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ROE Disaggregation Exercise - P&G
ROE Disaggregation Exercise - P&G
Balance sheets and income statements for Procter & Gamble follow. Refer to these
financial statements of P&G to answer the requirements below.
Balance Sheets
($ millions) 6/30/2003 6/30/2002 6/30/2001 6/30/2000
Cash...................................................... $ 5,912 $ 3,427 $ 2,306 $ 1,415
Marketable securities............................ 300 196 212 185
Accounts receivable.............................. 3,038 3,090 2,931 2,910
Inventories............................................ 3,640 3,456 3,384 3,490
Other current assets.............................. 2,330 1,997 2,056 2,146
Total current assets............................... 15,220 12,166 10,889 10,146
Plant assets............................................ 23,542 23,070 22,821 23,221
Accumulated depreciation.................... 10,438 9,721 9,726 9,529
Plant assets, net..................................... 13,104 13,349 13,095 13,692
Intangibles............................................ 13,507 13,430 8,300 8,786
Deposits and other assets...................... 1,875 1,831 2,103 1,742
Total assets............................................ $43,706 $40,776 $34,387 $34,366
2. Compute P&G’s financial leverage (LEV) and times interest earned for 2001
through 2003. Do these ratios indicate that P&G is becoming more or less solvent?
Explain.