P&G is a global leader in the fast-moving consumer goods industry, focused on providing branded consumer packaged goods of superior quality and value to its customers around the world. Its products are sold in more than 180 countries and territories primarily through mass merchandisers, e-commerce, grocery stores, membership club stores, specialty stores, pharmacies, etc. P&G has 5 business segments; Beauty, grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. During 2019 realized a gain of $1,091million (recorded as other non-operating income on the financial statements) on its holdings of Bitcoin. It was a speculative investment at the time and P&G has disposed of its complete holdings of Bitcoin in 2019. During 2017, P&G completed the sale of four product categories in the Beauty Brands business, including the global salon professional hair care and color, cosmetics and fragrance businesses. P&G recorded a loss of $5,217 million in 2017. Please find attached the financial statements for P&Gs June 30, 2019 and 2018 fiscal year.

Required:

Ratios for a competitor are shown below:

	2019	2018
Total Debt to Equity	3.72	3.65
Return on Equity	35%	38%
Profit Margin	15%	12%
Gross Profit Margin	34%	37%
EBITDA	$3,379	$3,256
Days Sales Outstanding(DSO)	39 days	33 days
Days Inventory On Hand(DIOH)	58 days	54 days
Days Payable Outstanding(DPO)	97 days	77 days

1. Which company do you think, P&G or the competitor, has a higher Market Capitalization (Stock price x Number of shares issued)? Explain your reasoning using the information above and considering that the fair market value of anything, is the present value of future cash flows.

2. Do you think P&Gs stock price should have increased or decreased from 2018 to 2019? Explain your reasoning, using the information above.

Balance Sheet As at June 30, 2019 and 2018 (in $ millions) 2019 2018 Assets Current Assets Cash Short-term investments Accounts receivable Inventories Other current liabilities 5,379 $ 6,048 4,951 5,017 2.218 23,613 5,430 9,281 4,686 4,738 2.046 26,181 21,271 24,215 40,273 863 110,235 20,600 23,902 45,175 313 116,171 Property, plant and equipment Intangible assets Goodwill Other assets Total Assets Liabilities Current Liabilities Accounts payable Accrued liabilities Current portion of long-term debt $ 11,260 $ 9,054 9,697 30,011 10,344 7,470 10,423 28,237 Long-term debt Other long-term liabilities Total Liabilities 20,395 17,110 67,516 20,863 17,878 66,978 Shareholders' Equity Capital Stock: Preferred shares Common shares Treasury stock Retained Earnings 745 67.836 (105,409) 79,547 42,719 110,235 967 67,855 (99,217) 79,588 49,193 116,171 Total Liabilities and Shareholders' Equity Statement of Operations For the Year Ended June 30, 2019 and 2018 (in S millions) 2018 2019 2017 $ 67,684 $ 34,768 32,916 66,832 $ 65,058 34,432 32,638 32.400 32.420 19,084 19,037 18,654 (5,217) Revenues Cost of sales Gross Profit Selling, general and administrative expenses Loss (Gain) on sale of business units Goodwill and intangible assets impairment expense Operating Income Interest expense Other non-operating expense(income) Net Income Before Income Taxes 8,345 5,487 13,363 18,983 506 465 509 (1,091) 6,069 12,857 18,518 Income tax expense 1,032 5,037 2.265 10,592 3,148 15,370 Net Income Basic Earnings Per Share 2.11 4.24 5.80 Average number of Common Shares Outstanding 2.390 2,500 2,650 Statement of Cash Flows For the Year Ended June 30, 2019 and 2018 (in S millions) 2019 2018 5,037 10,592 2.834 Cash Flows From Operating Activities Net carnings from continuing operations Adjustments to reconcile net income to operating cash flows: Depreciation and amortization of intangible assets Gain on sale of assets Goodwill and intangible assets impairment expense Changes in non-cash working capital Other Net cash provided (used) by operating activities 2.824 (1,091) 8,345 1,784 804 17,703 3,020 887 17,333 (3,347) (3,945) 3,233 (4,059) (3,717) (109) 1,906 (1,920) Cash Flows From Investing Activities Capital expenditures Business acquisitions Sale(Purchase) of investments, net Net cash used in Investing Activities Cash Flows From Financing Activities Issuance of debt, net of repayments Repurchase of common shares Cash dividends paid (1,194) (5,003) (7,498) (1,238) (7,004) (7,310) Net cash used in Investing Activities Net increase in cash Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period (13.695) (51) 5,430 5,379 (15,552) (139) 5,569 5,430