Main objectives of this assignment are as follows:
An analysis and evaluation of the data available in the Procter & Gamble annual report. An analysis and evaluation of the developments in the financial markets in the past 2 years of Procter & Gamble company.
Compare and assess the performance of P&G with its competitor company (Unilever).
Recommendations to Procter&Gamble for future advancements.
Procter and Gamble
Procter and Gamble is a fortune 500 multinational company which is headquartered at Downtown, Cincinnati, Ohio, U.S.A . It is one of the top 5 consumer goods manufacturer company in the world. It was founded in 1837 by William Procter, a candle maker and James Gamble, a soap maker, immigrants from England Ireland respectively. In year 2010 P&G had 1,28,000 employees.
Current President and C.E.O of Procter and Gamble Company is Bob Mc Donald.
Revenue of P&G in 2010 was 78.6 billion US Dollar.
Operating income of P&G in 2010 was 16.15 billion US Dollar.
Net income of P&G In year 2010 was 12.72 billion US Dollar.
Total Assets of P&G in year 2009 was around 135.12 billion US Dollar.
Procter and gamble company deals into four segments mainly, categorized as :
Beauty and grooming segment.
Household care segment.
Health and well being segment.
Snacks and Beverages segment.
Procter and Gamble was ranked 6th in the world for the world’s most admired company.
Procter and Gamble operates in nearly 82 countries around the world and it sells or markets 300 brands in more than 159 countries.
Procter and Gamble is the world’s biggest maker of household products according to sales and volume.
Procter and Gamble is also one of the biggest advertisers in the world.
Procter and Gamble was ranked #39 out of top Fortune 500 American companies.
P&G organization is the mother of innovations like extreme market research, brand -management & development and profit sharing programmes. These were all developed and implemented by P&G first than any other organization in the world.
Popular brands of P&G company with net sales more than one billion U.S. Dollar annually:
Ariel – laundry detergent
Charmin – bathroom towel
Bounty – paper towels
Crest – toothpaste
Dawn- dishwashing detergent
Downy- fabric softener
Gillette- shaving razors, shaving gel and cream, deodorant and anti-persipirant.
Head &Shoulders – shampoo
Olay- beauty products
Oral.b – dental products
Pantene- hair care products
Pringles- potato crisps
Tide- powder and liquid detergents
Procter and Gamble manufacturing operations are based in the following countries and regions:
Major competitors of Procter and Gamble are:
Kimberly Clark Corp.
Sara Lee Corporations.
Kraft foods INC
Competitor’s Profile (Unilever)
Unilever is an Anglo-Dutch multinational company founded in 1930 by the amalgamation of Dutch margarine company Margarine Unie with British soap maker
Lever Brothers. The company is headquartered at Unilever house London, United Kingdom and at Rotterdam, Netherlands. Unilever owns more than 370 brands as a result of acquisitions such as with Brooke Bond in 1984 and Chesebrough-Ponds Inc in 1987. Mission statement of Unilever or motto of Unilever is “Meeting the everyday needs of people everywhere.” According to Unilever company, everyday more than 140 million people pick their brands to clean their homes and to feed their families.
Unilever comes among top 5 in world for making packaged consumer products like soaps, tea, frozen foods, deodorants, perfumes, toiletries etc.
The corporation sells its products in more than 140 countries.
The annual revenue of Unilever Inc was around 39,826 Million Euros in year 2009.
Operating income of Unilever was around 5,010 Million Euros in year 2009.
Net income of Unilever was 3,658 million Euros in year 2009.
Unilever has subsidiaries in more than 85 countries and it employs more than 1,70,000 workers to its company.
Unilever stands at third position among food firms in the world after Nestle and Kraft and world’s second largest packaged consumer goods company after Procter& Gamble company.
Financial Analysis of Procter and Gamble company:
The financial statements including, annual reports, balance sheet, cash flow statement, income statement are attached with the following appendixes.:
Common size Statement analysis (Vertical) = Appendix A
2. Balance sheet , cash flow statement, Income Statement = Appendix B
Financial ratio formulas = Appendix C
Financial ratios = Appendix D
5.Comparison of Financial data between P&G and Unilever = Appendix E
Financial Statement Analysis:
Financial statement analysis is the process of analyzing financial strengths and weaknesses of a firm by making relationships between the items of the profit and loss account and of balance sheet.
These statements are very helpful for decision making purpose for any business or company.
They play a vital role for setting the framework of managerial decisions.
Financial statement analysis includes preparation and interpretation of financial statements in analogous and common size form.
Financial statement analysis also includes computation and interpretation of financial ratio that would be helpful to common share holder for business purpose and for short term creditors as well as long term creditors.
Techniques of Financial Statement Analysis :
Vertical and Horizontal Analysis.
It involves line by line comparison of two or more years financial data. The horizontal analysis compares financial data over a number of accounting period.
Accounts receivable can be compared over a period of months during a fiscal year or sales can be compared over a period of several years.
Vertical Common-Size Analysis
In Vertical Common-Size Analysis statement all the figures of income statement are taken as a percentage of sales and in balance sheet all the figures are taken as a percentage of total assets.In Income statement, sales figure is taken as base and is assumed to be 100 % and all other figures are expressed as a percentage of sales.
In balance sheet the percentage of total assets is taken as 100 % and all other figures are expressed as a percentage of total assets.
Ratio Analysis :
The ratio analysis is the most important and powerful tool of financial statement analysis. When we use ratio analysis, we can check and determine how profitable a business is. Ratios can be calculated by dividing one number to another number. It can be expressed in the form of percentage, proportion, time or rate.
Ratio Analysis is an accounting method used to compare one figure with another.
Ratios can helps us to determine whether a business is sound or not.
It simplifies the data of financial statements.
It also helps in comparing the results of one business with another.
It also helps in comparing the results of the business with the average result of all similar businesses in the same field.
It also tells the investors to determine whether they should buy, hold or sell the shares by seeing the ratio analysis of the particular company.
It also helps the employees of a particular company by providing information about stability and profitability of their company in present and future times.
It also helps in planning and forecasting during financial analysis. Ratios can help management to do basic functions like forecasting, planning, co-ordination, control of financial data of the business.
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