Procter & Gamble Co. (NYSE:PG)

Current Tax Expense

The current tax expense exhibits a generally upward trend over the six-year period. Starting at 2,514 million USD in 2019, it increased significantly to 3,327 million USD in 2020. This upward momentum continued more moderately through 2021 and 2022, reaching 3,604 million USD. The expense peaked at 4,068 million USD in 2023 before seeing a slight reduction to 4,031 million USD in 2024. Overall, the current tax expense nearly doubled from 2019 to 2024, indicating rising taxable income or tax rates over time.

Deferred Tax Benefit

The deferred tax benefit fluctuated, showing a varied pattern. It was most substantial in 2020, with a benefit of -596 million USD, suggesting significant deferred tax asset recognition or timing differences favoring lower tax obligations. From this peak benefit, there was a noticeable decline in magnitude over subsequent years, with values of -258 million USD in 2021 and -244 million USD in 2024, indicating fluctuating temporary differences or changes in deferred tax assets and liabilities. The deferred tax benefits consistently remained negative, denoting tax reductions, but the diminishing size suggests less impact on total tax expense over time.

Total Tax Expense

The total tax expense reflects the combined effect of current and deferred tax components. It rose steadily from 2,103 million USD in 2019 to a high of 3,263 million USD in 2021, followed by a slight decrease to 3,202 million USD in 2022. Subsequently, the tax expense resumed an increasing trajectory, reaching 3,615 million USD in 2023 and 3,787 million USD in 2024. This growth pattern aligns with the rising current tax expense, albeit moderated by the deferred tax benefits. The increasing total tax expense overall indicates that the company's taxable income or effective tax rates increased during this period.

The data reveals several noteworthy trends in the income tax components and the effective income tax rate over the six-year period examined.

U.S. Federal Statutory Income Tax Rate

The U.S. federal statutory income tax rate remained constant at 21% throughout the entire period, indicating no changes in the baseline federal tax rate affecting the company.

Country Mix Impacts of Foreign Operations

The impact from country mix of foreign operations fluctuated mildly around zero, showing a generally minor influence on the tax rate, with values varying between -0.5% and 0.1% and no clear upward or downward trend.

State Income Taxes, Net of Federal Benefit

State income taxes, net of federal benefits, exhibited a moderate upward trend, increasing from 1.4% in 2020 to 1.8% in 2024 after a low starting point of 2.6% in 2019. This suggests growing state tax liabilities or changes in state tax regulations impacting the overall tax burden.

Excess Tax Benefits from the Exercise of Stock Options

This component had negative impacts on the effective tax rate, ranging from -3.8% in 2019 to a less negative -1.0% in 2023, before slightly increasing to -1.5% in 2024. The trend indicates fluctuating tax benefits from stock option exercises but generally contributing to lowering the overall tax rate.

Tax Benefit from Simplification of Legal Entity Structure

Such benefits were recorded only in 2020 at -1.4%, with no reported values in other years, indicating a one-time tax advantage during that period, likely from corporate restructuring or similar activities.

Foreign Derived Intangible Income Deduction (FDII)

The FDII deduction showed some variability, decreasing from -2.2% in 2019 to a range around -1.0% to -1.1% in subsequent years, with a slight reduction to -0.8% in 2023. This suggests a diminishing but persistent deduction impacting taxable income related to foreign intangible income.

Changes in Uncertain Tax Positions

These changes were relatively minor, fluctuating narrowly between -0.4% and 0.1%, indicating stability in the company's estimate of uncertain tax liabilities without major re-assessments or adjustments.

Goodwill Impairment

A significant goodwill impairment was recorded in 2019 at 22.8%, with no such impacts reported in subsequent years. This one-time event likely had a substantial influence on the tax rate and financial results in that year.

Other

Other tax components showed a decreasing negative impact over the years, from -4.9% in 2019 down to -0.2% in 2024, indicating fewer or smaller miscellaneous tax adjustments affecting the tax rate.

Effective Income Tax Rate

The effective income tax rate displayed a substantial decrease from 34.7% in 2019 to a low of 17.2% in 2020, followed by a slight increase and stabilization in the range of 17.8% to 20.2% from 2021 to 2024. The sharp drop in 2020 corresponds to the goodwill impairment and other tax items entering relative minima or zero, while the following years indicate a period of stabilized but moderately increased effective tax rates.

The analysis of the financial data reveals several notable trends and movements across various financial items over the years from 2019 to 2024.

Capitalized research & development

This item, starting from no recorded values in 2019 and 2020, shows a consistent and significant increase from 358 million US$ in 2021 to 1,140 million US$ in 2024, indicating a growing investment in research and development activities over the recent years.

Loss and other carryforwards

The carrying forward of losses fluctuates moderately, ranging between 875 million US$ and 1,030 million US$, with a slight decline observed in 2024 to 892 million US$, suggesting some variability but overall stability in deferred tax effects related to carryforwards.

Pension and other retiree benefits

There is a pronounced downward trend in obligations related to pension and retiree benefits, dropping nearly by half from 1,591 million US$ in 2019 to 592 million US$ in 2024. This reduction may reflect changes in pension plans, funding, or actuarial assumptions.

Accrued marketing and promotion

Marketing and promotional accruals display a steady increase from 334 million US$ to 460 million US$, indicating heightened spending or accrual for marketing efforts over the period.

Stock-based compensation

Stock-based compensation remains relatively stable with a slight upward trend from 421 million US$ in 2019 to 433 million US$ in 2024, reflecting consistent use of equity-based incentives.

Fixed assets

The gross fixed assets remain fairly constant, fluctuating slightly around 200 million US$, while accumulated depreciation or deductions on fixed assets show an increasing trend in negative values, reaching -1,573 million US$ by 2024, indicative of ongoing asset depreciation.

Lease liabilities and right-of-use assets

Lease liabilities appear from 2020 onwards, with values gradually increasing from 190 million US$ to 199 million US$, while lease right-of-use assets correspondingly show negative values around 180-196 million US$, consistent with lease accounting standards.

Unrealized losses and gains on financial and foreign exchange transactions

Unrealized losses have notably increased, peaking at 282 million US$ in 2022 before declining to 107 million US$ in 2024, while unrealized gains remain negative with fluctuating values, indicating exposure to market or currency volatility affecting these accounts.

Inventory and accrued interest and taxes

Inventory figures recorded between 27 and 41 million US$ show minor fluctuations with missing data in later years, while accrued interest and taxes modestly increase from 15 million US$ to 22 million US$ but also lack data in later years.

Other current items

The category labeled "Other" presents a general downward trend from 931 million US$ to 843 million US$, with some fluctuations, potentially encompassing miscellaneous assets or liabilities.

Deferred tax assets and liabilities

Gross deferred tax assets fluctuate, peaking in 2021 at 5,133 million US$ and then showing some decline, while valuation allowances decrease significantly from -442 million US$ to -290 million US$, improving net deferred tax assets. Conversely, deferred tax liabilities consistently increase in magnitude from -8,656 million US$ to -9,355 million US$, resulting in a net deferred tax liability position that deteriorates from -4,453 million US$ in 2019 to -4,773 million US$ in 2024.

Goodwill and other intangible assets

Goodwill and intangible assets remain negative and broadly stable around -5,500 million US$, signifying ongoing amortization or impairment pressures over the period.

Other retiree benefits

This liability has grown increasingly negative from negligible levels in 2019 to -1,319 million US$ in 2024, indicating rising obligations beyond pensions.

Foreign withholding tax on repatriated earnings

This item declines from -239 million US$ to -104 million US$, reflecting possible changes in international tax strategies or repatriation volumes.

Overall, the data portrays increased capital investment in research and development and marketing accruals, a reduction in pension liabilities, steady stock-based compensation, and ongoing impact from deferred tax items. Lease accounting components are consistently recognized since 2020, and volatility is evident in unrealized financial transaction outcomes. The balance sheet reflects prudent asset depreciation and evolving tax and retiree benefit obligations.

The analysis of deferred tax assets and liabilities over the period from June 30, 2019, to June 30, 2024 reveals notable trends in the company's tax-related financial positions.

Deferred Tax Assets

Deferred tax assets, which are included in other noncurrent assets, show a general decline from 2,446 million USD in mid-2019 to 1,743 million USD by mid-2024. The figure decreases initially to 2,191 million USD in 2020, remains relatively stable at 2,214 million USD in 2021, then declines more sharply to 1,612 million USD in 2022. A modest recovery occurs in 2023, rising to 1,831 million USD, followed by a slight decrease in 2024 back to 1,743 million USD. This pattern suggests that while some recovery in deferred tax assets was achieved after a significant drop in 2022, the overall trend indicates a reduction in the asset balance over the five-year period.

Deferred Tax Liabilities

Deferred tax liabilities display more fluctuation but remain relatively high throughout the timeline. Starting at 6,899 million USD in 2019, the liabilities decline to 6,199 million USD in 2020 and slightly decrease further to 6,153 million USD in 2021. However, a reversal occurs in 2022, with the liabilities rising to 6,809 million USD. Subsequently, in 2023 and 2024, the liabilities decrease slightly to 6,478 million USD and then slightly increase again to 6,516 million USD. This variability suggests that the company has experienced shifts in its deferred tax obligations, but generally, the liabilities remain significant and relatively stable with minor fluctuations.

Overall Observations

The comparative analysis of deferred tax assets and liabilities indicates that liabilities consistently exceed assets by a wide margin. The declining trend in deferred tax assets against a relatively stable but fluctuating liability balance may reflect changes in the company's tax strategy, asset base, or profitability affecting deferred tax recognition. The data imply an ongoing tax position where deferred tax liabilities represent a substantial future tax obligation, potentially impacting cash flows.

Total Assets

The reported total assets of the company experienced moderate fluctuations over the period, beginning at 115,095 million USD in mid-2019, increasing to 120,700 million USD by mid-2020, then decreasing slightly through 2022 before rising again to 122,370 million USD by mid-2024. Adjusted total assets followed a similar trend but remain consistently lower than reported totals, indicating some adjustments reduced the asset base. The adjusted assets also showed a slight decline after 2020, reaching a low in 2022, then increasing steadily through 2024.

Total Liabilities

The reported total liabilities increased from 67,516 million USD in 2019 to a peak of 73,822 million USD in 2020, followed by a general decline to 71,811 million USD by 2024. Adjusted liabilities show a similar pattern but are lower in magnitude, reflecting adjustments that reduce recognized liabilities. The steady decrease in adjusted liabilities after 2020 suggests an improvement in the company’s obligation management over time.

Shareholders’ Equity

Reported shareholders’ equity remained relatively stable from 2019 to 2023, fluctuating slightly between 46,194 million USD and 46,777 million USD, before increasing notably to 50,287 million USD in 2024. The adjusted equity values track higher than reported values consistently, indicating positive adjustments, and display a gradual increase over the years, culminating at 55,060 million USD in 2024. This upward trend in adjusted equity reflects strengthening financial position and possibly retained earnings or valuation adjustments.

Net Earnings

The reported net earnings showed significant variation, starting at 3,897 million USD in 2019, sharply increasing to a peak of 13,027 million USD in 2020, and maintaining elevated levels through 2024 with gradual incremental increases. Adjusted net earnings portray a similar pattern but at slightly lower values, indicating negative adjustments reducing reported profits. The substantial increase in earnings from 2019 to 2020 suggests an exceptional event or earnings improvement, followed by relative stability at high levels.

Overall Observations

The data demonstrates a company with generally stable asset and equity bases, coupled with liability reduction and improved earnings post-2019. Adjustments for deferred and income tax impact the financial figures by lowering assets and liabilities while increasing equity, which suggests favorable tax treatment or timing differences. The spike in net earnings in 2020, and subsequent maintenance of elevated earnings, indicates a notable profitability improvement starting that year, contributing to the increase in equity by 2024. The consistency between reported and adjusted figures after 2020 indicates a steady state in financial reporting and tax adjustments over the last four years.

Net Profit Margin

The reported net profit margin exhibited a significant increase from 5.76% in 2019 to a peak of 18.79% in 2021, followed by a slight but consistent decline reaching 17.7% in 2024. The adjusted net profit margin demonstrated a similar trajectory, rising from 5.15% in 2019 to 18.46% in 2021, then gradually decreasing to 17.41% by 2024. This pattern indicates an overall improvement in profitability over the period with some stabilization in the most recent years.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios showed a steady upward trend, reflecting enhanced asset utilization efficiency. The reported ratio increased from 0.59 in 2019 to 0.69 in 2024, while the adjusted ratio moved from 0.6 to 0.7 in the same period. This suggests incremental improvements in generating sales from asset investments.

Financial Leverage

The reported financial leverage ratio rose from 2.44 in 2019 to a peak of 2.59 in 2020, then gradually declined to 2.43 by 2024. The adjusted leverage ratio followed a comparable pattern, increasing from 2.18 in 2019 to 2.35 in 2020 before decreasing to 2.19 in 2024. This illustrates a temporary increase in leverage followed by a conservative deleveraging trend in later years.

Return on Equity (ROE)

The reported ROE showed substantial growth from 8.26% in 2019 to a high of 31.64% in 2022, before decreasing slightly to 29.59% in 2024. The adjusted ROE also increased notably from 6.75% to 27.92% between 2019 and 2021, maintaining around 27.6% thereafter with a minor decline to 26.58% in 2024. This reflects a strong enhancement in shareholder returns, with some moderation in the final years.

Return on Assets (ROA)

The reported ROA surged from 3.39% in 2019 to 12.58% in 2022 and then maintained relatively stable levels around 12.13%-12.16% in 2023 and 2024. Adjusted ROA followed a similar pattern, increasing from 3.09% in 2019 to 12.41% in 2022, with minor fluctuations down to 11.93% in 2023 and recovering slightly to 12.13% in 2024. This indicates marked improvements in asset efficiency translating into profitability, stabilizing in recent periods.

Overall Insights

The data reveals consistent improvements in profitability margins, asset utilization, and returns over the five-year period, accompanied by a prudent reduction in financial leverage after an initial rise. Adjusted figures, which exclude reported and deferred income tax effects, generally mirror the reported trends but with slightly lower profitability and leverage ratios, indicating the influence of tax-related adjustments on financial outcomes. The stabilization of key profitability metrics in recent years suggests the company has reached a mature performance level following phases of rapid growth.

The financial data over the six-year period shows a significant improvement in both reported and adjusted net earnings attributable to the company. Reported net earnings increased markedly from $3,897 million in June 2019 to a peak of $14,879 million in June 2024. Similarly, adjusted net earnings followed a comparable upward trend, rising from $3,486 million to $14,635 million over the same period. This indicates enhanced profitability after accounting for adjustments related to income taxes.

Regarding profitability margins, the reported net profit margin exhibited a substantial increase from 5.76% in 2019 to a high of 18.79% in 2021, before slightly declining and stabilizing around 17.7% in 2024. This pattern suggests an initial phase of significant margin improvement, followed by minor fluctuations that still maintain a substantially higher profitability level compared to 2019. The adjusted net profit margin mirrored this trend, starting at 5.15% in 2019, peaking at 18.46% in 2021, and then slightly decreasing to 17.41% by 2024.

Overall, the data reveals a robust growth trajectory in both net earnings and profitability margins over the observed years. The slight decrease in margins after 2021 suggests possible pressures on profitability or strategic investments but did not significantly erode the substantial gains achieved since 2019. The close alignment between reported and adjusted figures indicates that deferred income tax adjustments have not caused major distortions in earnings trends.

The data indicates a relatively stable yet gradually improving trend in the reported and adjusted total assets over the examined periods. Both reported and adjusted total assets show a modest increase, with reported total assets rising from 115,095 million US dollars in mid-2019 to 122,370 million US dollars in mid-2024, which represents a cumulative growth. Adjusted total assets follow a similar trajectory, increasing from 112,649 million US dollars to 120,627 million US dollars over the same timeframe.

Regarding asset turnover ratios, there is a clear upward movement in both reported and adjusted total asset turnover, signifying enhanced efficiency in asset utilization. The reported total asset turnover ratio improves from 0.59 in June 2019 to 0.69 in June 2024, reflecting progressive improvement year over year, especially notable between 2020 and 2021 where there is a jump from 0.59 to 0.64. Adjusted total asset turnover mirrors this pattern closely, increasing from 0.60 to 0.70 over the same periods, underscoring similar operational efficiency gains after adjusting for income tax impacts.

Overall, the increasing total asset turnover ratios alongside steadily growing asset bases suggest improvements in how effectively the company is generating revenue from its asset investments. The closer alignment of adjusted to reported figures over time also indicates consistency in financial adjustments related to deferred income taxes, hinting at stable accounting practices in asset valuation and utilization.

Total Assets

Increase observed in both reported and adjusted figures, with reported assets growing approximately 6.3% over five years.

Adjusted assets track closely with reported assets, highlighting minor adjustments likely due to deferred tax considerations.

Total Asset Turnover

Both reported and adjusted ratios display a positive trend, improving company efficiency in asset utilization.

Reported turnover increased from 0.59 to 0.69, while adjusted turnover improved from 0.60 to 0.70 between 2019 and 2024.

Implications

Improved asset turnover suggests enhanced revenue generation relative to asset base, indicating better operational performance.

Stable relationship between reported and adjusted metrics reflects consistent application of tax-related adjustments.

Total Assets

The reported total assets exhibit a general upward trend over the six-year period, increasing from $115,095 million in 2019 to $122,370 million in 2024. Adjusted total assets follow a similar pattern, rising from $112,649 million in 2019 to $120,627 million in 2024. Both reported and adjusted figures show slight fluctuations during the years, with reported total assets peaking in 2020 before a minor decline in 2022, then recovering steadily thereafter. The adjustment consistently lowers the asset base, but both measures maintain close proportional growth.

Shareholders' Equity Attributable to Procter & Gamble

Reported shareholders' equity remains relatively stable from 2019 through 2023, fluctuating in a narrow range between approximately $46,000 million and $47,800 million. A noticeable increase occurs in 2024, reaching $50,287 million. Adjusted shareholders' equity follows a similar stable pattern before an uptick in 2024 to $55,060 million, indicating a consistent equity base adjusted for deferred taxes or related items with improved equity position in the final year.

Financial Leverage

The reported financial leverage ratio shows moderate variation, rising from 2.44 in 2019 to a peak of 2.59 in 2020, then decreasing gradually to 2.43 in 2024. This suggests a slight reduction in leverage or reliance on debt relative to equity by the end of the period. The adjusted financial leverage ratio is uniformly lower than the reported ratio, starting at 2.18 in 2019, peaking at 2.35 in 2020 and declining to 2.19 in 2024. Overall, the adjusted leverage trends indicate more conservative financial structuring once tax adjustments are accounted for.

Overall Observations

Both reported and adjusted figures demonstrate resilience and slight growth in asset size and shareholder equity over the examined timeline. The stable financial leverage ratios, especially the adjusted ones, indicate controlled and prudent management of the capital structure, sustaining the balance between debt and equity financing. The adjustment for deferred income taxes slightly diminishes reported asset and equity values but provides a consistent perspective on financial positioning. The increase in equity values and slight decrease in leverage in the final year may reflect improved profitability or capital retention strategies improving the company's financial robustness.

Net Earnings Trends

Reported net earnings attributable to the company exhibited significant growth from 2019 to 2020, increasing sharply from $3,897 million to $13,027 million. Following this increase, earnings continued to rise more moderately through 2021 and 2022, peaking at $14,742 million. There was a slight decline in 2023 to $14,653 million, followed by a modest recovery in 2024 reaching $14,879 million. Adjusted net earnings followed a similar trajectory, increasing strongly from $3,486 million in 2019 to $12,431 million in 2020, then gradually rising to a peak of $14,340 million in 2022. After a slight decrease in 2023, adjusted earnings climbed again in 2024.

Shareholders’ Equity Trends

Reported shareholders’ equity remained relatively stable from 2019 through 2023, fluctuating in a narrow range from $46,194 million to $46,777 million. However, there was a notable increase in 2024, with equity rising to $50,287 million. Adjusted shareholders’ equity followed a similar pattern but maintained higher values throughout the period. It decreased slightly from $51,647 million in 2019 to $50,317 million in 2021, then increased steadily to $55,060 million by 2024, indicating strengthening equity on an adjusted basis.

Return on Equity (ROE) Patterns

Reported ROE showed a substantial rise from 8.26% in 2019 to a peak of 31.64% in 2022, then experienced a slight decline to 29.59% in 2024. Adjusted ROE mirrored this trend, increasing from 6.75% in 2019 to 27.92% in 2021, then stabilizing around the 27% range, ending at 26.58% in 2024. The observed reduction in adjusted ROE in the most recent periods suggests a modest easing of profitability relative to shareholders’ equity, although levels remain substantially higher than those seen at the beginning of the timeframe.

Summary Insights

Overall, the data reveal a period of marked improvement in profitability and equity returns between 2019 and 2022, with subsequent stabilization and slight moderation in 2023 and 2024. Earnings and ROE metrics illustrate strong operational performance, while the equity base has expanded notably on an adjusted basis in the latter years. The differences between reported and adjusted figures suggest that adjustments for income tax and other factors slightly reduce the appearance of profitability and equity, but trends remain consistent across both sets of data.

The data presents a comprehensive overview of reported and adjusted financial metrics over six consecutive years, focusing on net earnings, total assets, and return on assets (ROA).

Net Earnings

Both reported and adjusted net earnings attributable to the company demonstrate significant growth from 2019 through 2020, with an increase from approximately 3.9 billion to over 13 billion US dollars. Following this surge, net earnings continue a steady upward trend through 2024, although the rate of increase moderates. The adjusted net earnings figures closely follow the reported net earnings, consistently remaining slightly lower. This suggests that adjustments, likely for income tax impacts, have a modest but consistent downward influence on net income reported.

Total Assets

The reported total assets show a gradual increase over the six-year period, moving from approximately 115 billion US dollars in 2019 to about 122 billion in 2024. Adjusted total assets mirror this pattern, albeit with somewhat lower values each year, indicating systematic adjustments that reduce the asset base slightly. The asset base exhibits minor fluctuations, with a slight dip observed in 2022, followed by recovery in subsequent years, reflecting possible asset revaluations or disposals.

Return on Assets (ROA)

The reported ROA percentage reveals a dramatic improvement from 2019 to 2020, increasing from 3.39% to 10.79%, and continues to increase gradually thereafter, stabilizing around 12.1-12.6% in the later years. Adjusted ROA figures display a very similar trend, starting slightly lower at 3.09%, reaching 10.49% in 2020, and maintaining a range close to reported ROA thereafter. The convergence of reported and adjusted ROA figures in recent years highlights consistent profitability relative to the adjusted asset base.

Overall, the financial trends suggest strong and sustained growth in earnings and efficient utilization of assets, as indicated by improving ROA figures. The adjustments made for income taxes have a consistent but relatively small impact on reported earnings and asset values, reflecting conservative adjustments that maintain comparability across periods. The slight fluctuations in total assets do not significantly impair the profitability trends observed.