lower asset turnover ratio which signifies
that its assets generate nearly equal turnover. It should increase its revenue in
proportion to its assets
 Debt to equity ratio measures how much money a company can borrow over the long
term without running into payment problems. It varies from industries to industries.
Ideally Debt/Equity ratio should be less than 1, and the lower the better. But this is a
thumb-rule. For certain industries like auto manufacturing, the ratio can be 2 or more.
FMCG industries usually have very low debt to equity ratio around 0.5 range.
RatioYear 2015 2014 2013 2012
QUICK RATIO 1.9 2.02 2.16 1.93
CURRENT RATIO 1.73 1.78 1.85 1.7
RETURN ON NET WORTH 28.17 30.11 25.23 26
NET PROFIT MARGIN 14.68 14.64 11.96 13.9
TOTAL ASSET TURNOVER
RATIO 1.21 1.37 1.42 1.19
DEBT TO EQUITY RATIO 0.49 0.51 0.46 0.47
INTEREST COVERAGE RATIO 19.92 21.99 23.25 17.63
INVENTORY TURNOVER RATIO 7.13 6.28 6.14 6.31

2.  The higher the interest coverage ratio of any firm, the more solvent it is. If an
organization, under normal circumstances, earns way more than what its interest
costs are, then it is financially secure. As the average interest coverage ratio for P&G
is 20, it means the company generates Rs.20in profit for every Re1 interest obligation
which is a good perspective for the company.
 Stock / inventory turnover ratio indicates how frequently the inventory is
replaced. Normally, higher this ratio better is the inventory management. FMCG
goods would normally have higher inventory turnover ratio because the goods are
cheap and are consumed very fast and on the top they are perishable also. P&G have
a average inventory turnover ratio of 6.4 which means that its inventory lasts for
around 57 days.