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Procter & Gamble Co. (PG) | Short-term (Operating) Activity Analysis

See also

Coca-Cola Co. (KO), Short-term Activity
Philip Morris International Inc. (PM), Short-term Activity
Toyota Motor Corp. (TM), Short-term Activity
PepsiCo Inc. (PEP), Short-term Activity
Unilever N.V. (UN), Short-term Activity
Kraft Foods Inc. (KFT), Short-term Activity
Altria Group Inc. (MO), Short-term Activity
Diageo PLC (DEO), Short-term Activity
Honda Motor Co. Ltd. (HMC), Short-term Activity
Nike Inc. (NKE), Short-term Activity
Colgate-Palmolive Co. (CL), Short-term Activity
Monsanto Co. (MON), Short-term Activity
Kimberly-Clark Corp. (KMB), Short-term Activity
Panasonic Corp. (PC), Short-term Activity
Sony Corp. (SNE), Short-term Activity

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Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.

Ratios (Summary)
Inventory Turnover
Receivables Turnover
Payables Turnover
Working Capital Turnover
Average Inventory Processing Period
Average Receivable Collection Period
Operating Cycle
Average Payables Payment Period
Cash Conversion Cycle

Ratios (Summary)

Procter & Gamble Co., short-term (operating) activity ratios

	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Turnover Ratios
Inventory turnover	11.19	12.36	11.49	9.92	11.22	10.84
Receivables turnover	13.16	14.80	13.54	12.35	11.54	11.92
Payables turnover	10.29	10.89	13.22	12.33	13.39	13.89
Working capital turnover	14.66	17.67	11.73	9.94	9.88	9.60
Average No. of Days
Average inventory processing period	33	30	32	37	33	34
Add: Average receivable collection period	28	25	27	30	32	31
Operating cycle	60	54	59	66	64	64
Less: Average payables payment period	-35	-34	-28	-30	-27	-26
Cash conversion cycle	25	21	31	37	37	38

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

Ratio	Description	The company
Inventory turnover	An activity ratio calculated as revenue divided by inventory.	Procter & Gamble Co.'s inventory turnover improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Receivables turnover	An activity ratio equal to revenue divided by receivables.	Procter & Gamble Co.'s receivables turnover improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Payables turnover	An activity ratio calculated as revenue divided by payables.	Procter & Gamble Co.'s payables turnover declined from 2009 to 2010 and from 2010 to 2011.
Working capital turnover	An activity ratio calculated as revenue divided by working capital.	Procter & Gamble Co.'s working capital turnover improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011 not reaching 2009 level.
Average inventory processing period	An activity ratio equal to the number of days in the period divided by inventory turnover over the period.	Procter & Gamble Co.'s average inventory processing period improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Average receivable collection period	An activity ratio equal to the number of days in the period divided by receivables turnoverd.	Procter & Gamble Co.'s average receivable collection period improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Operating cycle	Equal to average inventory processing period plus average receivables collection period.	Procter & Gamble Co.'s operating cycle improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Average payables payment period	An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.	Procter & Gamble Co.'s average payables payment period increased from 2009 to 2010 and from 2010 to 2011.
Cash conversion cycle	A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.	Procter & Gamble Co.'s cash conversion cycle improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011.

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Inventory Turnover

	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 sales	82,559	78,938	79,029	83,503	76,476	68,222
Inventories	7,379	6,384	6,880	8,416	6,819	6,291
Inventory Turnover, Comparison to Industry
Procter & Gamble Co.¹	11.19	12.36	11.49	9.92	11.22	10.84
Industry, Consumer Goods	10.74	10.26	10.01	10.43	9.44	–

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

2011 Calculations

¹ Inventory turnover = Net sales ÷ Inventories
= 82,559 ÷ 7,379 = 11.19

Ratio	Description	The company
Inventory turnover	An activity ratio calculated as revenue divided by inventory.	Procter & Gamble Co.'s inventory turnover improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

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Receivables Turnover

	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 sales	82,559	78,938	79,029	83,503	76,476	68,222
Accounts receivable	6,275	5,335	5,836	6,761	6,629	5,725
Receivables Turnover, Comparison to Industry
Procter & Gamble Co.¹	13.16	14.80	13.54	12.35	11.54	11.92
Industry, Consumer Goods	11.14	9.82	11.65	10.94	10.01	–

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

2011 Calculations

¹ Receivables turnover = Net sales ÷ Accounts receivable
= 82,559 ÷ 6,275 = 13.16

Ratio	Description	The company
Receivables turnover	An activity ratio equal to revenue divided by receivables.	Procter & Gamble Co.'s receivables turnover improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

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Payables Turnover

	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 sales	82,559	78,938	79,029	83,503	76,476	68,222
Accounts payable	8,022	7,251	5,980	6,775	5,710	4,910
Payables Turnover, Comparison to Industry
Procter & Gamble Co.¹	10.29	10.89	13.22	12.33	13.39	13.89
Industry, Consumer Goods	11.93	10.62	14.86	12.41	12.01	–

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

2011 Calculations

¹ Payables turnover = Net sales ÷ Accounts payable
= 82,559 ÷ 8,022 = 10.29

Ratio	Description	The company
Payables turnover	An activity ratio calculated as revenue divided by payables.	Procter & Gamble Co.'s payables turnover declined from 2009 to 2010 and from 2010 to 2011.

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Working Capital Turnover

	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 sales	82,559	78,938	79,029	83,503	76,476	68,222
Working capital	5,632	4,468	6,736	8,402	7,738	7,106
Working Capital Turnover, Comparison to Industry
Procter & Gamble Co.¹	14.66	17.67	11.73	9.94	9.88	9.60
Industry, Consumer Goods	10.10	9.51	8.45	9.37	8.16	–

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

2011 Calculations

¹ Working capital turnover = Net sales ÷ Working capital
= 82,559 ÷ 5,632 = 14.66

Ratio	Description	The company
Working capital turnover	An activity ratio calculated as revenue divided by working capital.	Procter & Gamble Co.'s working capital turnover improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011 not reaching 2009 level.

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Average Inventory Processing Period

	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data
Inventory turnover	11.19	12.36	11.49	9.92	11.22	10.84
Average Inventory Processing Period (no. of days), Comparison to Industry
Procter & Gamble Co.¹	33	30	32	37	33	34
Industry, Consumer Goods	34	36	36	35	39	–

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

2011 Calculations

¹ Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 11.19 = 33

Ratio	Description	The company
Average inventory processing period	An activity ratio equal to the number of days in the period divided by inventory turnover over the period.	Procter & Gamble Co.'s average inventory processing period improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

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Average Receivable Collection Period

	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data
Receivables turnover	13.16	14.80	13.54	12.35	11.54	11.92
Average Receivable Collection Period (no. of days), Comparison to Industry
Procter & Gamble Co.¹	28	25	27	30	32	31
Industry, Consumer Goods	33	37	31	33	36	–

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

2011 Calculations

¹ Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 13.16 = 28

Ratio	Description	The company
Average receivable collection period	An activity ratio equal to the number of days in the period divided by receivables turnoverd.	Procter & Gamble Co.'s average receivable collection period improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

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Operating Cycle

No. of days

	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data
Average inventory processing period	33	30	32	37	33	34
Average receivable collection period	28	25	27	30	32	31
Operating Cycle, Comparison to Industry
Procter & Gamble Co.¹	60	54	59	66	64	64
Industry, Consumer Goods	67	73	68	68	75	–

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

2011 Calculations

¹ Operating cycle = Average inventory processing period + Average receivable collection period
= 33 + 28 = 60

Ratio	Description	The company
Operating cycle	Equal to average inventory processing period plus average receivables collection period.	Procter & Gamble Co.'s operating cycle improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

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Average Payables Payment Period

	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data
Payables turnover	10.29	10.89	13.22	12.33	13.39	13.89
Average Payables Payment Period (no. of days), Comparison to Industry
Procter & Gamble Co.¹	35	34	28	30	27	26
Industry, Consumer Goods	31	34	25	29	30	–

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

2011 Calculations

¹ Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 10.29 = 35

Ratio	Description	The company
Average payables payment period	An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.	Procter & Gamble Co.'s average payables payment period increased from 2009 to 2010 and from 2010 to 2011.

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Cash Conversion Cycle

No. of days

	Jun 30, 2011	Jun 30, 2010	Jun 30, 2009	Jun 30, 2008	Jun 30, 2007	Jun 30, 2006
Selected Financial Data
Average inventory processing period	33	30	32	37	33	34
Average receivable collection period	28	25	27	30	32	31
Average payables payment period	35	34	28	30	27	26
Cash Conversion Cycle, Comparison to Industry
Procter & Gamble Co.¹	25	21	31	37	37	38
Industry, Consumer Goods	36	38	43	39	45	–

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

2011 Calculations

¹ Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 33 + 28 – 35 = 25

Ratio	Description	The company
Cash conversion cycle	A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.	Procter & Gamble Co.'s cash conversion cycle improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011.

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