The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online.

Instructions

Refer to P&G’s financial statements and the accompanying notes to answer the following questions.

a. How does P&G value its inventories? Which inventory costing method does P&G use as a basis for reporting its inventories?

b. How does P&G report its inventories in the balance sheet? In the notes to its financial statements, what three descriptions are used to classify its inventories?

c. What costs does P&G include in Inventory and Cost of Products Sold?

d. What was P&G’s inventory turnover in 2017? What is its gross profit percentage? Evaluate P&G’s inventory turnover and its gross profit percentage.