Financial statements analysis and common stock valuation

Dividend Discount Model (DDM)

The dividend discount model (DDM) is a technique for estimating the value of a share of Procter & Gamble Co.’s common stock issue as the present value of all future dividends.

• Intrinsic Stock Value (Valuation Summary)
• Required Rate of Return (r)
• Dividend Growth Rate (g)

Present Value of Free Cash Flow to the Firm (FCFF)

The FCFF valuation approach estimates the value of the firm as the present value of future FCFF discounted at the weighted average cost of capital (WACC).

• Intrinsic Stock Value (Valuation Summary)
• Weighted Average Cost of Capital (WACC)
• FCFF Growth Rate (g)

Operating Profit Margin
since 2005

Procter & Gamble Co.’s profitability ratio calculated as operating income divided by revenue.

• Calculation

Enterprise Value to FCFF (EV/FCFF)

Free cash flow to the firm is the cash flow available to the Procter & Gamble Co.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to The Firm (FCFF)
• Interest Paid, Net of Tax
• EV to FCFF Ratio, Current
• EV to FCFF Ratio, Historical

Common-Size Balance Sheet: Assets

Assets components shown as percentage of total assets.

Cash Flow Statement

The cash flow statement provides information about Procter & Gamble Co.’s cash receipts and cash payments during an accounting period, showing how these cash flaws link the ending cash balance to the beginning balance shown on Procter & Gamble Co.’s balance sheet.