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Maria Alejandra Ramirez ACG2021-001

Executive Summary. In 2007, Procter and Gamble achieved a 5% increase on its Organic Sales Growth, and a 15% increase on its Earnings per Share. Beauty and Health Care Sales have doubled just in the past six years. The company's stock price has increased, as well as the investors' confidence in the

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Maria Alejandra Ramirez ACG2021-001

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    1. Annual Report

    2. Executive Summary In 2007, Procter and Gamble achieved a 5% increase on its Organic Sales Growth, and a 15% increase on its Earnings per Share. Beauty and Health Care Sales have doubled just in the past six years. The company’s stock price has increased, as well as the investors’ confidence in the company. Also, the stock’s return to the investors increased. A negative change was that Receivables turnover and Days’ inventory on hand decreased. But overall, the company seems to show good performance and increased business. Procter & Gamble’s 2007 Annual Report http://thomson.mobular.net/thomson/7/2481/2801/

    3. Introduction ALAN G. (A.G.) LAFLEY Chairman of the Board and Chief Executive Officer

    4. Audit Report Procter & Gamble’s independent auditors: Deloitte & Touche LLP

    5. Stock Market Information As of June 30th, 2007: Company’s stock price: $61.190 Dividend per share: $0.35 Twelve month trading range of the company’s stock (June 30th, 2006 – June 30th, 2007) High: $66.30 - Low: $55.25 November 28th,2007 Closing Price: $73.91 PG has strong market share and a balanced portfolio of brands. Currently, either buying or holding this investment would be a good choice.

    6. Industry Situation and Company Plans PG's competitive strengths are a diverse portfolio of businesses, scale, strong brands and a strong focus on product innovation. Combined with geographic diversity, category diversity provides PG with a consistent revenue stream. P&G expects to grow globally, and increase consumer usage frequency. Also, they expect to enter categories they are not currently competing in. The company expects to increase 3% to 4% its beauty and health markets. Procter & Gamble recently announced plans to invest approximately $300 million to begin Phase I construction in early 2008, of a manufacturing facility in Box Elder County, Utah, to be operational by 2010. http://www.seekingalpha.com/article/22504-procter-gamble-a-classic-investment-with-great-potential http://www.expansionmanagement.com/cmd/articledetail/articleid/19227/default.asp http://money.cnn.com/2006/11/07/commentary/sivy/sivy.moneymag/index.htm

    7. Income Statement P&G uses the Multistep Income Statement format

    8. Balance Sheet Between 2006 and 2007, the Assets account increased by $2,319 and the Liabilities account decreased by $1,533. As a result, Stockholders’ Equity increased by $3,852.

    9. Statement of Cash Flows Cash flows from operations are more than net income for the past two years (2006 and 2007) In 2007, Acquisitions used $492 million of cash for transactions primarily in Beauty and Health Care. On October 2005, P&G acquired the Gillette Company. P&G’s first discretionary use of cash is dividend payments. There are also long-term and short-term debts, as well as treasury purchases. Overall, P&G’s cash has decreased over the past two years

    10. Accounting Policies Significant accounting policies: Revenue recognition: Sales are recognized when revenue is realized or realizable and has been earned. The revenue recorded is presented net of sales and other taxes P&G collects on behalf of governmental authorities and includes shipping and handling costs. Cash Equivalents: Highly liquid investments with remaining stated maturities of three months or less when purchased are considered cash equivalents and recorded at cost. Inventory Valuation: are valued at the lower cost or market value. Product-related inventories are primarily maintained on the first-in, first-out method. Property, Plant, and Equipment: are recorded at cost. Depreciation expense is recognized over the assets’ estimated useful lives using the straight-line method.

    11. Financial Analysis Liquidity Ratios

    12. Financial Analysis Profitability Ratios

    13. Financial Analysis Solvency Ratio

    14. Financial Analysis Market Strength Ratios

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