Microsoft Excel LibreOffice Calc

Procter & Gamble Co. (PG)


Analysis of Investments

Difficulty: Advanced


Investment Accounting Policy

Investment securities primarily consist of readily marketable debt securities. Unrealized gains or losses from investments classified as trading, if any, are charged to earnings. Unrealized gains or losses on debt securities classified as available-for-sale are recorded in OCI. If an available-for-sale security is other than temporarily impaired, the loss is charged to either earnings or OCI depending on the intent and ability to retain the security until P&G recovers the full cost basis and the extent of the loss attributable to the creditworthiness of the issuer. Investment securities are included as Available-for-sale investment securities and Other noncurrent assets in the Consolidated Balance Sheets.

Investments in certain companies over which P&G exerts significant influence, but does not control the financial and operating decisions, are accounted for as equity method investments. Other investments that are not controlled, and over which P&G does not have the ability to exercise significant influence, are accounted for under the cost method. Both equity and cost method investments are included as Other noncurrent assets in the Consolidated Balance Sheets.

Source: 10-K (filing date: 2019-08-06).


Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Procter & Gamble Co., adjustment to Net Earnings Attributable To Procter & Gamble

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Net earnings attributable to Procter & Gamble (as reported) 3,897  9,750  15,326  10,508  7,036  11,643 
Add: Unrealized gains (losses) on investment securities, net of tax 184  (148) (59) 28  24 
Net earnings attributable to Procter & Gamble (adjusted) 4,081  9,602  15,267  10,536  7,060  11,652 

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).


Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

Procter & Gamble Co., adjusted ratios

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Net Profit Margin
Reported net profit margin 5.76% 14.59% 23.56% 16.09% 9.22% 14.02%
Adjusted net profit margin 6.03% 14.37% 23.47% 16.14% 9.26% 14.03%
Return on Equity (ROE)
Reported ROE 8.26% 18.64% 27.77% 18.33% 11.27% 16.82%
Adjusted ROE 8.65% 18.36% 27.67% 18.37% 11.31% 16.83%
Return on Assets (ROA)
Reported ROA 3.39% 8.24% 12.73% 8.27% 5.43% 8.07%
Adjusted ROA 3.55% 8.12% 12.68% 8.29% 5.45% 8.08%

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Procter & Gamble Co.’s adjusted net profit margin deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Procter & Gamble Co.’s adjusted ROE deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Procter & Gamble Co.’s adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.

Procter & Gamble Co., Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Procter & Gamble 3,897  9,750  15,326  10,508  7,036  11,643 
Net sales 67,684  66,832  65,058  65,299  76,279  83,062 
Ratio
Net profit margin1 5.76% 14.59% 23.56% 16.09% 9.22% 14.02%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Procter & Gamble 4,081  9,602  15,267  10,536  7,060  11,652 
Net sales 67,684  66,832  65,058  65,299  76,279  83,062 
Ratio
Adjusted net profit margin2 6.03% 14.37% 23.47% 16.14% 9.26% 14.03%

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

2019 Calculations

1 Net profit margin = 100 × Net earnings attributable to Procter & Gamble ÷ Net sales
= 100 × 3,897 ÷ 67,684 = 5.76%

2 Adjusted net profit margin = 100 × Adjusted net earnings attributable to Procter & Gamble ÷ Net sales
= 100 × 4,081 ÷ 67,684 = 6.03%

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Procter & Gamble Co.’s adjusted net profit margin deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Procter & Gamble 3,897  9,750  15,326  10,508  7,036  11,643 
Shareholders’ equity attributable to Procter & Gamble 47,194  52,293  55,184  57,341  62,419  69,214 
Ratio
ROE1 8.26% 18.64% 27.77% 18.33% 11.27% 16.82%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Procter & Gamble 4,081  9,602  15,267  10,536  7,060  11,652 
Shareholders’ equity attributable to Procter & Gamble 47,194  52,293  55,184  57,341  62,419  69,214 
Ratio
Adjusted ROE2 8.65% 18.36% 27.67% 18.37% 11.31% 16.83%

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

2019 Calculations

1 ROE = 100 × Net earnings attributable to Procter & Gamble ÷ Shareholders’ equity attributable to Procter & Gamble
= 100 × 3,897 ÷ 47,194 = 8.26%

2 Adjusted ROE = 100 × Adjusted net earnings attributable to Procter & Gamble ÷ Shareholders’ equity attributable to Procter & Gamble
= 100 × 4,081 ÷ 47,194 = 8.65%

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Procter & Gamble Co.’s adjusted ROE deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Procter & Gamble 3,897  9,750  15,326  10,508  7,036  11,643 
Total assets 115,095  118,310  120,406  127,136  129,495  144,266 
Ratio
ROA1 3.39% 8.24% 12.73% 8.27% 5.43% 8.07%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Procter & Gamble 4,081  9,602  15,267  10,536  7,060  11,652 
Total assets 115,095  118,310  120,406  127,136  129,495  144,266 
Ratio
Adjusted ROA2 3.55% 8.12% 12.68% 8.29% 5.45% 8.08%

Based on: 10-K (filing date: 2019-08-06), 10-K (filing date: 2018-08-07), 10-K (filing date: 2017-08-07), 10-K (filing date: 2016-08-09), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

2019 Calculations

1 ROA = 100 × Net earnings attributable to Procter & Gamble ÷ Total assets
= 100 × 3,897 ÷ 115,095 = 3.39%

2 Adjusted ROA = 100 × Adjusted net earnings attributable to Procter & Gamble ÷ Total assets
= 100 × 4,081 ÷ 115,095 = 3.55%

Ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Procter & Gamble Co.’s adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.