Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Procter & Gamble Co., profitability 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).
- Gross Profit Margin
- The gross profit margin exhibited variability over the six-year period, starting at 48.63% in mid-2019 and increasing to a peak of 51.39% in mid-2024. Notably, there was a decline observed in 2022, dropping to 47.43%, followed by a recovery back above 51% by 2024. This indicates fluctuations in cost of goods sold relative to revenue, with overall improvement toward the end of the period.
- Operating Profit Margin
- Operating profit margin experienced a significant increase between 2019 and 2020, rising from 8.11% to 22.14%, and stabilizing around the low 20% range thereafter. From 2020 through 2024, the margin hovered slightly above 22%, showing strong and consistent operational profitability without major decline or growth after the initial jump.
- Net Profit Margin
- The net profit margin followed a similar trend to the operating margin, with a sharp rise from 5.76% in 2019 to approximately 18-19% from 2020 onward. After peaking at 18.79% in 2021, it slightly decreased over subsequent years to 17.7% in 2024, indicating stable but marginally declining profitability after operating expenses and taxes.
- Return on Equity (ROE)
- Return on equity demonstrated substantial growth from 8.26% in 2019 to a peak of 31.64% in 2022. Thereafter, ROE showed a modest decline to 29.59% by 2024, though it remained significantly higher than the initial value. This pattern reflects improved effectiveness in generating profits from shareholders' investments, maintaining strong returns despite a slight recent downturn.
- Return on Assets (ROA)
- Return on assets increased consistently from 3.39% in 2019 to about 12.5% by 2022, maintaining a level just above 12% in subsequent years. This steady improvement suggests enhanced efficiency in utilizing the company’s asset base to generate profits, with the latter years reflecting a plateau rather than continued growth.
Return on Sales
Return on Investment
Gross Profit Margin
Procter & Gamble Co., gross profit margin calculation
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
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 43,191 ÷ 84,039 = 51.39%
- Gross Profit
- Gross profit has shown an overall upward trend from June 30, 2019 to June 30, 2024. It increased from $32,916 million in 2019 to $43,191 million in 2024, with a slight dip observed in 2022 where it declined from $39,010 million in 2021 to $38,030 million.
- Net Sales
- Net sales exhibited a steady increase throughout the analyzed period. Starting at $67,684 million in 2019, net sales rose consistently year over year, reaching $84,039 million by June 30, 2024. This trend indicates sustained revenue growth over the six-year span.
- Gross Profit Margin
- The gross profit margin percentage demonstrated some variability but generally showed a favorable progression. The margin increased from 48.63% in 2019, peaked at 51.25% in 2021, then experienced a decline to 47.43% in 2022. Following that, it rose again, reaching the highest point of 51.39% in 2024. This pattern implies fluctuations in cost management or pricing strategies but ultimately improved profitability.
Operating Profit Margin
Procter & Gamble Co., operating profit margin 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
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 18,545 ÷ 84,039 = 22.07%
- Operating Income
- Over the six-year period from June 2019 to June 2024, operating income demonstrated a significant upward trend. Starting at $5,487 million in 2019, it sharply increased to $15,706 million in 2020, reflecting almost a threefold rise. Subsequent years showed continued growth, though at a slower pace, reaching $18,545 million by June 2024. This indicates a strong improvement in operational profitability over the timeframe.
- Net Sales
- Net sales steadily increased each year from $67,684 million in June 2019 to $84,039 million in June 2024. The growth was consistent but moderate, with no abrupt changes, suggesting stable expansion in revenue generation. This gradual rise underscores a positive trend in the company’s ability to grow its sales base annually.
- Operating Profit Margin
- The operating profit margin showed a marked improvement from 8.11% in 2019 to above 22% beginning in 2020, where it remained relatively stable through to 2024. The margin peaked at 23.63% in 2021 before a slight decline to around 22% in the subsequent years. This stability at a significantly higher margin level than in 2019 suggests enhanced efficiency and cost management contributing to sustained profitability.
- Overall Analysis
- The financial data reveals a period of substantial operational improvement starting in 2020, highlighted by a dramatic rise in operating income and a sharp increase in operating profit margin. Net sales have grown steadily, supporting the profitability gains. The maintenance of a high operating margin over multiple years indicates the company’s effective control over expenses relative to revenues. Collectively, these trends point to strong operational performance and improved financial health over the analyzed period.
Net Profit Margin
Procter & Gamble Co., net profit margin 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
Net profit margin = 100 × Net earnings attributable to Procter & Gamble (P&G) ÷ Net sales
= 100 × 14,879 ÷ 84,039 = 17.70%
- Net Earnings
- The net earnings attributable to the company showed a significant increase from 2019 to 2020, jumping from 3,897 million USD to 13,027 million USD. This substantial rise suggests a marked improvement in profitability or extraordinary gains during that period. Following this, net earnings continued to increase, reaching a peak of 14,742 million USD in 2022, before experiencing a slight decline to 14,653 million USD in 2023. The latest data for 2024 indicates a modest rebound to 14,879 million USD.
- Net Sales
- Net sales exhibited a consistent upward trend throughout the analyzed period. Starting at 67,684 million USD in 2019, sales gradually increased each year, reaching 84,039 million USD by 2024. The growth is steady, without abrupt fluctuations, reflecting ongoing expansion in revenue generation.
- Net Profit Margin
- The net profit margin experienced a notable surge between 2019 and 2020, increasing sharply from 5.76% to 18.36%. This increase aligns with the substantial rise in net earnings, indicating improved efficiency or one-time benefits that enhanced profitability relative to sales. From 2020 onwards, the profit margin remained relatively stable, fluctuating slightly but maintaining a high level near 18%. A slight downward trend is observed from 18.79% in 2021 to 17.7% in 2024, which may reflect increased costs or pricing pressures slightly impacting profit efficiency.
- Overall Analysis
- The company demonstrated strong financial performance with significant improvements in profitability starting in 2020. While sales steadily increased, the net profit margin improvements suggest enhanced operational efficiency or favorable market conditions contributing to improved earnings. The relatively stable, though slightly declining, profit margins after 2021 suggest a need to monitor cost controls and pricing strategies amid ongoing revenue growth. The net earnings’ rebound in the latest period indicates resilience and the ability to sustain profitability despite marginal margin contractions.
Return on Equity (ROE)
Procter & Gamble Co., ROE 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
ROE = 100 × Net earnings attributable to Procter & Gamble (P&G) ÷ Shareholders’ equity attributable to Procter & Gamble
= 100 × 14,879 ÷ 50,287 = 29.59%
- Net Earnings
- Net earnings attributable to the company exhibited a significant increase from 2019 to 2020, rising from $3,897 million to $13,027 million. This upward trend continued modestly over the subsequent years, reaching a peak of $14,879 million in 2024. The growth rate slowed after 2020, with earnings stabilizing around the $14,000 million mark between 2021 and 2024.
- Shareholders’ Equity
- Shareholders’ equity showed a slight decline from $47,194 million in 2019 to $46,521 million in 2020, followed by a relatively stable period through 2023. In 2024, there was a noticeable increase to $50,287 million, indicating an accumulation of equity or retained earnings towards the end of the period analyzed.
- Return on Equity (ROE)
- ROE experienced a sharp increase in 2020, jumping from 8.26% in 2019 to 28%, and then continued to rise, peaking at 31.64% in 2022. Thereafter, ROE saw a slight decline but remained robust, ending at 29.59% in 2024. This trend reflects improved profitability relative to shareholders' equity over the period, with a peak performance around 2022.
- Overall Analysis
- The data reveals a substantial improvement in profitability starting in 2020, as evidenced by the surge in net earnings and ROE. While net earnings stabilized after the initial increase, ROE remained elevated, implying efficient use of equity capital. The shareholders' equity remained relatively stable with a minor dip around 2020, followed by an increase towards 2024. This pattern suggests effective capital management and consistent profitability contributing to equity growth in the later years.
Return on Assets (ROA)
Procter & Gamble Co., ROA 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
ROA = 100 × Net earnings attributable to Procter & Gamble (P&G) ÷ Total assets
= 100 × 14,879 ÷ 122,370 = 12.16%
- Net earnings attributable to Procter & Gamble (P&G)
- Net earnings exhibited a significant increase from 3,897 million USD in 2019 to 13,027 million USD in 2020, marking a substantial improvement. This upward trend continued with steady growth in subsequent years, reaching 14,879 million USD by 2024. The most pronounced growth was observed between 2019 and 2020, followed by moderate yet consistent increases through 2024.
- Total assets
- Total assets showed a gradual but steady rise over the examined period. Beginning at 115,095 million USD in 2019, the asset base increased to 122,370 million USD by 2024. The asset value experienced minor fluctuations, including a slight decline in 2022, but overall the trend is ascending, reflecting a stable expansion of the company's asset holdings.
- Return on Assets (ROA)
- The ROA percentage demonstrated a marked improvement from 3.39% in 2019 to double-digit figures starting in 2020. The ratio increased to 10.79% in 2020 and continued to rise progressively, peaking at 12.58% in 2022. Slight decreases occurred in the following years, with values of 12.13% in 2023 and 12.16% in 2024, indicating a stabilization at a relatively high level of asset profitability.