The 2015 annual report of the Procter & Gamble Company (P&G) is available at www.pginvestor.com. After reviewing P&G’s annual report, respond to the following questions.

a. Calculate P&G’s total debt to total assets ratio for 2014 and 2015. Is the company principally debt or equity financed? What is the trend in P&G’s use of debt financing? What was P&G’s short-term and long-term weighted-average cost of debt? What is the trend in P&G’s cost of borrowing?

b. Calculate P&G’s return on assets for 2014 and 2015. Is the company’s financing strategy sound? What is P&G’s short-term and long-term credit rating? Does P&G have an “investment grade” rating or a “junk grade” rating?

c. P&G’s “total debt” in 2015 was \($30.350\) billion. What is the composition of P&G’s “total debt”?

Why would P&G issue notes denominated in British pounds, EU euros, Japanese yen, as well as in U.S. dollars? Is P&G subject to any debt covenants under its various borrowings? If so, what are the covenants and is the company satisfying the covenants?

d. Does P&G use operating leases to finance any of its operating assets? If so, what are the future minimum operating lease payments for future years? Calculate the present value of P&G’s operating leases assuming an implicit cost of borrowing of four percent. Is P&G’s use of operating leases material?