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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. Click here to view Appendix B. Refer to P&G's financial statements and the related information in the annual report to answer the following questions. (c2) Your answer is correct. How much working capital did P&G have on June 30, 2017? On June 30, 2016? (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45). Enter your answer in millions.) June 30, 2017 June 30, 2016 Working capital $ -3716 million 3012 million e Textbook and Media Attempts: 1 of 3 used (d1) Your answer is correct. What were P&G's cash flows from its operating, investing, and financing activities for 2017? What were its trends in net cash provided by operating activities over the period 2015-2017? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 2017 2016 Net cash provided by operating activities $ 12,753 millions $ 15,435 millions Net cash used in investing activities $ -5689 millions $ -5575 millions Net cash used in financing activities $ -8568 millions $ -9213 millions (Round answers to 2 decimal places, e.g. 52.72.) P&G's net cash provided by operating activities increased by 5.66 % from 2015 to 2016. P&G's net cash provided by operating activities decreased vby -17.38 i % from 2016 to 2017. P&G's net cash provided by operating activities decreased by - 17.38 i % from 2016 to 2017. e Textbook and Media Attempts: 1 of 3 used (e 1) Compute P&G's (1) current cash debt coverage, (2) cash debt coverage, and (3) free cash flow for 2017. (Round ratio values to 2 decimal places, e.g. 52.75.) Current Cash Debt Coverage :1 Cash Debt Coverage :1 Free cash flow $ e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer Appendix B Specimen Financial Statements: The Procter & Gamble Company Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces, containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system. The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report: Financial Highlights Letter to the Stockholders Management's Discussion and Analysis Financial Statements Notes to the Financial Statements Management's Responsibility for Financial Reporting Management's Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Selected Financial Data The official SEC filing of the annual report is called a Form 10-K, which often omits the public relations pieces found in most standard annual reports. On the following pages, we present The Procter & Gamble Company (P&G)'s financial statements taken from the company's 2017 Form 10-K. Consolidated Statements of Earnings Amounts in millions except per share amounts; Years ended June 30 2017 2016 2015 NET SALES $ 65,058 $ 65,299 $ 70,749 Cost of products sold 32,535 32,909 37,056 Selling, general and administrative expense 18,568 18,949 20,616 Venezuela deconsolidation charge 2,028 OPERATING INCOME 13,955 13,441 11,049 Interest expense 465 579 626 Interest income 171 182 149 Other non-operating income/(expense), net (404) 325 440 EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 13,257 13,369 11,012 Income taxes on continuing operations 3,063 3,342 2,725 NET EARNINGS FROM CONTINUING OPERATIONS 10.104 10 097 8 287 10,027 10,194 5,217 8,287 (1,143) 7,144 108 577 10,604 96 $ 10,508 15,411 85 $ 15,326 $ 7,036 S $ 3,59 $ NET EARNINGS FROM CONTINUING OPERATIONS NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS NET EARNINGS Less: Net earnings attributable to noncontrolling interests NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE BASIC NET EARNINGS PER COMMON SHARE:1) Earnings from continuing operations Earnings/(loss) from discontinued operations BASIC NET EARNINGS PER COMMON SHARE DILUTED NET EARNINGS PER COMMON SHARE:1) Earnings from continuing operations Earnings/(loss) from discontinued operations DILUTED NET EARNINGS PER COMMON SHARE DIVIDENDS PER COMMON SHARE (1) Basic net carnings per common share and Diluted net carnings per common share are calculated on Net carnings attributable to Procter 3.79 2.01 0.21 2.92 (0.42) 2.50 S 5.80 $ 3.80 $ 8 $ $ 3.69 1.90 3.49 0.20 3.69 2.84 (0.40) 2.44 2.59 $ 5-59 $ $ 8 2.70 $ 2.66 S Gamblo. 2017 $ 15,411 2016 $ 10,604 2015 $ 7,144 (7.220) 1,234 Consolidated Statements of Comprehensive Income Amounts in millions; Years ended June 30 NET EARNINGS OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX Financial statement translation Unrealized gains/(losses) on hedges (net of $(186), $5 and $739 tax, respectively) Unrealized gains/(losses) on investment securities (net of $(6), $7 and $0 tax, respectively) Unrealized gains/Closses) on defined benefit retirement plans (net of $551, $(621) and 5328 tax, respectively) TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX TOTAL COMPREHENSIVE INCOME Less: Total comprehensive income attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE 239 (306) (59) 1,401 1,275 16,686 85 $ 16,601 (1,679) 1 28 (1,477) (3,127) 7,477 96 $ 7.381 24 844 (5,118) 2,026 108 $ 1,918 Consolidated Balance Sheets 2017 2016 8 $ 5,569 9,568 4,594 7,102 6,246 4.373 Consolidated Balance Sheets Amounts in millions; As of June 30 Assets CURRENT ASSETS Cash and cash equivalents Available-for-sale investment securities Accounts receivable INVENTORIES Materials and supplies Work in process Finished goods Total inventoreis Deferred income taxes Prepaid expenses and other current assets Current assets held for sale TOTAL CURRENT ASSETS PROPERTY, PLANT AND EQUIPMENT, NET GOODWILL TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET OTHER NONCURRENT ASSETS TOTAL ASSETS 1,308 529 2,787 4,624 2,139 1,188 563 2,965 4.716 1,507 2,653 7,185 33.782 19,385 44,350 24,527 5,092 26,494 19,893 44,699 24,187 5,133 $ 120,406 $ 127,136 $ 9,632 $ 7,024 Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable Accrued and other liabilities Current liabilities held for sale Debt due within one year TOTAL CURRENT LIABILITIES LONG-TERM DEBT DEFERRED INCOME TAXES OTHER NONCURRENT LIABILITIES 13,554 30,210 18,038 8,126 8,254 9,325 7,449 2,343 11,653 30,770 18,945 9,113 10,325 8,254 64,628 10,325 69,153 1,006 1,038 OTHER NONCURRENT LIABILITIES TOTAL LIABILITIES SHAREHOLDERS' EQUITY Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized) Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2017 - 4,009-2, 2016 - 4,009.2) Additional paid-in capital Reserve for ESOP debt retirement Accumulated other comprehensive income/(loss) Treasury stock, at cost (shares held: 2017 - 1,455.9, 2016 - 1,341.2) Retained earnings Noncontrolling interest TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY See accompanying Notes to Consolidated Financial Statements. 4,009 63,641 (1,249) (14,632) (93,715) 96,124 594 4,009 63,714 (1,290) (15.907) (82,176) 87,953 642 57,983 $ 127,136 55,778 $ 120,406 7,036 Consolidated Statements of Shareholders' Equity Accumulated Other Total Common Additional Reserve for Comprehensive Non- Share Dollars in millions; Shares Common Preferred Paid-In ESOP Debt Income/ Treasury Retained controlling holders' Shares in thousands Outstanding Stock Stock Capital Retirement (Loss) Stock Earnings Interest Equity BALANCE JUNE 30, 2014 2,710,806 $4,009 $1,111 $63.911 ($1,340) ($7,662) ($75,805) $84.990 $762 $69,976 Net earnings 108 7,144 Other comprehensive loss (5,118) (5,118) Dividends to shareholders: Common (7,028) (7,028) Preferred, net of tax benefits (259) (259) Treasury purchases (54,670) (4,604) (4,604) Employee plan issuances 54,100 156 3.153 3,309 Preferred stock conversions 4.335 (34) 4 30 ESOP debt impacts 68 88 20 20 68 ESOP debt impacts Noncontrolling interest, niet BALANCE JUNE 30, 2015 (219) $63,852 2,714,571 $4,009 $1,077 ($1,320) 88 (239) (458) $631 $63,050 96 10,604 (3,127) ($12,780) ($77,226) $84,807 10,508 (3,127) Net earnings (7,181) (255) (7,181) (255) (8,217) 3,090 (103,449) 52,089 4,863 (8,217) 3,234 (144) 6 (39) 33 30 74 2,668,074 $4,009 $1,038 $63,714 ($1,290) Other comprehensive loss Dividends to shareholders: Common Preferred, net of tax benefits Treasury purchases (1) Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2016 Net earnings Other comprehensive loss Dividends to shareholders: Common Preferred, net of tax benefits Treasury purchases (2) Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2017 ($15,907) ($82,176) $87,953 15,326 1,275 104 (85) (85) $642 $57,983 85 15,411 1,275 (6,989) (247) (6,989) (247) (14,625) 2,981 (164,866) 45,848 4,241 (77) 4 (14,625) 3,058 28 (32) 41 81 122 (133) (133) $594_$55,778 2,553,297 $4,009 $1,006 $63,641 (81,249) ($14,632) ($93,715) $96,124 Includes S4,213 of treasury shares acquired in the divestiture of the Batteries business (sce Note 13). (2) Includes $9,421 of treasury shares received as part of the share exchange in the Beauty Brands transaction (see Note 13). See accompanying Notes to Consolidated Financial Statements. Consolidated Statements of Cash Flows Amounts in millions; Year's ended June 30 2017 2016 2015 2017 2016 2015 $ 6,836 $ 8,548 $ 7,102 10,604 3,078 7,144 3,134 15,411 2,820 543 351 (601) (5,490) 335 (815) (41) 450 35 Consolidated Statements of Cash Flows Amounts in millions; Years ended June 30 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR OPERATING ACTIVITIES Net carnings Depreciation and amortization Loss on early extinguishment of debt Share-based compensation expense Deferred income taxes Gain on sale of assets Venezuela deconsolidation charge Goodwill and intangible asset impairment charges Change in accounts receivable Change in inventories Change in accounts payable, accrued and other liabilities Change in other operating assets and liabilities Other TOTAL OPERATING ACTIVITIES INVESTING ACTIVITIES Capital expenditures Proceeds from asset sales Cash related to deconsolidated Venezuela operations Acquisitions, net of cash acquired Purchases of short-term investments Proceeds from sales and maturities of short-term investments Pre-divestiture addition of restricted cash related to the Beauty Brands divestiture Cash transferred at closing related to the Beauty Brands divestiture Release of restricted cash upon closing of the Beauty Brands divestiture Cash transferred in Batteries divestiture Change in other investments TOTAL INVESTING ACTIVITIES FINANCING ACTIVITIES (322) 71 (149) (43) 162 12,753 337 (803) (766) 2,028 2,174 349 313 928 (976) 746 14,608 116 1,285 204 184 15,435 (3,314) (3,384) 571 432 (3,736) 4,498 (908) (137) (3,647) 1,203 (16) (4,843) 1,488 (874) (475) 1,870 (186) (2,815) 1,354 (996) (26) (5,689) (143) 93 (5,575) (163) (2,890) (4,931)(1) upon Cash transferred in Batteries divestiture (143) Change in other investments (26) 93 (163) TOTAL INVESTING ACTIVITIES (5,689) (5,575) (2,890) FINANCING ACTIVITIES Dividends to shareholders (7,236) (7,436) (7,287) Change in short-term debt 2,727 (418) (2,580) Additions to long-term debt 3,603 3,916 2,138 Reductions of long-term debt (2,213) (3,512) Treasury stock purchases (5,204) (4,004) (4,604) Treasury stock from cash infused in Batteries divestiture (1,730) Impact of stock options and other 2,473 2,672 2,826 TOTAL FINANCING ACTIVITIES (8,568) (9,213) (13,019) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (29) (381) CHANGE IN CASH AND CASH EQUIVALENTS (1,533) 266 (1,712) CASH AND CASH EQUIVALENTS, END OF YEAR $ 5,569 $ 7,102 6,836 SUPPLEMENTAL DISCLOSURE Cash payments for interest $ 518 $ 569 $ 678 Cash payment for income taxes 3,714 3,730 Divestiture of Batteries business in exchange for shares of P&G stock(2) 4,213 Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt 11,360 Assets acquired through non-cash capital leases are immaterial for all periods. (1) Includes $543 of costs related to early extinguishment of debt. (2) Includes $1,730 from cash infused into the Batteries business pursuant to the divestiture agreement (see Note 13). (411) 4,558 See accompanying Notes to Consolidated Financial Statements
