PROCTER & GAMBLE

Procter & Gamble Co. (P&G, NYSE: PG) is a Fortune 500, American global corporation based
in Cincinnati, Ohio, that manufactures a wide range of consumer goods. As of 2008, P&G is
the 23rd largest US Company by revenue and 14thlargest by profit. It is 10th in Fortune's Most
Admired Companies list (as of 2007). P&G is credited with many business innovations including
brand management, the soap opera, and "Connect & Develop" innovation. According to the
Nielsen Company, in 2007
P&G spent more on U.S. advertising than any other company; the $2.62 billion it spent is almost
twice as much as General Motors, the next company on the Nielsen list. P &G was named
2008 Advertiser of the Year by Cannes InternationalAdvertising Festival. Procter & Gamble has
expanded dramaticallythroughout its history, but its headquarters still remains in Cincinnati.
P&G's dominance in many categories of products makes its brand management decisions
worthy of study. For example, P&G'scorporate strategists must account for the likelihood of one
of theirproducts cannibalizing the sales of another.

MISSION
To provide branded products and services of superior quality and value that improves the lives
of the world's consumers, now and for generations to come.

VALUES
P&G is its people and the values by which live.
We attract and recruit the finest people in the world. We build ourorganization from within,
promoting and rewarding people without regard to any difference unrelated to performance. We
act on the conviction thatthe men and women of Procter & Gamble will always be our most
important asset.
LEADERSHIP

We are all leaders in our area of responsibility, with a deep commitment to

deliver leadership results
We have a clear vision of where we are going.
We focus our resources to achieve leadership objectives and strategies.
We develop the capability to deliver our strategies and eliminate organizational barriers.

OWNERSHIP

We accept personal accountability to meet our business needs,improve our systems, and h
elp others improve their effectiveness.

We all act like owners, treating the Company's assets as our own and behaving with the
Company's long-term success in mind.

INTEGRITY

We always try to do the right thing.

We are honest and straightforward with each other.
We operate within the letter and spirit of the law.
We uphold the values and principles of P&G in every action and decision.
We are data based and intellectually honest in advocating proposals,
recognizing risks.

including

PASSION FOR WINNING

We are determined to be the best at doing what matters most.

We have a healthy dissatisfaction with the status quo.
We have a compelling desire to improve and to win in themarketplace.

TRUST

We respect our P&G colleagues, customers, and consumers, andtreat them as we want to
be treated.
We have confidence in each other's capabilities and intentions.
We believe that people work best when there is a foundation of trust.

CASH FLOW
STATEMENTS OF
P & G
FROM 2006-2010

Cash and cash equivalents

,beginning of the year
Operating activities
Net earnings
Depreciation & amortization
Share-based compensation
expenses
Deferred income taxes
Gain on sale of businesses
Change in A/R
Change in inventories
Change in A/P, accrued and
other liabilities
Change in other operating
assets and liabilities
Other
Total operating activities
Investing activities
Capital expenditure
Proceeds from assets sales
Acquisitions, net of cash
required
Change in investments
Total investing activities
Financing activities
Dividends to shareholders
Change in STD
Additions in LTD
Reductions of long term debt
Treasury stock purchase
Impact of stock options and
other
Total financing activities
Effect of exchange rate
changes on cash and cash
equivalents
Change in cash and cash
equivalents
Cash and cash equivalents ,
end of the year

2010
$
4,781

2009
$
3,313

2008
$
5,354

2007
$
6,693

2006
$
6,389

12,736
3,108
453

13,436
3,082
516

12,075
3,166
555

10,340
3,130
668

8,684
2,627
585

36
(2,670)
(14)
86
2,446

596
(2,377)
415
721
(742)

1,214
(284)
432
(1,050)
297

253
(729)
(389)
(273)

(524)
383
230

(305)

(758)

(1,270)

(157)

(508)

196
16,072

30
14,919

(127)
15,008

592
13,435

10
11,375

(3,067)
3,068
(425)

(3,238)
1,087
(368)

(3,046)
928
(381)

(2,945)
281
(492)

(2,667)
882
171

(173)
(597)

166
(2,353)

(50)
(2,549)

673
(2,483)

884
(730)

(5,458)
(1,798)
3,830
(8,546)
(6,004)
721

(5,044)
(2,420)
4,926
(2,578)
(6,370)
681

(4,655)
2,650
7,088
(11,747)
(10,047)
1,867

(4,209)
8,981
4,758
(17,929)
1,499
(5,578)

(3,703)
(8,627)
22,545
(5,282)
1,319
(16,830)

(17,255)
(122)

(10,814)
(284)

(14,844)
344

(12,478)
187

(10,578)
237

(1,902)

1,468

(2,041)

(1,339)

304

2,879

4,781

3,313

5,354

6,693

ANALYSIS OF CASH FLOW STATEMENTS

OPERATING ACTIVITIES
Operating cash flow was $16.1 billion in 2010, an 8% increase versus the prior year. Operating
cash flow resulted primarily from net earnings adjusted for non-cash items (depreciation and
amortization, stock based compensation, deferred income taxes and gain on the sale of
businesses) and a reduction in working capital. The increase in operating cash flow was
primarily due to the current year reduction in working capital balances, partially offset by a
decline in earnings versus 2009. Working capital reductions contributed $2.5 billion to operating
cash flow in 2010 mainly due to an increase in accounts payable, accrued and other liabilities.
Accounts payable, accrued and other liabilities increased primarily due to increased expenditures
to support business growth, primarily related to the increased marketing investments. Accounts
receivable days were down year over year due mainly to the global pharmaceuticals divestiture
and improved collection efforts. Inventory contributed to operating cash flow despite growth in
the business due to a reduction in days on hand due primarily to inventory management
improvement efforts. Cash flow from discontinued operations contributed $285 million to
operating cash flow. In 2009, operating cash flow was $14.9 billion, a decrease of 1% versus the
prior year total of $15.0 billion. Operating cash flow resulted primarily from net earnings
adjusted for non-cash items. The decrease in operating cash flow versus 2008 was primarily due
to a decline in net earnings from continuing operations. A net decrease in working capital also
added to cash flow as lower accounts receivable and inventory balances were partially offset by a
decline in accounts payable. The decrease in working capital was primarily due to the impact of
lower net sales and our ability to adequately adjust production to better meet unit volume
requirements. Accounts receivable days declined primarily due to improved collection efforts.
Inventory and accounts payable days declined due in part to the optimization of our
manufacturing process and inventory levels and a moderation of commodity costs late in the
year. Other operating assets and liabilities reduced cash flow primarily due to changes in
postretirement benefit plans. Cash flow from discontinued operations contributed $662 million to
operating cash flow.

INVESTING ACTIVITIES
Net investing activities consumed $597 million of cash in 2010 and $2.4 billion in 2009 mainly
due to capital spending and acquisitions, partially offset by proceeds from asset sales, including
$3.0 billion in cash received from the sale of our global pharmaceuticals business in 2010.
Discontinued operations consumed $1 million of cash from investing activities in 2010 and
contributed $69 million in 2009.

FINANCING ACTIVITIES
Dividend Payments: Our first discretionary use of cash is dividend payments. Dividends per
common share increased 10% to $1.80 per share in 2010. Total dividend payments to both
common and preferred shareholders were $5.5 billion in 2010 and $5.0 billion in 2009. The
increase in dividend payments resulted from increases in our quarterly dividends per share,
partially offset by a reduction in the number of shares outstanding. In April 2010, the Board of
Directors declared an increase in our quarterly dividend from $0.44 to $0.4818 per share on
Common Stock and Series A and B ESOP Convertible Class A Preferred Stock. This represents
a 9.5% increase compared to the prior quarterly dividend and is the 54th consecutive year that
our dividend has increased. We have paid a dividend in every year since our incorporation in
1890.
Long-Term and Short-Term Debt: We maintain debt levels we consider appropriate after
evaluating a number of factors, including cash flow expectations, cash requirements for ongoing
operations, investment and financing plans (including acquisitions and share repurchase
activities) and the overall cost of capital. Total debt was $29.8 billion in 2010, $37.0 billion in
2009 and $36.7 billion in 2008. Our total debt decreased in 2010 mainly due to repayments
funded by operating cash flow and cash provided by the global pharmaceuticals divestiture.
Treasury Purchases: In 2007, we began to acquire outstanding shares under a publicly
announced three-year share repurchase plan, which expired on June 30, 2010. We acquired
$22.3 billion of shares under this repurchase plan. Total share repurchases were $6.0 billion in
2010 and $6.4 billion in 2009, nearly all of which were made under the publicly announced plan.
We currently expect share repurchases of $68 billion in 2011.

INCOME STATEMENT OF P & G FROM 2006-2010

Net sales
COGS
GP
Operating income
Interest expense
Other non operating income
net
Earnings before income taxes
Income taxes
Net earnings
Basic net earnings per share
Diluted net earnings per
share
Dividends per share

2010
$
78,938
37919
41,019
16,021
946
(28)

2009
$
79,029
38,898
40,131
16,123
1,358
560

2008
$
81,748
39,536
42,212
16,637
1,467
462

2007
$
76,467
36,686
37,781
15,450
1,304
564

2006
$
68,222
33,125
35,097
13,249
1,119
283

15,047
4,101
10,946
4.32
4.11

15,325
4,032
11,293
4.49
4.26

15,632
3,834
11,798
3.86
3.64

14,710
4,370
10,340
3.22
3.04

12,413
3,729
8,684
2.79
2.64

1.80

1.64

1.45

1.28

1.15

RATIOS
LIQUIDITY
RATIOS
C.R
Q.R
Cash Ratio

2010

2009

2008

2007

2006

0.77
0.33
0.11

0.70
0.34
0.15

0.79
0.32
0.10

0.78
0.39
0.18

0.121
0.67
0.39

0.9
0.8
0.7
0.6
0.5

C.R
Q.R

0.4

Cash Ratio
0.3
0.2
0.1
0
2010

2009

2008

2007

2006

LIQUIDITY ANALYSIS
The liquidity analysis of P & G shows a constant trend means it increases or decreases but not
show the falling trend, the Current Ratio shows increasing trend it means its current liabilities are
decreasing and current assets are increased. Its cash and quick ratio are highest in the 2008 its
means its in hand is strong in 2008 and its current liabilities are decreasing.

PROFITABILITY
RATIOS
Gross Profit
Margin
Net Profit Margin
ROE
ROA

2010

2009

2008

2007

2006

51.96

50.78

51.63

49.41

51.44

13.86
17.81
12.49

14.28
17.89
11.95

14.43
16.97
11.55

13.52
15.48
11.19

12.72
13.81
9.76

60
50
40
Gross Profit Margin
Net Profit Margin

30

ROE
ROA

20
10
0
2010

2009

2008

2007

2006

PROFITABILITY ANAYLSIS
The gross profit margin of P & G shows constant trend its means that its profit are almost same
in the 5 years and not show increasing and decreasing trend it means that its management is not
efficient and not utilize its assets efficiently so that its profit increase. The GP was highest in
2010 and 2008.the net profit margin was highest in 2009 and 2008 but in 2010 it will decrease.
ROA and ROE was highest in 2010.

ASSEST
MANGEMENT
RATIOS
Inventory Turnover
A/R Turnover
Operating Cycle

2010

61
24
85

2009

64
26
90

2008

78
30
108

2007

68
30
98

2006

69
30
99

120

100

80
Inventory Turnover
60

A/R Turnover
Operating Cycle

40

20

0
2010

2009

2008

2007

2006

ASSET MANAGEMENT ANALYSIS

Asset management analysis of P &G good in 2010 because its account receivables are very efficient in
2010.its operating cycle is highest in 2008 it means that it didnt efficiently receive its cash and convert
its inventory.

Leverage ratio
Debt Ratio
Equity Ratio

2010
0.52
0.47

2009
0.53
0.46

2008
0.51
0.48

2007
0.22
0.48

2006
0.51
0.46

0.6

0.5

0.4
Debt Ratio

0.3

Equity Ratio
0.2

0.1

0
2010

2009

2008

2007

2006

LEVERAGE ANALYSIS
Procter & gamble leverage ratio is not satisfactory because its debt is always highest than its equity it
means that it runs its business on debt, it debt ratio in 2008 was .51 and its equity ratio was .48 and only
in that year its equity is highest from all other years. We can also say that it is a big company and need
more cash so it take more loans for their business.

UNILEVER
CASH FLOW STATEMENTS 2006-2010
CASH
FLOW
FROM 2010
OPERATING ACTIVITIES
RUPEES
000

2009
RUPEES
000

2008
RUPEES
000

2007
RUPEES
000

2006
RUPEES
000

Cash generated from operations

601,100

513,898

701,226

330,005

270,732

Markup paid

(8,094)

(27,224)

(22,129)

(2,426)

(3,501)

Income tax paid

(217,737)

(134,431)

(190,035)

(138,260)

(26,020)

Retirements benefits-obligation (8,355)

paid
Decrease in long term loans
1,132

(7,546)

(9,480)

(8,817)

(8,900)

1,547

1,133

(5,881)

35

Decrease
in
long
term
prepayment
Net cash generated from
operating activities
CASH USED IN INVESTING
ACTIVITIES
Purchase of property, plant and
equipment
Sale proceeds on property, plant
and equipment
Return received on savings
accounts/term deposits
Net cash used in investing
activities
CASH USED IN FINANCING
ACTIVITIES
Dividends paid

227

5,133

2,598

(7,429)

3,945

368,273

351,377

483,313

167,192

236,291

(51,455)

(22,114)

(142,439)

(116,852)

(23,368)

2,974

5,682

8,631

2,092

5,502

36

155

8,392

14,181

6,609

(48,455)

(16,277)

(125,416)

(100,579)

(11,257)

(301,517)

(208,610)

(246,250)

(584,925)

(153,772)

Net increase in cash and cash 18,311

equivalents
Cash and cash equivalents at the (108,079)
beginning of the year

126,490

111,647

(518,312)

71,262

(234,569)

(346,216)

172,096

100,834

Cash and cash equivalents at the (89,768)

end of the year

(108,079)

(234,569)

(346,216)

172,096

ANALYTICAL REVIEW
OPERATING ACTIVITIES
The cash flow from the operating activities shows positive balance which means that
operating activities are favorable
The operating cash flow increased by 4.7% from the last year so our operating activities
are satisfactory.
The timing is good which means that its account receivables are less than accounts
payable and it has less operating expense.
The administrative policies of the company are going well and manage it in a very
successful manner.
Routine and daily activities are going healthy.

INVESTING ACTIVITIES
Favorable investing cash flow of the company.
Efficient utilization of cash for expansion purpose.
Company show exceptional growth in 2010 as compared to 2009
Growth of the business operations, employees and its clients are satisfied.

FINANCING ACTIVITIES
Financing activities of cash flow statement are favorable.
When financing activities are favorable it means people are satisfied with the company
and ready to invest in the company.
Financing policies are satisfactory so people are more willing to adopt its financing
opportunities.
When financing policies are well supervised then organization becomes more authentic
for lenders and investors to invest.

CONCLUSION
Net cash flow of the company is favorable and it means it is positive.
Operating activities are satisfactory.
Investing and financing policies of the company are also satisfactory

 The companys utilize its funds efficiently in investing activities

Companys holding cash is negative which is not good sign for the company

RECOMMENDATIONS
Need to maintain its operating policies
Companys holding cash is negative so need to reformulate its policies because if holding
cash is negative then company will not be able to perform its daily activities efficiently.

INCOME STATEMENTS 2006-2010

2010
RUPEES
000

2009
RUPEES
000

2008
RUPEES
000

2007
RUPEES
000

2006
RUPEES
000

Sales

4,040,887

3,376,511

3,081,879

2,376,408

1,939,515

Cost of sales

(2,506,003)

(2,122,144)

(1,924,766)

(1,489,985)

(1,208,264)

Gross profit

1,534,884

1,254,367

1,1157,113

886,423

731,251

Distribution cost

(786,593)

(797,304)

(536,144)

(477,416)

(405,974)

Administrative expenses

(51,547)

(50,219)

(45,421)

(47,004)

(38,832)

Other operating expenses

(51,810)

(120,275)

(43,940)

(28,873)

(22,951)

Other operating income

23,576

30,161

20,936

19,742

30,967

668,510

316,730

552,544

352,872

294,461

Restricting cost

(10,202)

(52,557)

Profit from operations

658,308

264,173

552,544

352,872

294,461

Finance cost

(12,449)

(22,517)

(22,233)

(6,798)

(4,345)

Profit before taxation

645,859

241,656

530,311

346,074

290,116

Taxation

(208,396)

(64,864)

(181,765)

(121,582)

(102,137)

Profit after tax

437,463

176,792

348,546

224,492

187,979

Earnings per share

71.04

28.71

56.60

36.46

30.53

RATIOS
PROFITABILITY RATIOS
2010
%
Gross profit margin
Net profit margin
ROA
ROE

38
11
60
108

2009
%

2008
%

2007
%

2006
%

37
5
27
66

38
11
54
116

37
9
37
113

38
10
33
34

140
Gross Profit Margin

120

Net Profit Margin

ROA

100

ROE
80
60
40
20
0
2010

2009

2008

2007

2006

PROFITABILITY ANALYSIS
The profitability ratios of unilever was not up to the mark which shows that company is not
generating enough profit or revenue. The gross profit margin of Unilever shows a constant trent
which shows that company is not increasing their assets or not fully utilize their assts thats why
company is not increase their profit. Moreover its ROA and ROE also increase in 2010 which is
good because it means that its earnings before interest and tax and net income is more than its
assets and equity. In 2010 ROE is much higher than ROA.net profit margin was also increase in
2010 by 6%.

LEVERAGE RATIOS

Equity ratio
Total debt ratio

2010
%
0.91
0.08

2009
%
0.87
0.11

2008
%
0.44
0.56

2007
%
0.63
0.37

2006
%
-

1
0.9

Equity Ratio

0.8

Total Debt Ratio

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2010

2009

2008

2007

2006

LEVERAGE ANALYSIS
The leverage ratios of Unilever are excellent which shows that company equity ratio is more than
its debt ratio which means that company is running its business on its cash or profit and not
taking loans or debt to continue its operation. This thing indicates that companys management is
very good and company is able to operate their business without debt which is very healthy sign
for such large company.

ASSETS MANAGEMENT RATIO

2010
50
Inventory turnover
8
A/R turnover
58
Operating cycle

2009
59
7
66

2008
69
8
77

2007
81
12
93

2006
65
13
78

100
Inventory Turnover

90

A/R Turnover

80

Operating Cycle

70
60
50
40
30
20
10
0
2010

2009

2008

2007

2006

ASSET MANAGEMENT ANALYSIS

The assets management analysis of Unilever is also satisfactory because its operating cycle
shows in 2010 its operating cycle is lowest which shows that its inventory turnover and account
receivables is lower than 2009 which is good and which shows that company is actively receive
its money and cash from lenders and do their business on cash basis not on lending so thats why
company in not need to take loans or debts to continue its operations.

LIQUIDITY RAIOS
2010
%
Current ratio 1.09
0.51
Quick ratio

2009
%
0.88
0.32

2008
%
1
0.22

2007
%
1
0.22

2006
%
2
1

2.5
Current Ratio
Quick Ratio

1.5

0.5

0
2010

2009

2008

2007

2006

LIQUIDITY ANALYSIS
The liquidity analysis of unilever shows decreasing trend from 2007 but afterwards it will show a
constant trend, in 2006 current ratio and quick ratio was highest it means that in 2006 current
assets and cash is more than current liabilities but after 2006 its current liabilities are going to
increase due to which its current ratio and quick ratio was going to decrease but again in 2010 it
will show increasing trend which shows that company is going to increase their assts with
respect to liabilities.

COMPARISON OF LIQUIDITY RATIOS OF UNILEVER WITH

PROCTER & GAMBLE
LIQUIDITY RATIO
CURRENT RATIO
YEARS
2010
2009
2008
2007
2006

UNILEVER
1.09

0.88
1
1
2

P&G
0.77
0.71
0.79
0.78
0.12

QUICK RATIO
UNILEVER
0.51
0.32
0.22
0.22
1

P&G
0.33
0.34
0.32
0.39
0.67

2.5

1.5

UNILEVER C.R
P & G C.R
UNILEVER Q.R

P & G Q.R
0.5

0
2010

YEARS
2010
2009
2008
2007
2006

2009

2008

2007

LEVERAGE RATIOS
DEBT RATIO
UNILEVER
P&G
0.08
0.52
0.11
0.53
0.56
0.51
0.37
0.22
0.51

2006

EQUITY RATIO
UNILEVER
P&G
0.91
0.47
0.87
0.46
0.44
0.48
0.63
0.48
0.46

1
0.9
0.8
0.7
0.6

UNILEVER D.R

0.5

P & G D.R
UNILEVER E.R

0.4

P & G E.R

0.3
0.2
0.1
0
2010

YEARS
2010
2009
2008
2007
2006

2009

2008

2007

2006

ASSEST MANAGEMENT RATIOS

INVENTORY
A/R TURNOVER
TURNOVER
UNILEVER
P &G
UNILEVER
P&G
50
61
8
24
59
64
7
26
69
78
8
30
81
68
12
30
65
69
13
30

OPERATING CYCLE
UNILEVER
58
66
77
93
78

P&G
85
90
108
98
99

120

100
UNILEVER INVENTORY TO

80

P & G INVENTORY TO
UNILEVER A/R TO

60

P & G A/R TO
UNILEVER OC

40

P & G OC
20

0
2010

YEARS
2010
2009
2008
2007
2006

2009

GP
UNI
38
37
38
37
38

P&G
51.96
50.78
51.63
49.41
51.44

2008

2007

2006

PROFITABILITY RATIOS
NP
ROE
UNI
P&G
UNI
P&G
11
13.86
10.8
17.81
5
14.28
8.6
17.89
11
14.43
11.6
16.97
9
13.52
11.3
15.48
10
12.72
10.8
13.81

ROA
UNI
P&G
9.87
12.49
10.7
11.95
8.9
11.55
9.9
11.19
6.33
9.76

60

50
UNI GP
P & G GP

40

UNI NP
P & G NP

30

UNI ROE
P & G ROE

20

UNI ROA
P & G ROA

10

0
2010

2009

2008

2007

2006

CONCLUSION
We concluded that Procter and Gamble is a large company its assets and equity is according to
that but it have to work so that they will fully utilize its assets and opportunities, its liquidity
ratios are not satisfactory because in 2010 in will decrease by 2009 it means that its current
liabilities are increasing which is not the good sign for the company. Its leverage ratio shows that
its debt is more than its equity means it run its business on debt and did not generate enough cash
or revenue to operate the company. Asset management ratio are also not satisfactory and are high
in each year which shows that they do their business on lending and not efficiently receive their
money due to which its debt are increasing and they have to take loan to run their business which
is not the good sign for the company, its profitability ratios are also not showing good trend
because its ROA & ROE is not satisfactory means they did not efficiently utilize their assets to
generate revenue.

RECOMMENDATIONS
By the analysis of Procter and Gamble we came to know its financial position and where its
stand in the market so we will recommend it following suggestions so that they will generate
more revenue and do their business in an efficient manner.

They will improve their policies and strategies so that they will receive its cash more and
its account receivable days are decreasing and then its operating cycle are decreasing so
when its operating cycle are decreasing they will not need loans or debts to operate their
business.
For leverage ratios I will recommend that they efficiently utilize its assets and
reformulate its policies so that its equity ratio is more than its debt ratio because at
present its equity ratio is low than its debt which means that company is doing its
business on debt and which is not good for the company in long term.
Its liquidity ratios shows increasing trend which means that its assets are increasing than
its liabilities so we will recommend that they will work more in order to improve their
current ratio and quick ratio so that it will show a drastic increasing trend and makes
company profitable.
For profitability ratios they have to work very hard because its return on assets and return
on equity is not satisfactory which shows that it net profit and earnings before tax are not
upto mark which will effect profitability ratios so company need to work on that and find
out reasons why its profitability ratios are not increasing.