P & G 's Financial Performance

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P&G’s financial ratios demonstrate similarity with industry average among short-term liabilities, negative working capital, and efficient use of assets to produce sales. However, there is disparity amidst P&G and the industry average in the value created from leveraging long-term debt, managing assets, and their measures of profitability and performance. Furthermore, due to immense competition, and restructuring efforts to cut costs, the company has been blindsided with numerous product recalls. Nonetheless, although there are shortcomings in the company’s operations, and a difference in the capacity of earnings for P&G compared to average earnings for the industry; overall, P&G does not show immediate signs of financial vulnerability. Financial Stability and Performance Financial Statement and Ratio Analysis Upon examining P&G’s financial ability to meet short-term obligations, it is apparent that not only have their current liabilities exceeded current assets over the last three years, but close to half of their current assets have been tied up in inventories and other illiquid assets. For example, assessing both the quick and current ratio shows that less than 70% of the firm’s quick assets could be converted immediately to pay current commitments, but a little more than 90% of the firm’s liabilities would ultimately be covered. Though, based on industry average similar findings occur; therefore, it must not be uncommon for industries akin to P&G to have
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