2 1 27 September 2019 Procter & Gamble Corporation The corporation I have chosen for this discussion is Procter & Gamble. P&G is an international consumer goods company. It was established by William Procter and James Gamble in the year 1837. The corporation’s headquarters is based in downtown Cincinnati. P&G specializes in a variety of personal health products, personal care products and hygiene products. The company organizes the products into many segments including grooming, beauty, health care, fabric care, hair care, oral care, personal care, feminine care, and baby care. The current CEO of the company is David Taylor. A Brief background of the Company William Procter and Gamble emigrated from the U.K and settled in Cincinnati. They became business partners and founded Procter and Gamble. During the American Civil War, the company got deals to supply candles and soaps to the Union Army. The contracts contributed allot to the company’s profit. The military also introduced P&G products to other solders. During the 1880s, the company started to market a new product; an economical soap known as Ivory. In 1887, the company introduced a profit-sharing approach that gave workers ownership of a stake in the corporation (Pepper, 1999). This program helped workers to connect their significant role with the success of the company. P&G became the first cooperation to carry out a deliberate market research with the consumers in 1924. That move enabled the company to enhance consumer understanding, expect the changing needs of the consumers, and respond with appropriate products that enhanced their daily lives. The company was among the first cooperation to respond to consumer correspondence by introducing the Consumer Relations Department in 1994. P&G began to move into other countries in terms of product sale and manufacturing. Moreover, it gained several other firms. The acquisition included Noxell, Folgers Coffee, Max Factor, Richardson-Vicks, Iams Company, Pantene, and many more. Since its establishment, the company has been doing well. In 2016 and 2017, Forbes recognized P&G as the most reputable company in the universe. Consumer Goods Industry Procter and Gamble Cooperation is among the companies within the consumer goods sector. The consumer goods industry concentrates on products that are purchased by individuals. The industry includes corporations involved in electronics, packaged goods, food production, automobiles, beverages, and personal products, to name a few. The industry depends more on the behaviour of the consumers. Companies within the industry compete for prices because of high competition. Company Analysis It is always important to determine the health, feasibility and profitability of a company. I will use financial analysis to determine the health, feasibility, and profitability of P&G Company. Financial analysis, therefore, entails the use of financial information to assess the performance of .

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27 September 2019

2. Procter & Gamble Corporation
The corporation I have chosen for this discussion is Procter &
Gamble. P&G is an international consumer goods company. It
was established by William Procter and James Gamble in the
year 1837. The corporation’s headquarters is based in downtown
Cincinnati. P&G specializes in a variety of personal health
products, personal care products and hygiene products. The
company organizes the products into many segments including
grooming, beauty, health care, fabric care, hair care, oral care,
personal care, feminine care, and baby care. The current CEO of
the company is David Taylor.
A Brief background of the Company
William Procter and Gamble emigrated from the U.K and settled
in Cincinnati. They became business partners and founded
Procter and Gamble. During the American Civil War, the
company got deals to supply candles and soaps to the Union
Army. The contracts contributed allot to the company’s profit.
The military also introduced P&G products to other solders.
During the 1880s, the company started to market a new product;
an economical soap known as Ivory. In 1887, the company
introduced a profit-sharing approach that gave workers
ownership of a stake in the corporation (Pepper, 1999). This
program helped workers to connect their significant role with
the success of the company.
P&G became the first cooperation to carry out a deliberate
market research with the consumers in 1924. That move enabled
the company to enhance consumer understanding, expect the
changing needs of the consumers, and respond with
appropriate products that enhanced their daily lives. The
company was among the first cooperation to respond to
consumer correspondence by introducing the
Consumer Relations Department in 1994.
P&G began to move into other countries in terms of product
sale and manufacturing. Moreover, it gained several other firms.
The acquisition included Noxell, Folgers Coffee, Max Factor,
Richardson-Vicks, Iams Company, Pantene, and many more.

3. Since its establishment, the company has been doing well. In
2016 and 2017, Forbes recognized P&G as the most reputable
company in the universe.
Consumer Goods Industry
Procter and Gamble Cooperation is among the companies within
the consumer goods sector. The consumer goods industry
concentrates on products that are purchased by individuals. The
industry includes corporations involved in electronics, packaged
goods, food production, automobiles, beverages, and
personal products, to name a few. The industry depends more on
the behaviour of the consumers. Companies within the industry
compete for prices because of high competition.
Company Analysis
It is always important to determine the health, feasibility and
profitability of a company. I will use financial analysis to
determine the health, feasibility, and profitability of P&G
Company. Financial analysis, therefore, entails the use of
financial information to assess the performance of the company.
In other words, financial analysis is used to assess if a
corporation is solvent, stable, profitable or liquid. Financial
analysis answers several essential questions and provides a
comprehensive image of where a corporation stands. The
analysis will focus most on the balance sheet, income statement,
and the cash flow statement (Robinson et al., 2015). The results
from the analysis will give me clear information on the
stability, viability, solvency, or profitability of P&G Company.
With the results, I will also provide clear recommendations for
the company.
The Methods Used for the Analysis
Horizontal analysis
Horizontal analysis involves the evaluation of historical
information over several periods. In other terms, it entails a
comparison of a corporation’s financial information over
reporting years, mostly two years (Greenaway et al., 1995). I
will analyse the company’s performance for the year ending
30th June 2018 and 30th June 2019.

4. P &G reported accumulated earnings of $98, 641 million and a
net income of 9,750million as of 30th June 2018. The company
reported accumulated earnings of $94, 918 million and a net
income of 3,897 million as of 30th June 2019. The following
calculation will help to analyse the change in the company’s
accumulated earnings and net income.
($94,918 million-$98,641 million/$98,641 million)*100% = -
3.77%
($3,897 million- 9,750 million/$9,750 million)*100% =-60%
Therefore, the company’s accumulated earnings decreased by
3.77% and the company’s net income decreased by 60%. The
above results show that the company is not operating efficiently
and profitably. Moreover, its performance has gone down
Vertical analysis
Vertical analysis entails the representation of an object in the
annual reports as a proportion of the base value. I will compare
the performance of the company for two years: 2018 and 2019. I
will pick some items from the company’s income statement to
compare the company’s performance for the two years.
Items
Amount as of 30th June 2019
(Amount in millions)
Percentage
Amount as of 30th June 2018 (Amounts in millions)
Percentage
Revenue
$67,684
100%
$66,837
100%
Cost of goods sold
$34, 768
51%
$34,432
51.51%

5. Gross profit
$32,916
48.9%
$32,400
48.48%
Net income
$3,899
5.76%
$9,750
14.59%
From the above results, P&G net income has reduced from
14.59% to 5.76%. This results show that the company’s
performance is really deteriorating. The decrease net income
might show that the company has ineffective pricing strategy,
poor marketing program, and the company also cannot keep up
with the changing consumer needs.
Ratios Analysis
Ratios entail the representation of the relationships between
various items in the financial statement. The ratios used in the
analysis are debt-to-equity ratio, quick ratio, and quality of
earnings ratio.
Debt to Equity Ratio
Debt to equity ratio usually equates the corporation’s total
liabilities/obligations to the total equity. It displays the
proportion of the company’s financing that comes from
creditors and shareholders.
Debt to equity = Total liabilities/Total Equity
The company’s total liabilities was $65, 427 million and
$52,883 million total equity as of 30th June 2018. This shows
that debt-to-equity ratio was 1.2 for that year. The company’s
total liabilities was $67, 516 million and $47,579 million total
equity as of 30th June 2019. This interpret to a 1.4 debt-to-
equity ratio as of June this year. The above result show that
P&G is not a stable company because a higher proportion of the
company’s financing comes from credit financing (Nissim &

6. Penman, 2001). Credit financing is expensive compared to
equity financing.
Quick Ratio
Quick ratio normally displays the corporation’s ability to meet
its current obligations using quick assets. Quick assets include
cash, cash equivalent, and account receivables.
Quick Ratio = Cash + cash equivalent + short-term investment-
Account Receivables/ Current Liabilities
The corporation’s total quick asset was $23,320 million as of
30th June 2018. The company’s current liabilities were $28,237
million in the same financial year. This translates to a 8.2 quick
ratio. The company’s total quick asset was $22,473 million as at
30th June 2019 and the total current liabilities of $ 30,011
million in the same year. This means that the quick ratio will be
7.4. These results show that P&G is not capable to pay its short-
term expenses. It also shows that the corporation’s only way to
meet its short-term obligations is by selling some of its long-
term assets.
Quality of Earnings Ratio.
The quality of earnings ratio shows the degree to which the
company’s net income pleases quality criteria (Barker and
Imam, 2008). A high quality income is predictable, sustainable,
derived from the application of conventional and essential
accounting policies, and it is backed by cash from operating
activities.
Quality of earnings ratio = Cash from operating activities/Net
income
The company’s cash from operating activities was $15,242
million as of 30th June 2019. The net income was $3,899
million in the same year. This show that the ratio is 3.9. The
company’s cash from operating activities was $14,867 million
as of 30 June 2018. The net income was $9,750 million in the
same year. This show the ratio is 1.5. The results show that the
cash from the operating activities is more than the net income.
Therefore, the company has a high-quality income.
Recommendations and Future Considerations

7. Profit is important to any company. Profitability determines
whether a business can get a loan from financial institutions and
if it can attract different investors to finance its operations.
From the results, it is clear that P&G profitability has reduced.
The company can, therefore, do the following to correct its
financial situation; expand its market by moving into new
market areas. This can transform the company’s financial
situation when handled correctly (Wreden, 2007). P&G can also
reduce its cost and expenses. The company’s major cost areas
include finance, premises, production, and suppliers. The
company needs to consider which key areas they need to do
some adjustment. For example, to review whether it can lower
the cost of raw material and cut waste. The company might
consider improving the following aspects in the future: its
relationship with its consumers, its pricing strategy, and
marketing strategies.
References
Barker, R., & Imam, S. (2008). Analysts’ perceptions of
‘earnings quality’. Accounting and Business Research, 38(4),
313-329.
Greenaway, D., Hine, R., & Milner, C. (1995). Vertical and
horizontal intra-industry trade: a cross industry analysis for the
United Kingdom. The Economic Journal, 105(433), 1505-1518.
Nissim, D., & Penman, S. H. (2001). Ratio analysis and equity
valuation: From research to practice. Review of accounting
studies, 6(1), 109-154.
Pepper, J. E. (1999). Competitive intelligence at procter &

8. gamble. Competitive Intelligence Review: Published in
Cooperation with the Society of Competitive Intelligence
Professionals, 10(4), 4-9.
Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A.
(2015). International financial statement analysis. John Wiley &
Sons.
Wreden, N. (2007). Profit Brand: How to increase the
profitability, accountability & sustainability of brands. Kogan
Page Publishers.
Instructions
Consider the following scenario:
Your senior management was very impressed with your
assessment of the financial statements and ratios analysis you
provided on your competitor. They have asked you to assemble
using the information and assessment techniques you
demonstrated in Week 7, a presentation for some senior staff
and board of directors. You will need to display your corporate
position as well as the industry metrics, and then show what
your corporation is currently doing to improve your position in
the industry and support your projected growth. One key point
that your management has asked for is for you to explain your
process steps for the analysis of the financial statement and
ratios. If you do not have a corporation, choose a corporation
and its competitor for your presentation.
In this course, we have discussed many important topics related
to Financial Statement Analysis. Taking on the role of a
financial statement analyst provide a presentation to senior
management and board directors in financial statement and ratio
analysis by developing a PowerPoint presentation, based upon
the content assignment outcomes from last week, and other
outcomes defined within this course.

9. Support your conclusions with references from a minimum of
five (5) journal articles or publications.
Incorporate appropriate animations, transitions, and graphics as
well as "speaker notes" for each slide. The speaker notes may be
comprised of brief paragraphs or bulleted lists.
Create a PowerPoint slide set or MS MovieMaker project
creating a gratitude demonstration or presentation. Think about
who your target audience is and how your topic affects them.
The required length of the PowerPoint Presentation option for
this assignment is 12-15 slides (with a separate reference slide).
Your presentation MUST include notes that contain 100-150
words per slide (this is your script). Be sure to include citations
for quotations and paraphrases with references in APA format
and style. Save the file as a PPT file with the correct course
code information in the name.