Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Debt to Equity since 2005
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Solvency Ratios (Summary)
Procter & Gamble Co., solvency ratios
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
- Debt to Equity
- The debt to equity ratio exhibited moderate fluctuations over the observed periods. Starting at 0.64 in June 2019, it increased to a peak of 0.75 in June 2020, followed by a slight decrease and stabilization around 0.68 to 0.74 until June 2023. In the latest period, June 2024, the ratio decreased again to 0.65, indicating a modest reduction in relative debt load compared to equity.
- Debt to Equity Including Operating Lease Liability
- This ratio follows a similar pattern to the standard debt to equity ratio but with slightly higher values. It grew from 0.64 in June 2019 to 0.77 in June 2020, then decreased gradually before returning to 0.66 in June 2024. The inclusion of operating lease liabilities slightly elevates the leverage but reflects comparable trends in leverage management.
- Debt to Capital
- The debt to capital ratio displayed only minor variation, oscillating between 0.39 and 0.43. It increased from 0.39 in June 2019 to a high of 0.43 observed in June 2020 and June 2023, with dips to 0.40-0.41 in intervening years. By June 2024, it returned to 0.39, suggesting overall stable capital structure with modest reliance on debt financing.
- Debt to Capital Including Operating Lease Liability
- Trends for this metric closely parallel the conventional debt to capital ratio, with a slight upward adjustment due to leasing liabilities. This ratio remained around 0.39 to 0.43 throughout the period, reinforcing the narrative of consistent capital leverage with the operating leases contributing a noticeable but steady impact.
- Debt to Assets
- The debt to assets ratio maintained a relatively steady level, fluctuating between 0.26 and 0.29. It showed an increase from 0.26 in June 2019 to a peak of 0.29 in June 2020 and June 2023, then retreated to 0.27 by June 2024. This pattern highlights a stable proportion of debt relative to total assets, with no significant shifts in asset financing composition.
- Debt to Assets Including Operating Lease Liability
- Including operating lease liability results in marginally higher ratios, ranging between 0.26 and 0.30. The ratio increased to 0.30 in June 2020, suggesting the highest leverage period, and declined back to 0.27 in June 2024, indicating a reduction in asset leverage when considering operating leases.
- Financial Leverage
- Financial leverage ratios started at 2.44 in June 2019, peaked at 2.59 in June 2020, and experienced a gradual decline thereafter, reaching 2.43 by June 2024. This trend indicates a slight decrease in the company's use of borrowed funds relative to equity in recent years, aligning with observed debt ratio adjustments.
- Interest Coverage
- Interest coverage exhibited significant volatility. It surged sharply from 12.92 in June 2019 to 35.05 in June 2020, peaking further at 41.99 in June 2022. However, it declined substantially to 25.28 in June 2023, and further to 21.28 in June 2024. Despite the decrease in recent periods, the interest coverage remains strong overall, suggesting comfortable earnings relative to interest expenses but a trending decrease in buffer capacity.
- Fixed Charge Coverage
- This ratio followed a similar trajectory as interest coverage, increasing from 5.85 in June 2019 to a high of 16.98 in June 2022 before declining to 12.31 by June 2024. The elevated levels throughout indicate robust capability to cover total fixed charges, although the recent downward movement suggests a cautious note on operating performance or increased fixed obligations.
Debt Ratios
Coverage Ratios
Debt to Equity
Procter & Gamble Co., debt to equity calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity attributable to Procter & Gamble
= ÷ =
- Total debt
- The total debt experienced fluctuations over the examined period. Starting at $30,092 million in mid-2019, the debt increased to a peak of $34,720 million by mid-2020. It then decreased to $31,988 million in mid-2021 and remained relatively stable through mid-2022 at $31,493 million. The debt rose again in mid-2023 to $34,607 million before declining to $32,460 million in mid-2024. Overall, the debt level shows some volatility but generally remains between $30 billion and $35 billion.
- Shareholders’ equity attributable to Procter & Gamble
- Shareholders’ equity demonstrated a steady and modest upward trend over the period. Beginning at $47,194 million in mid-2019, equity slightly decreased in the following years to $46,521 million in 2020 and $46,378 million in 2021. It then stabilized around the $46,500 million mark through mid-2022 and mid-2023, before making a more noticeable increase to $50,287 million by mid-2024. This indicates an improvement in the company’s net asset position in the most recent year.
- Debt to equity ratio
- The debt to equity ratio showed variations corresponding to movements in debt and equity levels. It rose from 0.64 in mid-2019 to 0.75 in mid-2020, reflecting an increase in leverage likely driven by the rise in debt and a decrease in equity. The ratio then declined to 0.69 in mid-2021 and remained stable through mid-2022 at 0.68. It again increased to 0.74 in mid-2023, consistent with the rise in debt and stable equity. By mid-2024, the ratio dropped back to 0.65, indicating a reduction in leverage aligned with the increase in equity and decrease in debt. This pattern suggests a relatively stable capital structure with periods of increased leverage followed by deleveraging.
Debt to Equity (including Operating Lease Liability)
Procter & Gamble Co., debt to equity (including operating lease liability) calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Shareholders’ equity attributable to Procter & Gamble
= ÷ =
- Total Debt (including operating lease liability)
-
The total debt exhibited fluctuations over the six-year period. Starting at approximately $30.1 billion in mid-2019, it increased to a peak of about $35.6 billion in mid-2020. Subsequently, debt levels decreased to roughly $32.8 billion by mid-2021 and remained relatively stable through mid-2022 at around $32.3 billion. In mid-2023, there was a notable increase back to approximately $35.4 billion, followed by a decline to about $33.4 billion by mid-2024.
- Shareholders’ Equity Attributable to Procter & Gamble
-
Shareholders’ equity showed a generally stable yet slightly increasing trend over the period. It started at approximately $47.2 billion in mid-2019 and declined marginally over the next two years, reaching around $46.4 billion by mid-2021. From mid-2022 onwards, equity values began to rise, culminating in a notable increase to about $50.3 billion in mid-2024, representing the highest value in the period reviewed.
- Debt to Equity Ratio (including operating lease liability)
-
The debt to equity ratio mirrored the movements observed in both debt and equity. The ratio increased from 0.64 in mid-2019 to a peak of 0.77 in mid-2020, indicating a higher leverage during that year. It then declined gradually to 0.69 and 0.66 in the following years, with a slight increase to 0.76 in mid-2023 before returning to 0.66 by mid-2024. Overall, the leverage remained moderate with fluctuations reflecting changes in both debt and equity balances.
- Summary
-
The financial data reflect a pattern of moderate volatility in total debt levels, with peaks occurring around mid-2020 and mid-2023. Shareholders’ equity remained fairly stable with a slight upward trajectory evident in the latter years, suggesting retained earnings or capital increases. The debt to equity ratio fluctuated accordingly but remained within a moderate range, indicating balanced leverage management. The observed trends suggest prudent management of the capital structure, adjusting debt levels in response to operational or market conditions while maintaining equity growth over time.
Debt to Capital
Procter & Gamble Co., debt to capital calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
- Total Debt
- The total debt showed fluctuations over the period analyzed. Starting at 30,092 million US dollars in 2019, it increased to a peak of 34,720 million in 2020. Following this, there was a decline to 31,988 million in 2021 and a further slight decrease to 31,493 million in 2022. In 2023, total debt rose again to 34,607 million, but it decreased to 32,460 million by 2024. Overall, the debt amounts remained within a relatively narrow range but experienced some volatility, with a tendency to revert toward the lower end towards the end of the period.
- Total Capital
- The total capital generally exhibited a gradual upward trend. It increased from 77,286 million in 2019 to 81,241 million in 2020, followed by a slight reduction to 78,366 million in 2021. From 2021 onward, the figure progressively increased each year, reaching 78,082 million in 2022, 81,384 million in 2023, and ultimately 82,747 million in 2024. This pattern indicates a modest but consistent growth in total capital over the analyzed timeframe.
- Debt to Capital Ratio
- The debt to capital ratio fluctuated between 0.39 and 0.43 during the period, reflecting the changes in both debt and capital. The ratio started at 0.39 in 2019, increased to 0.43 in 2020, then decreased to 0.41 in 2021 and further to 0.40 in 2022. It rose again to 0.43 in 2023 before dropping back to 0.39 in 2024. This suggests that the company's leverage level experienced periodic adjustments but remained within a relatively stable range, indicating consistent management of debt relative to capital.
Debt to Capital (including Operating Lease Liability)
Procter & Gamble Co., debt to capital (including operating lease liability) calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= ÷ =
- Total debt (including operating lease liability)
- The total debt exhibited fluctuations over the periods analyzed. It increased significantly from 30,092 million USD in mid-2019 to 35,611 million USD in mid-2020, followed by a decline to 32,838 million USD in mid-2021 and a slightly lower level of 32,293 million USD in mid-2022. However, the debt rose again to 35,424 million USD in mid-2023 before decreasing to 33,369 million USD in mid-2024. These movements indicate a somewhat variable approach to leveraging debt throughout the years.
- Total capital (including operating lease liability)
- Total capital showed a steady increase overall. Starting at 77,286 million USD in mid-2019, it rose to 82,132 million USD by mid-2020, although it slightly decreased to 79,216 million USD in mid-2021 and remained relatively stable at 78,882 million USD in mid-2022. Subsequently, it rebounded to 82,201 million USD in mid-2023 and further increased to 83,656 million USD in mid-2024. This suggests a gradual expansion of the company’s capital base over the period.
- Debt to capital ratio (including operating lease liability)
- The debt to capital ratio exhibited a narrow range of variation between 0.39 and 0.43 during the analysis period. It rose from 0.39 in 2019 to 0.43 in 2020, then decreased slightly to 0.41 in 2021 and remained stable through 2022. It increased again to 0.43 in 2023 before dropping to 0.40 in 2024. This pattern indicates that the relative proportion of debt within the capital structure has remained fairly consistent, reflecting a stable financial leverage policy with minor adjustments.
- Overall insights
- The financial data reflects a company maintaining a stable capital structure with moderate fluctuations in total debt levels. The total capital has generally increased, which may indicate reinvestment or accumulation of equity and liabilities. The consistency in the debt to capital ratio suggests prudence in managing leverage despite changes in absolute debt amounts. Such trends are indicative of ongoing efforts to balance growth and risk management over the five-year period.
Debt to Assets
Procter & Gamble Co., debt to assets calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
- Total Debt
- The total debt exhibited fluctuations throughout the analyzed period. Starting at 30,092 million US dollars in mid-2019, it increased notably to 34,720 million in 2020. Subsequently, the debt decreased in 2021 and 2022 to 31,988 million and 31,493 million respectively. However, this was followed by another rise in 2023 reaching 34,607 million before a slight reduction to 32,460 million in 2024. Overall, the total debt shows a pattern of variability with no clear sustained upward or downward trend but remains higher in the later years compared to 2019.
- Total Assets
- Total assets demonstrated a general upward trend over the period. Beginning at 115,095 million US dollars in 2019, assets increased to 120,700 million in 2020. There was a modest decline in 2021 and 2022 to 119,307 million and 117,208 million respectively, followed by a recovery in 2023 and 2024 with values of 120,829 million and 122,370 million. The data suggests relative stability with a long-term increase in total assets, indicating a gradual expansion of the asset base over the years.
- Debt to Assets Ratio
- The debt to assets ratio remained relatively stable between 0.26 and 0.29, reflecting consistent leverage levels over the period. It started at 0.26 in 2019, peaked at 0.29 in both 2020 and 2023, and reverted to 0.27 in 2021, 2022, and 2024. This stability indicates that changes in debt levels were generally proportional to changes in the asset base, maintaining the company's overall financial leverage within a narrow range.
Debt to Assets (including Operating Lease Liability)
Procter & Gamble Co., debt to assets (including operating lease liability) calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= ÷ =
- Total Debt (including operating lease liability)
- Over the six-year period, total debt exhibited fluctuations rather than a consistent upward or downward trend. From June 2019 to June 2020, total debt increased significantly, rising from 30,092 million USD to 35,611 million USD. This peak was followed by a decline in the subsequent year, dropping to 32,838 million USD by June 2021. The debt level remained relatively stable in the next year at 32,293 million USD, before increasing again in June 2023 to 35,424 million USD. The most recent data point shows a decrease to 33,369 million USD by June 2024.
- Total Assets
- Total assets demonstrated moderate growth with a few minor adjustments over the analyzed period. Starting at 115,095 million USD in June 2019, assets grew steadily, reaching 120,700 million USD in 2020. This was followed by a slight decline to 119,307 million USD in 2021 and further to 117,208 million USD in 2022. However, assets rebounded in 2023 to 120,829 million USD and continued to increase marginally to 122,370 million USD by 2024. The overall trend indicates a gradual asset base expansion with some volatility.
- Debt to Assets Ratio (including operating lease liability)
- The debt to assets ratio remained relatively stable throughout the period, hovering between 0.26 and 0.30. It increased from 0.26 in June 2019 to a peak of 0.30 in June 2020, suggesting a higher proportion of debt relative to assets at that time. Subsequently, the ratio declined slightly and held steady at 0.28 during 2021 and 2022. A modest increase to 0.29 was observed in 2023, followed by a decrease to 0.27 in 2024. This pattern indicates cautious debt management in relation to asset growth, maintaining a balanced leverage position over time.
Financial Leverage
Procter & Gamble Co., financial leverage calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity attributable to Procter & Gamble
= ÷ =
- Total Assets
- The total assets demonstrated a fluctuating trend over the observed periods. Starting at 115,095 million US dollars in 2019, there was an increase to 120,700 million in 2020, followed by a slight decline in both 2021 and 2022 to 119,307 million and 117,208 million, respectively. The asset base then rose again in 2023 and 2024, reaching 120,829 million and 122,370 million. Overall, total assets showed a modest upward trajectory with minor year-to-year volatility.
- Shareholders’ Equity Attributable to Procter & Gamble
- Shareholders’ equity remained relatively stable from 2019 through 2023, fluctuating narrowly between 46,194 million and 46,777 million US dollars. In 2024, however, there was a notable increase to 50,287 million, suggesting an improvement in the equity position, potentially reflecting retained earnings growth or capital injections during that fiscal year.
- Financial Leverage
- The financial leverage ratio exhibited slight variation within a narrow range over the six-year period. It rose from 2.44 in 2019 to a peak of 2.59 in 2020, then marginally decreased and stabilized around 2.52 to 2.58 until 2023. In 2024, the ratio declined to 2.43, the lowest in the observed timeframe, indicating a modest reduction in the company’s reliance on debt relative to equity at the end of the period.
Interest Coverage
Procter & Gamble Co., interest coverage calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
- Earnings before interest and tax (EBIT)
- The EBIT shows an overall upward trend from US$6,578 million in 2019 to US$19,686 million in 2024. Notably, there was a substantial increase between 2019 and 2020, followed by continued but more moderate growth in subsequent years. This indicates improving operational profitability over the analyzed period.
- Interest Expense
- Interest expense fluctuated during the period, starting at US$509 million in 2019 and then decreasing to US$439 million in 2022 before rising significantly to US$925 million in 2024. The sharp increase in the last two years suggests an increase in borrowing costs or higher levels of debt.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the ability to meet interest obligations, improved substantially from 12.92 in 2019 to a peak of 41.99 in 2022. However, it declined to 21.28 by 2024. Despite the decline, the ratio remains relatively strong, indicating the company continues to generate sufficient EBIT to cover interest expenses comfortably.
Fixed Charge Coverage
Procter & Gamble Co., fixed charge coverage calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Preferred dividends, tax adjustment = (Preferred dividends × U.S. federal statutory income tax rate) ÷ (1 − U.S. federal statutory income tax rate)
= ( × ) ÷ (1 − ) =
2 2024 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
- Earnings Before Fixed Charges and Tax
- There is a significant upward trend in earnings before fixed charges and tax over the analyzed period. Starting at 6,919 million US dollars in June 2019, the figure more than doubled by June 2020 to 16,646 million US dollars, showing a substantial increase. This positive trajectory continued at a moderate pace through to June 2024, reaching 20,029 million US dollars. The trend reflects consistent growth in operating profitability before accounting for fixed financial obligations.
- Fixed Charges
- The fixed charges remained relatively stable from June 2019 to June 2022, fluctuating slightly around the 1,100 to 1,200 million US dollars range. However, there is a noticeable increase starting in June 2023, where fixed charges rose sharply to 1,421 million US dollars, and further increased to 1,627 million US dollars by June 2024. This upward movement indicates growing financial obligations related to fixed costs such as interest expenses or lease payments in the last two years of the period.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio shows a strong increase from 5.85 in June 2019 to a peak of 16.98 in June 2022, indicating an improved ability to cover fixed charges with earnings before fixed charges and tax. This improvement suggests enhanced financial health and operating efficiency over the initial years. However, in the most recent years, the ratio declines to 13.66 in June 2023 and further to 12.31 in June 2024. This decrease may be attributed to the rise in fixed charges outpacing earnings growth, which slightly weakens the company's margin of safety in covering fixed financial obligations.