Answer To: Group Project FNBSLW 735 As the final project for our course, you are expected to evaluate P&G’s...
Himanshu answered on May 10 2021
2.
Financial Analysis
Financial analysis is the method of assessing the success and suitability of companies, programmes, budgets, and other financial transactions. Financial analysis is commonly used to determine whether an enterprise is stable, viable, liquid, or productive enough to justify monetary investment (P&G)
The Procter & Gamble Company (PG)
Share price
$135.15
Market Capitalization
330 Billion
EPS
5.44
Price to Earnings Ratio
24.85
Share Performance (Trend)
Liquidity ratio
Years
2020
2019
2018
2017
2016
Current Ratio
0.84
0.74
0.82
0.87
1.09
Quick Ratio
0.61
0.50
0.58
0.64
0.57
Cash Ratio
0.48
0.33
0.41
0.49
0.42
A liquidity ratio tests the willingness of a business to pay its short-term debt obligations. Three major liquidity ratios are the current ratio, a quick ratio and a money ratio. Until deciding a firm, investors and borrowers would like to see a liquidity level of 1.0. As illustrated above, the level of liquidity of companies is in fact below 1, which in the near future implies a certain caution.
Solvency Ratio
Years
2020
2019
2018
2017
2016
Debt to Equity
0.75
0.64
0.60
0.57
0.53
Debt to Capital
0.43
0.39
0.37
0.36
0.35
Debt to Assets
0.29
0.26
0.26
0.26
0.24
Financial Leverage
2.59
2.44
2.26
2.18
2.22
To measure a firm's readiness to render its long-term commitments, the debts ratios are implemented. An investor can understand the potential of an enterprise by reading a solvency rate to meet its debt commitments.
Profitability Ratio
Years
2020
2019
2018
2017
2016
Gross Profit
50.32%
48.63%
48.73%
49.99%
49.60%
Operating Margin
22.14%
8.11%
20.52%
21.45%
20.58%
Net Profit
18.36%
5.76%
14.59%
23.56%
16.09%
In addition to its sales and other expenses associated with income generation in the period set, the profitability ratio is used to measure the company's capacity to gain profit. This ratio shows the real result of the company. The profits of the business are consistent according to the survey, which is a positive indicator (Yahoo Finance)
3.
Economic Analysis
The Procter & Gamble Company has evolved to become one of the world's largest consumer goods industries. Procter & Gamble's performance on the market of consumer products is closely linked to the markets where it operates. The effect of economic trends and challenges on the restricted or the macro-environment is determined by this aspect of the economic assessment process. In the case of Procter & Gamble, the following economic external considerations stand out:
· The emerging economies are expanding at a rapid pace (opportunity)
· Increasing discretionary income (opportunity)
· The bulk of emerging markets' economies are stable (opportunity)
The opportunity associated with emerging markets' rapid growth rate supports Procter & Gamble's future growth. Additionally, the firm has the potential to expand as disposable income levels rise. This economic external influence leads to consumers' increased buying power for manufactured products from companies such as Procter & Gamble. Furthermore, the bulk of emerging markets' resilience leads to the significant stability of P&G's remote or macro-environment. According to this part of the economic analysis, the Procter & Gamble Company has growth opportunities.
Industry Analysis
Analysis of the Industry Procter & Gamble Company is the world's leading consumer packaged products (CPG) company in the personal product market. The CPG market is very competitive. P&G's main rivals, such as Kimberly-Clark Corp., Colgate-Palmolive Co., Johnson and Johnson, Avon Consumer Co., and Unilever, are similarly diversified across several sub-sectors. Companies that operate in several industries must focus on brand equity and product creativity to capture market share (Owler)
Model of Five Forces The five forces model is used in every sector to determine the policy, viability, and strength of that industry. The five forces model identifies the valuable parts of the CPG industry by using factors such as competition among incumbent companies, threat of new entrants, threat of replacement goods, customer...