Ige BusIness Publlshers

Chapter $2$ I From Business Events to Financial Statements

b$.$ P&G$\text{'}$s total assets decreased by approximately $$3\mathrm{.}2$ billion from $2018$ to $2019.$ Which assets principally

accounted for this decline? $($To answer this question, calculate each asset as a percentage of total assets

and then compare between years.$)$ Is this decline a problem? If so$,$ why? If not, why not?

c$.$ Consider the change in P&G$\text{'}$s total debt and total shareholders' equity from $2018$ to $2019.$ Did the $$3\mathrm{.}2$

billion decrease in its assets have an impact on debt? What was the impact on shareholders' equity?

Calculate P&G$\text{'}$s long$-$term debt$-$to$-$equity ratio and total debt to total assets ratio for both years as part

of your analysis. What can you say about P&G$\text{'}$s apparent financing strategy?

d$.$ Consider P&G$\text{'}$s statement of cash flow. What were the five major cash outflows for the company in

$2019?$ How did P&G finance these cash outflows?

e$.$ Compare P&G$\text{'}$s dividend payments to its net income in $2018$ and $2019.($Note: The ratio of dividends

paid divided by net income is called the dividend payout ratio.$)$ What percentage of net income does

P&G pay to its shareholders? How does this payout percentage compare to P&G$\text{'}$s competitors $($such as

Johnson & Johnson$)?$ Do you agree with this dividend payment policy? What message does this policy

convey to investors about the company's future growth potential?