Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Procter & Gamble Co. (NYSE:PG)

Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Procter & Gamble Co., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Total undiscounted future operating lease payments 1,218  1,338  1,493  1,563  1,617 
Discount rate1 1.79% 1.90% 1.70% 2.00% 2.05%
 
Total present value of future operating lease payments 1,143  1,253  1,403  1,440  1,483 

Based on: 10-K (filing date: 2020-08-06), 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).

1 Weighted-average interest rate for Procter & Gamble Co.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 1.79%
2020 255  2020 255  251 
2021 213  2021 213  206 
2022 162  2022 162  154 
2023 166  2023 166  155 
2024 134  2024 134  123 
2025 and thereafter 288  2025 134  120 
2026 134  118 
2027 20  17 
Total: 1,218  1,218  1,143 

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

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 1.90%
2019 275  2019 275  270 
2020 240  2020 240  231 
2021 202  2021 202  191 
2022 172  2022 172  160 
2023 153  2023 153  139 
2024 and thereafter 296  2024 153  137 
2025 143  125 
Total: 1,338  1,338  1,253 

Based on: 10-K (filing date: 2018-08-07).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 1.70%
2018 261  2018 261  257 
2019 273  2019 273  264 
2020 237  2020 237  225 
2021 194  2021 194  181 
2022 160  2022 160  147 
2023 and thereafter 368  2023 160  145 
2024 160  142 
2025 48  42 
Total: 1,493  1,493  1,403 

Based on: 10-K (filing date: 2017-08-07).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.00%
2017 237  2017 237  232 
2018 240  2018 240  231 
2019 224  2019 224  211 
2020 206  2020 206  190 
2021 154  2021 154  139 
2022 and thereafter 502  2022 154  137 
2023 154  134 
2024 154  131 
2025 40  33 
Total: 1,563  1,563  1,440 

Based on: 10-K (filing date: 2016-08-09).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.05%
2016 249  2016 249  244 
2017 225  2017 225  216 
2018 210  2018 210  198 
2019 194  2019 194  179 
2020 177  2020 177  160 
2021 and thereafter 562  2021 177  157 
2022 177  154 
2023 177  150 
2024 31  26 
Total: 1,617  1,617  1,483 

Based on: 10-K (filing date: 2015-08-07).


Adjustments to Financial Statements for Operating Leases

Procter & Gamble Co., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Adjustment to Total Assets
Total assets (as reported) 120,700  115,095  118,310  120,406  127,136  129,495 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  1,143  1,253  1,403  1,440  1,483 
Total assets (adjusted) 120,700  116,238  119,563  121,809  128,576  130,978 
Adjustment to Total Debt
Total debt (as reported) 34,720  30,092  31,286  31,592  30,598  30,350 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  1,143  1,253  1,403  1,440  1,483 
Add: Current operating lease liabilities (included in Accrued and other liabilities) 239  —  —  —  —  — 
Add: Long-term operating lease liabilities 652  —  —  —  —  — 
Total debt (adjusted) 35,611  31,235  32,539  32,995  32,038  31,833 

Based on: 10-K (filing date: 2020-08-06), 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).

1, 2 Equal to total present value of future operating lease payments.


Procter & Gamble Co., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Procter & Gamble Co., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Total Asset Turnover1
Reported total asset turnover 0.59 0.59 0.56 0.54 0.51 0.59
Adjusted total asset turnover 0.59 0.58 0.56 0.53 0.51 0.58
Debt to Equity2
Reported debt to equity 0.75 0.64 0.60 0.57 0.53 0.49
Adjusted debt to equity 0.77 0.66 0.62 0.60 0.56 0.51
Return on Assets3 (ROA)
Reported ROA 10.79% 3.39% 8.24% 12.73% 8.27% 5.43%
Adjusted ROA 10.79% 3.35% 8.15% 12.58% 8.17% 5.37%

Based on: 10-K (filing date: 2020-08-06), 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).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Procter & Gamble Co.’s adjusted total asset turnover ratio improved from 2018 to 2019 and from 2019 to 2020.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Procter & Gamble Co.’s adjusted debt to equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Procter & Gamble Co.’s adjusted ROA deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

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


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales 70,950  67,684  66,832  65,058  65,299  76,279 
Total assets 120,700  115,095  118,310  120,406  127,136  129,495 
Activity Ratio
Total asset turnover1 0.59 0.59 0.56 0.54 0.51 0.59
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net sales 70,950  67,684  66,832  65,058  65,299  76,279 
Adjusted total assets 120,700  116,238  119,563  121,809  128,576  130,978 
Activity Ratio
Adjusted total asset turnover2 0.59 0.58 0.56 0.53 0.51 0.58

Based on: 10-K (filing date: 2020-08-06), 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).

2020 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 70,950 ÷ 120,700 = 0.59

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 70,950 ÷ 120,700 = 0.59

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Procter & Gamble Co.’s adjusted total asset turnover ratio improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt 34,720  30,092  31,286  31,592  30,598  30,350 
Shareholders’ equity attributable to Procter & Gamble 46,521  47,194  52,293  55,184  57,341  62,419 
Solvency Ratio
Debt to equity1 0.75 0.64 0.60 0.57 0.53 0.49
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 35,611  31,235  32,539  32,995  32,038  31,833 
Shareholders’ equity attributable to Procter & Gamble 46,521  47,194  52,293  55,184  57,341  62,419 
Solvency Ratio
Adjusted debt to equity2 0.77 0.66 0.62 0.60 0.56 0.51

Based on: 10-K (filing date: 2020-08-06), 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).

2020 Calculations

1 Debt to equity = Total debt ÷ Shareholders’ equity attributable to Procter & Gamble
= 34,720 ÷ 46,521 = 0.75

2 Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity attributable to Procter & Gamble
= 35,611 ÷ 46,521 = 0.77

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Procter & Gamble Co.’s adjusted debt-to-equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Procter & Gamble 13,027  3,897  9,750  15,326  10,508  7,036 
Total assets 120,700  115,095  118,310  120,406  127,136  129,495 
Profitability Ratio
ROA1 10.79% 3.39% 8.24% 12.73% 8.27% 5.43%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net earnings attributable to Procter & Gamble 13,027  3,897  9,750  15,326  10,508  7,036 
Adjusted total assets 120,700  116,238  119,563  121,809  128,576  130,978 
Profitability Ratio
Adjusted ROA2 10.79% 3.35% 8.15% 12.58% 8.17% 5.37%

Based on: 10-K (filing date: 2020-08-06), 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).

2020 Calculations

1 ROA = 100 × Net earnings attributable to Procter & Gamble ÷ Total assets
= 100 × 13,027 ÷ 120,700 = 10.79%

2 Adjusted ROA = 100 × Net earnings attributable to Procter & Gamble ÷ Adjusted total assets
= 100 × 13,027 ÷ 120,700 = 10.79%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Procter & Gamble Co.’s adjusted ROA deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.