Financial Analysis: Procter And Gamble Co.

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Abstract : Analysis of financial statement of a company is an important because it is useful to obtain Information about how the company operated in the previous period. Interpretation of the evaluation of financial indicator does not always prove to be easy, required multiple calculations and combined approaches. This case study considers the analysis of Financial Statement of P&G Corporation, which is one of the largest corporations in world.
The case study highlights the analysis of financial statement in respect of Ratio Analysis. Secondary information is collected for this case. This case study limited only one techniques of financial analysis that is Ratio Analysis and also taken a single company. Thus
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Introduction :
Procter and Gamble Co. also know as P&G, is an American multinational consumer goods company, founded by William Procter and James Gamble. Its products include cleaning agents and personal care products. It has in its kitty global brands such as Ariel and Tide in the Fabric care segments and Head & Shoulder, Pantene and Rejoice is the Hair care segment. For this case study selects P&G Company as it has an important role in the consumer segment products. As P&G was a popular company, the financials statement shows better performance in the previous year.
Financial Statement Analysis is the process of reviewing and analyzing a company’s financial statements to make better decisions. These statement includes the Income statement, Balance sheet, Statement of cash flows and a statement of changes in equity.
There are 4 techniques used in Ratio Analysis:
Horizontal Analysis
Vertical Analysis
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The higher net profit ratio indicates the standard performance of the business concern.
Return on Capital Employed = 45.40%
It reveals / measure the % of income derived from equity capital.
EPS = 14.61%
EPS measures the earning capacity of firm from the owner’s point of view and it is helpful in determining the price of equity shares in the market place.
Dividend Pay-out Ratio = 30.25
Dividend pay-out ratio indicates the dividend policy adopted by the management about the utilization of the divisible profit to pay dividend or to retain both.
Solvency Ratio
Debt-Equity Ratio = 0.1025:1
This ratio measure the firm’s obligation to creditors is relation to funds invested by the owners. The ideal ratio is 1:1. The company is not able to obelize the creditors with regarding their own fund.

Proprietary Ratio = 1.66%
This ratio is used to determine the financial stability of the concern in general. As it is less the creditors have greater risk.
Capital Gearing Ratio = 32.46
A higher gearing ratio indicates a company is having large fund bearing fixed interest or fixed dividend as compared to equity share capital. FINDINGS:
As CR is 1.89:1, the company is able to meet its obligation in
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