After understanding the company, go to the financial statements, which along with the footnotes to the statements are our main focus. Additional information after the statements will aid you.
1. On the basis of the information supplied in this annual report prepare a brief discussion and analysis of P&G’s performance and financial position. 2. In particular, you should address the following points:
2
a. What is the P&G’s core operating activity through which it generates revenues? When does P&G recognize its revenues from this core operating activity? Discuss the treatment of payment discounts and product returns. b. Discuss the accounting treatment of inventories and its implications on the balance sheet and income statement numbers. c. Which types of intangible assets are included in the “other intangible assets”? Discuss the firm’s policy on amortization and/or impairment of intangible assets and its implications on numbers in the financial statements. Provide examples to illustrate your points. d. Discuss the treatment of goodwill and explain why goodwill decreased during 2019. e. How much did P&G originally pay for all the Machinery and Equipment that it owned as of June 30th 2019? f. Assume that capital expenditure and recorded depreciation expense for 2019 relate exclusively to the Machinery and Equipment. Assume that the only thing that the firm sold was one machine for $350 M in cash. How much did the firm originally pay for the machine that was sold? At the time of the sale, what was the accumulated depreciation on the machine that was sold? Did P&G record a gain or a loss on the sale of the machine? Use the information from Balance sheet, Cash Flow Statement and the P/L account in your calculations. g. Discuss the treatment of the leases and its implications on the numbers in the financial statements. h. Explain which transactions during 2019 affected total equity. Which particular accounts reflected these changes in total equity? i. What were the key components of comprehensive income for 2019? What events caused currency translation gains/losses during 2019? j. What is the implication of the acquisition of the Merck KGaA on P&G’s accounting numbers? k. Did P&G issue any shares as a part of stock option compensation plan in 2019? Did existing shareholders incur a loss as a result of such a share issue? Did P&G have a stock option overhang at the end of fiscal 2019? Explain your findings.
Some important notes regarding the coursework
? Suggested length is 1,200 words. However, it is possible to produce a concise yet thorough analysis in less than 1,200 words.
? Summarize your broad conclusion and finding at the front of your report in an executive summary (which is included in the word count).
? Your objective is to highlight the most salient information to enable your reader to understand Procter and Gamble’s performance and financial position.
