A PRESENTATION ON

FINANCIAL ANALYSIS OF
PROCTOR & GAMBLE

PERSENTED BY: HITESH MAHAJAN

2010MBE08
 BRIEF HISTORY
1837: William Procter and James Gamble form Procter & Gamble, a partnership in Cincinnati, Ohio, to
manufacture and sell candles and soap. 

1890: The Procter & Gamble Company is incorporated.

1985: P&G purchases Richardson-Vicks Company, owner of the Vicks, NyQuil, and Oil of Olay Brands. 
1992: Pantene Pro-V shampoo is introduced.

2001: P&G acquires the Clairol hair-care

business from Bristol-Myers Squibb Company. 
 Latest Full Context Quarter Ending Date
2010/12
Gross Profit Margin 55.0% Debt/Common Equity Ratio 0.34

EBIT Margin 19.6% Price/Book Ratio (Price/Equity) 2.69

EBITDA Margin 23.4% Book Value per Share $22.53

Pre-Tax Profit Margin 18.5% Total Debt/ Equity 0.51

Long-Term Debt to Total Capital 0.25

Interest Coverage 18.3

SG&A as % of Revenue 31.6%

Current Ratio 0.8

R&D as % of Revenue 0.0%

Quick Ratio 0.4
Receivables per Day Sales $29.64
Leverage Ratio 2.1
Days CGS in Inventory 72

Receivables Turnover 12.2

Working Capital per Share $-1.93

Inventory Turnover 5.0

Cash per Share $1.16

Asset Turnover 0.6

Free Cash Flow per Share $1.46

Revenue to Assets 0.6 Tangible Book Value per Share $-8.89

ROE from Total Operations 17.7% Price/Cash Flow Ratio 12.2

Price/Free Cash Flow Ratio 41.5

Return on Invested Capital 13.1%

Price/Tangible Book Ratio -6.82

Return on Assets 8.3%
Return on Equity 18.1% Current P/E Ratio 16.5

P/E Ratio 1 Month Ago 17.5

Return on Assets 8.4%

P/E Ratio 26 Weeks Ago 14.8

Return on Invested Capital 12.8%

P/E Ratio 52 Weeks Ago 15.2

Gross Profit Margin 55.4%

5-Year High P/E Ratio 23.7

Pre-Tax Profit Margin 19.1%

5-Year Avg. High P/E Ratio 19.8

Post-Tax Profit Margin 13.8% 5-Year Low P/E Ratio 9.6

5-Year Avg. Low P/E Ratio 14.9

Net Profit Margin (Total Operations) 14.8%

5-Year Avg. P/E Ratio 16.9

R&D as a % of Sales 0.0%

Current P/E as % of 5-Year Avg. P/E 97%

SG&A as a % of Sales 31.3%

P/E as % of 2 Digit MG Group P/E 72%

Debt/Equity Ratio 0.39

P/E as % of 3 Digit MG Group P/E 104%

Total Debt/Equity Ratio 0.56 12 Month Normalized P/E Ratio 16.5

 SHARE PRICE
(IN COMPARISON WITH SOME COMPETITORS)

Company Symbol Price Change Market Cap P/E

Reckitt Benckiser RB.L 3,027.00  0.23% 109.86b 7,079.05

Group PLC

Hindustan Unilever HUL.BO 266.75  0.65% 581.96b 27.01

Ltd.

L'Oreal OR.PA 78.51  0.15% 231.47b 103.58

L'Oreal OR.MI 77.55  1.11% 228.64b 102.31

Procter & Gamble PG 60.60  0.28% 169.73b 16.52

Co.

Dabur India Ltd. DABUR.NS 96.95  0.05% N/A N/A

 INCOME STATEMENT
Currency in : Jun 30 Jun 30 Jun 30 Jun 30
Millions of U.S. Dollars 2007 2008 2009 2010
Restated Restated Restated

Revenues 74,832.0 79,257.0 76,694.0 78,938.0

TOTAL REVENUES 74,832.0 79,257.0 76,694.0 78,938.0

Cost of Goods Sold 35,659.0 39,261.0 38,690.0 37,919.0

GROSS PROFIT 39,173.0 39,996.0 38,004.0 41,019.0

Selling General & Admin Expenses, Total 24,170.0 24,017.0 22,630.0 24,998.0

OTHER OPERATING EXPENSES, TOTAL 24,170.0 24,017.0 22,630.0 24,998.0

OPERATING INCOME 15,003.0 15,979.0 15,374.0 16,021.0

Interest Expense -1,304.0 -1,467.0 -1,358.0 -946.0

NET INTEREST EXPENSE -1,304.0 -1,467.0 -1,358.0 -946.0

Currency in : Jun 30 Jun 30 Jun 30
Millions of U.S. Dollars 2007 2008 2009
Restated Restated Restated

Other Non-Operating Income (Expenses) 565.0 373.0 397.0 -28.0

EBT, EXCLUDING UNUSUAL ITEMS 14,264.0 14,885.0 14,413.0 15,047.0

EBT, INCLUDING UNUSUAL ITEMS 14,264.0 14,885.0 14,413.0 15,047.0

Income Tax Expense 4,201.0 3,594.0 3,733.0 4,101.0

Earnings from Continuing Operations 10,063.0 11,291.0 10,680.0 10,946.0

EARNINGS FROM DISCOUNTINUED

277.0 784.0 2,756.0 1,790.0
OPERATIONS

NET INCOME 10,340.0 12,075.0 13,436.0 12,736.0

NET INCOME TO COMMON INCLUDING

10,179.0 11,899.0 13,244.0 12,517.0
EXTRA ITEMS

NET INCOME TO COMMON EXCLUDING

9,902.0 11,115.0 10,488.0 10,727.0
EXTRA ITEMS
 BALANCE SHEET
Currency in Jun 30 Jun 30 Jun 30 Jun 30
Millions of U.S. Dollars 2007 2008 2009 2010
Restated Restated Restated

Assets        

Cash and Equivalents 5,354.0 3,313.0 4,781.0 2,879.0

Short-Term Investments 202.0 -- -- --

TOTAL CASH AND SHORT TERM INVESTMENTS 5,556.0 3,313.0 4,781.0 2,879.0

Accounts Receivable 6,629.0 6,761.0 5,836.0 5,335.0

TOTAL RECEIVABLES 6,629.0 6,761.0 5,836.0 5,335.0

Inventory 6,819.0 8,416.0 6,880.0 6,384.0

Prepaid Expenses 3,300.0 4,013.0 3,199.0 3,194.0

Deferred Tax Assets, Current 1,727.0 2,012.0 1,209.0 990.0

TOTAL CURRENT ASSETS 24,031.0 24,515.0 21,905.0 18,782.0

Gross Property Plant and
34,721.0 38,086.0 36,651.0 37,012.0
Equipment

Accumulated Depreciation -15,181.0 -17,446.0 -17,189.0 -17,768.0

NET PROPERTY PLANT AND

19,540.0 20,640.0 19,462.0 19,244.0
EQUIPMENT

Goodwill 56,552.0 59,767.0 56,512.0 54,012.0

Long-Term Investments -- -- 212.0 57.0

Other Intangibles 33,626.0 34,233.0 32,606.0 31,636.0

Other Long-Term Assets 4,265.0 4,837.0 4,136.0 4,441.0

TOTAL ASSETS 138,014.0 143,992.0 134,833.0 128,172.0

       

LIABILITIES & EQUITY        

Accounts Payable 5,710.0 6,775.0 5,980.0 7,251.0

Accrued Expenses 3,928.0 9,897.0 7,879.0 7,937.0

Short-Term Borrowings 9,495.0 11,338.0 9,379.0 7,908.0

Current Portion of Long-Term

2,544.0 1,746.0 6,941.0 564.0
Debt/Capital Lease
Current Portion of Capital Lease
-- -- -- 44.0
Obligations

Current Income Taxes Payable 3,382.0 945.0 722.0 622.0

Other Current Liabilities, Total 5,658.0 257.0 -- --

TOTAL CURRENT LIABILITIES 30,717.0 30,958.0 30,901.0 24,282.0

Long-Term Debt 23,375.0 23,581.0 20,652.0 21,003.0

Capital Leases -- -- -- 357.0

Minority Interest -- -- 283.0 324.0

Pension & Other Post-Retirement Benefits 3,401.0 3,658.0 5,314.0 6,616.0

Deferred Tax Liability Non-Current 12,015.0 11,805.0 10,752.0 10,902.0

Other Non-Current Liabilities 1,746.0 4,496.0 3,832.0 3,573.0

TOTAL LIABILITIES 71,254.0 74,498.0 71,451.0 66,733.0

Preferred Stock Convertible 1,406.0 1,366.0 1,324.0 1,277.0

TOTAL PREFERRED EQUITY 1,406.0 1,366.0 1,324.0 1,277.0

Common Stock 3,990.0 4,002.0 4,007.0 4,008.0

Additional Paid in Capital 59,030.0 60,307.0 61,118.0 61,697.0

Retained Earnings 41,797.0 48,986.0 57,309.0 64,614.0

Treasury Stock -38,772.0 -47,588.0 -55,961.0 -61,309.0

Comprehensive Income and Other -691.0 2,421.0 -4,698.0 -9,172.0

TOTAL COMMON EQUITY 65,354.0 68,128.0 61,775.0 59,838.0

TOTAL EQUITY 66,760.0 69,494.0 63,382.0 61,439.0

TOTAL LIABILITIES AND EQUITY 138,014.0 143,992.0 134,833.0 128,172.0

 CASH FLOW
Currency in As of: Jun 30 Jun 30 Jun 30 Jun 30
Millions of U.S. Dollars 2007 2008 2009 2010
Restated Restated Restated

NET INCOME 10,340.0 12,075.0 13,436.0 12,736.0

Depreciation & Amortization 2,490.0 2,517.0 2,434.0 2,507.0

Amortization of Goodwill and Intangible Assets 640.0 649.0 648.0 601.0

DEPRECIATION & AMORTIZATION, TOTAL 3,130.0 3,166.0 3,082.0 3,108.0

(Gain) Loss from Sale of Asset -153.0 -284.0 -2,377.0 -2,670.0

Change in Accounts Receivable -729.0 432.0 415.0 -14.0

Change in Inventories -389.0 -1,050.0 721.0 86.0

Change in Accounts Payable -278.0 297.0 -742.0 2,446.0

Change in Other Working Capital -151.0 -1,270.0 -758.0 -305.0

CASH FROM OPERATIONS 13,410.0 15,008.0 14,919.0 16,072.0

Capital Expenditure -2,945.0 -3,046.0 -3,238.0 -3,067.0

Sale of Property, Plant, and

281.0 928.0 1,087.0 3,068.0
Equipment

Cash Acquisitions -492.0 -381.0 -368.0 -425.0

Investments in Marketable &

673.0 -50.0 166.0 -173.0
Equity Securities

CASH FROM INVESTING -2,483.0 -2,549.0 -2,353.0 -597.0

Short-Term Debt Issued 9,006.0 2,650.0 -- --

Long-Term Debt Issued 4,758.0 7,088.0 4,926.0 3,830.0

TOTAL DEBT ISSUED 13,764.0 9,738.0 4,926.0 3,830.0

Short Term Debt Repaid -- -- -2,420.0 -1,798.0

Long Term Debt Repaid -17,929.0 -11,747.0 -2,587.0 -8,546.0

TOTAL DEBT REPAID -17,929.0 -11,747.0 -5,007.0 -10,344.0

Issuance of Common Stock 1,499.0 1,867.0 681.0 721.0

Repurchase of Common Stock -5,578.0 -10,047.0 -6,370.0 -6,004.0

Common Dividends Paid -4,048.0 -4,479.0 -4,852.0 -5,239.0

Preferred Dividends Paid -161.0 -176.0 -192.0 -219.0

TOTAL DIVIDEND PAID -4,209.0 -4,655.0 -5,044.0 -5,458.0

CASH FROM FINANCING -12,453.0 -14,844.0 -10,814.0 -17,255.0

Foreign Exchange Rate

187.0 344.0 -284.0 -122.0
Adjustments

NET CHANGE IN CASH -1,339.0 -2,041.0 1,468.0 -1,902.0

 SOME IMPORTANT RATIOS
Cash Management 30 Sep 2010 30 Jun 2010 30 Sep 2009 5-Yr Avg

Current Ratio 0.7 0.8 0.9 0.9

LTD to Equity 34.0% 34.8% 33.5% 36.7%

Debt/CFO (years) 2.4 1.9 2.2 2.6

Inventory/CGS (days) 65.6 65.3 75.4 69.8

Finished Goods/Invento 63.7% 64.0% 66.6% 66.5%

ry

Days of Sales Outstandi 27.7 27.6 30.8 30.5

ng (days)

Working Capital/Revenu -5.2% -5.7% -12.9% -5.4%

e

Cash Conversion Cycle 34.8 34.3 49.3 51.5

Time (days)
Profitability 30 Sep 2010 30 Jun 2010 30 Sep 2009 5-Yr Avg

Operating Expense/Rev 79.7% 79.7% 79.6% 79.9%

enue
ROIC 12.3% 12.7% 11.7% 12.6%

Free Cash Flow/Investe 11.5% 14.1% 13.2% 12.5%

d Capital
Accrual Ratio -0.2% -2.1% -0.2% -0.7%

Value 30 Sep 2010 30 Jun 2010 30 Sep 2009 5-Yr Avg

P/E 14.5 14.5 13.4 18.4

P/E vs. S&P 500 P/E  1.0 1.0 0.6 1.1

PEG 6.0 4.6 2.4 1.7

Price/Sales 2.3 2.3 2.4 2.7

Enterprise Value/Cash Fl 15.2 13.1 13.1 16.9

ow (EV/CFO)

Share Price ($) $59.97 $59.98 $57.92 -

• Year over year, Procter & Gamble Co. has seen
net income shrink from $13.4B to $12.7B
despite relatively flat revenues.

• A key factor has been an increase in the

percentage of sales devoted to SGA (selling,
general and administrative expense) costs
from 29.51% to 31.67%.
The company's market value is currently about
$190 billion, which makes P&G one of the ten
most-valuable U.S. corporations. 
Sales %: Was up by almost 3% to $78.9 billionin 2010

Net Income:
‡
Net income of P&G in 2010 was $12.7 billion as compared to last years
$13.4billion.
‡
Net income was down by $.7 billion (5%),which was due to spending more
money in R&D process. Another reason was due to the loss in
pharmaceuticals and coffee businesses

Dividends:

Dividend growth is a good indicator of the financial health of a company.

Dividends per common share increased 10% to $1.80 per share in 2010
• The gross profit margin is a measurement of a
company's manufacturing and distribution
efficiency during the production process.

• Gross margin of 2010 is $51.9 billion as

compared to 2009 is $49.5 billion. An increase
of 2.4% has been seen in the gross margin in
2010 which was due to manufacturing and
logistics cost savings projects.
• Liquidity refers to the ability of a concern to meet its
current obligations as and when these become due.

• Current Ratio: current assets/current liabilities 2010
is .77 n 2009 is .71

• Quick Ratio: cash + net receivables + marketable

securities/ current liabilities 2010 is .51 and 2009 .49
The cornerstone of evaluating solvency is the
Debt-to-Equity Ratio which looks at a firms
debt level in terms of total stockholders'
equity. In 2010 it was 1.08 and in 2009 it was
1.12. In other words, for every dollar of
Shareholders' Equity, P&G holds $1.08 worth
of debt. For now its low which is good for
company.
 REFERENCES
• http://
investing.businessweek.com/businessweek/re
search/stocks/earnings/earnings.asp?ticker=P
G:US

• http://moneycentral.msn.com/investor/invsub
/results/statemnt.aspx?Symbol=us:PG

• http
://www.financial-gauges.com/2010/11/pg-fina
THANK
YOU