Procter & Gamble Co. (PG) | Long-term Debt and Solvency Analysis

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Solvency ratios also known as long-term debt ratios measure a company's ability to meet long-term obligations.

Ratios (Summary)

Procter & Gamble Co., debt and solvency ratios

	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Debt to equity	0.47	0.49	0.59	0.53	0.53	0.61
Debt to capital	0.32	0.33	0.37	0.35	0.35	0.38
Interest coverage	19.28	18.80	13.86	11.96	12.28	12.09

Source: Based on data from Procter & Gamble Co. Annual Reports

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Procter & Gamble Co.'s debt-to-equity ratio improved from 2009 to 2010 and from 2010 to 2011.
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Procter & Gamble Co.'s debt-to-capital ratio improved from 2009 to 2010 and from 2010 to 2011.
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Procter & Gamble Co.'s interest coverage ratio improved from 2009 to 2010 and from 2010 to 2011.

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	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data (USD $ in millions)
Debt due within one year	9,981	8,472	16,320	13,084	12,039	2,128
Long-term debt	22,033	21,360	20,652	23,581	23,375	35,976
Total debt	32,014	29,832	36,972	36,665	35,414	38,104
Stockholders' equity attributable to parent	67,640	61,115	63,099	69,494	66,760	62,908
Debt to Equity, Comparison to Industry
Procter & Gamble Co.¹	0.47	0.49	0.59	0.53	0.53	0.61
Industry, Consumer Goods	0.93	0.88	0.86	0.76	0.66	–

Source: Based on data from Procter & Gamble Co. Annual Reports

2011 Calculations

¹ Debt to equity = Total debt ÷ Stockholders' equity attributable to parent
= 32,014 ÷ 67,640 = 0.47

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Procter & Gamble Co.'s debt-to-equity ratio improved from 2009 to 2010 and from 2010 to 2011.

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	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data (USD $ in millions)
Debt due within one year	9,981	8,472	16,320	13,084	12,039	2,128
Long-term debt	22,033	21,360	20,652	23,581	23,375	35,976
Total debt	32,014	29,832	36,972	36,665	35,414	38,104
Stockholders' equity attributable to parent	67,640	61,115	63,099	69,494	66,760	62,908
Total capital	99,654	90,947	100,071	106,159	102,174	101,012
Debt to Capital, Comparison to Industry
Procter & Gamble Co.¹	0.32	0.33	0.37	0.35	0.35	0.38
Industry, Consumer Goods	0.48	0.47	0.46	0.43	0.40	–

Source: Based on data from Procter & Gamble Co. Annual Reports

2011 Calculations

¹ Debt to capital = Total debt ÷ Total capital
= 32,014 ÷ 99,654 = 0.32

Ratio	Description	The company
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Procter & Gamble Co.'s debt-to-capital ratio improved from 2009 to 2010 and from 2010 to 2011.

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	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data (USD $ in millions)
Net earnings	11,797	12,736	13,436	12,075	10,340	8,684
Add: Interest expense	831	946	1,358	1,467	1,304	1,119
Add: Income tax expense (benefit)	3,392	4,101	4,032	4,003	4,370	3,729
Earnings before interest and tax (EBIT)	16,020	17,783	18,826	17,545	16,014	13,532
Interest Coverage, Comparison to Industry
Procter & Gamble Co.¹	19.28	18.80	13.86	11.96	12.28	12.09
Industry, Consumer Goods	12.49	10.10	8.21	18.08	17.82	–

Source: Based on data from Procter & Gamble Co. Annual Reports

2011 Calculations

¹ Interest coverage = EBIT ÷ Interest expense
= 16,020 ÷ 831 = 19.28

Ratio	Description	The company
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Procter & Gamble Co.'s interest coverage ratio improved from 2009 to 2010 and from 2010 to 2011.

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