Procter & Gamble Co. (NYSE:PG)

The analysis of long-term activity ratios reveals a period of initial efficiency gains followed by a gradual decline and eventual stabilization. While total asset utilization remained relatively consistent throughout the analyzed period, there is a observable contraction in the efficiency of fixed assets and equity in generating revenue during the later quarters.

Net Fixed Asset Turnover

An upward trend was observed from September 2021, where the ratio stood at 3.61, peaking at 3.91 in September 2022. Following this peak, the ratio remained relatively stable, fluctuating between 3.73 and 3.85 through December 2024. However, a consistent downward trajectory began in March 2025 (3.69), reaching a low of 3.43 in June 2026 before ending the period at 3.45. This suggests a decrease in the productivity of fixed assets relative to sales in the final eighteen months of the period.

Total Asset Turnover

The total asset turnover ratio demonstrated steady growth in the early stages, rising from 0.64 in September 2021 to a peak of 0.70 by December 2023. Unlike the fixed asset turnover, this metric exhibited significant stability, maintaining a narrow range between 0.66 and 0.70 for the remainder of the timeline. This indicates a consistent ability to generate revenue from the overall asset base despite fluctuations in specific asset categories.

Equity Turnover

The equity turnover ratio followed a pattern similar to the net fixed asset turnover, starting at 1.67 and reaching a maximum of 1.83 in September 2022. A gradual decline followed, with the ratio descending to 1.62 by June 2024. From March 2025 onward, the ratio stabilized within a tight range of 1.59 to 1.61. This movement reflects a reduction in the efficiency of shareholder equity in driving sales compared to the peak seen in 2022.

The net fixed asset turnover ratio exhibits a non-linear trajectory characterized by an initial phase of efficiency gains followed by a steady decline in asset productivity toward the end of the observed period.

Asset Utilization Efficiency

An upward trend in the turnover ratio is observed from September 30, 2021, to September 30, 2022, peaking at 3.91. This indicates an increase in the volume of sales generated per unit of net fixed assets during this window.

Stabilization Phase

Between September 30, 2022, and March 31, 2024, the ratio remained relatively stable, fluctuating within a narrow range between 3.74 and 3.85, suggesting a consistent relationship between capital investment and revenue generation.

Long-term Efficiency Decline

A consistent downward trend is evident from June 30, 2024, through September 30, 2026, with the ratio falling to 3.45. This decline reflects a period where the growth in net property, plant, and equipment outpaced the growth in net sales.

The underlying drivers of these changes are linked to the divergent growth rates of net sales and fixed assets. While net sales increased from 20,338 million to 23,276 million over the entire period, the net property, plant, and equipment grew more aggressively in the latter half of the timeframe, rising from 22,152 million in March 2024 to 25,519 million by September 2026. This expansion of the asset base without a proportional increase in sales output led to the reduction in the turnover ratio, signaling a decrease in capital efficiency during the final years of the analysis.

The total asset turnover ratio exhibits a period of moderate improvement followed by a phase of stabilization and a slight recent decline. Between September 2021 and September 2022, a consistent upward trend is observed, with the ratio rising from 0.64 to 0.69, indicating an increase in the efficiency of asset utilization to generate revenue.

Revenue and Asset Dynamics

Net sales demonstrated overall growth over the analyzed period, fluctuating between a low of 19,381 million US dollars in March 2022 and a peak of 23,276 million US dollars in September 2026. Total assets remained relatively stable, ranging between 116,282 million and 128,378 million US dollars for the majority of the timeframe, before increasing to 133,132 million US dollars by the end of the period.

Asset Turnover Efficiency

The asset turnover ratio reached its maximum value of 0.70 in December 2023 and March 2024, marking the period of highest operational efficiency regarding asset deployment. A subsequent decline is noted toward the end of the sequence, with the ratio falling to 0.66 by September 2026. This contraction is primarily driven by the expansion of the total asset base, which grew more rapidly than net sales in the final quarter.

Long-term Operational Consistency

Throughout the five-year period, the ratio maintained a narrow corridor between 0.64 and 0.70. This stability suggests a consistent relationship between the company's investment in its asset base and its ability to produce top-line growth, reflecting a steady operational model despite fluctuations in quarterly sales volumes.

The analysis of equity turnover from September 2021 to September 2026 reveals a general decline in the efficiency of equity utilization relative to revenue generation, despite a consistent growth in absolute sales figures.

Net Sales Trends

Net sales demonstrated a gradual upward trajectory over the analyzed period, rising from 20,338 million USD in September 2021 to a peak of 23,276 million USD by September 2026. Although the growth was characterized by periodic quarterly fluctuations—with notable lows in March 2022 and March 2024—the long-term trend indicates sustained revenue expansion.

Shareholders' Equity Expansion

Shareholders' equity attributable to the company exhibited a steady and consistent increase. Equity grew from 46,111 million USD in September 2021 to 55,098 million USD by September 2026. This persistent growth suggests a strengthening of the company's capital base through retained earnings or other equity infusions.

Equity Turnover Dynamics

The equity turnover ratio reached a peak of 1.83 in September 2022, representing the highest level of efficiency in generating sales per unit of equity. Following this peak, a downward trend is observed, with the ratio gradually declining to 1.60 by September 2026. This decline indicates that the rate of equity growth has outpaced the rate of sales growth.

Comparative Efficiency Analysis

The compression of the turnover ratio from the 1.70–1.80 range observed between 2021 and 2023 to a stabilized range of 1.59–1.62 between 2024 and 2026 points to a reduction in capital productivity. While the company continues to grow its top line, the increasing equity base has resulted in a lower turnover rate, suggesting that additional equity is not translating into proportional increases in net sales.