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 these financial statements and the accompanying notes to answer the following questions. What were P&G's total assets at June 30, 2017? At June 30, 2016? June 30, 2016 June 30, 2017 120406 million Total assets $ $ 127316 million How much cash (and cash equivalents) did P&G have on June 30, 2017? Cash and cash equivalents $ 5569 million What were P&G's research and development costs in 2016? In 2017? 2017 2016 Research and development costs 1874 million 1879 million What were P&G's revenues in 2016? In 2017? 2017 2016 Net sales 65058 million 65299 million What were the amounts of P&G's depreciation and amortization expense in 2015, 2016, and 2017? 2017 2016 2015 Depreciation and amortization expense 15411 million $ 10604 million $ 7144 million Kellogg Company has its headquarters in Battle Creek, Michigan. The company manufactures and sells ready-to-eat breakfast cereals and convenience foods including cookies, toaster pastries, and cereal bars. Selected data from Kellogg Company's recent annual report follows (dollar amounts in millions). Sales Gross profit % Operating profit Net cash flow less capital expenditures Net earnings Current Year $14,580 34.73 1,024 1,211 633 Prior Year $14,792 41.26 2,837 1,170 1808 2 Years Ago $14,197 38.28 1,562 1,225 961 In its annual reports, Kellogg Company has indicated that it plans to achieve sustainability of its operating results with operating principles that emphasize profit-rich, sustainable sales growth, as well as cash flow and return on invested capital. Kellogg believes its steady earnings growth, strong cash flow, and continued investment during a multi-year period demonstrates the strength and flexibility of its business model. Compute the percentage change in sales, operating profit, net cash flow less capital expenditures, and net earnings from year to year for the years presented. (Round answers to 2 decimal places, e.g. 52.75%. If an amount reduces the account balance then enter with negative sign.) % Change Current Year % Change Last Year Sales -1.43% 4.19% Operating profit -63.91% 81.63 J% Net cash flow less capital expenditures 3.50 -4.49% % Net earnings -64.99 J% 88.14 % 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 accompanying notes to answer the following questions. (c1) Compute P&G's gross profit for each of the years 2015-2017. 2017 2016 2015 Gross profit $ 32523 million 32390 million $ $ 33693 million Consolidated Statements of Comprehensive Income 2017 2016 2015 Amounts in millions; Years ended June 30 NET EARNINGS $ 15,411 $ 10,604 $ 7,144 239 (1,679) (7,220) 1 1,234 28 24 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/(losses) on defined benefit retirement plans (net of $551, $(621) and $328 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 (306) (59) 1,401 1,275 (1,477) 844 (3,127) (5,118) 7,477 2,026 16,686 85 96 108 $ 16,601 $ 7,381 $ 1,918 Consolidated Statements of Earnings Amounts in millions except per share amounts; Years ended June 30 NET SALES 2017 2016 2015 $ 65,058 $ 65,299 $ 70,749 32,535 32,909 37,056 18,568 18,949 20,616 Cost of products sold Selling, general and administrative expense Venezuela deconsolidation charge OPERATING INCOME 2,028 13,955 13,441 11,049 Interest expense 465 579 626 Interest income 171 182 149 325 440 (404) 13,257 13,369 11,012 3,063 2,725 3,342 10,027 10,194 8,287 5,217 577 (1,143) 7,144 15,411 10,604 85 96 108 $ 15,326 $ 10,508 $ 7,036 Other non-operating income/(expense), net EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income taxes on continuing operations 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 $ 3.79 $ 3.59 $ 2.92 2.01 0.21 (0.42) $ 5.80 $ 3.80 $ 2.50 $ 3.69 $ 3.49 $ 2.84 1.90 0.20 (0.40) $ 5.59 $ 3.69 $ 2.44 $ 2.70 $ 2.66 $ 2.59 (1) Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble. Consolidated Balance Sheets 2017 2016 $ 5,569 $ 7,102 9,568 6,246 4,594 4,373 1,308 1,188 529 563 2,787 2,965 4,624 4,716 1,507 2,139 2,653 7,185 26,494 33,782 19,893 19,385 44,699 44,350 24,187 24,527 5,133 5,092 $ 120,406 $ 127,136 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 inventories 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 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 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 $ 9,632 $ 9,325 7,024 7,449 2,343 13,554 30,210 11,653 30,770 18.945 18,038 8,126 9,113 8,254 10,325 64,628 69,153 1,006 1,038 4,009 4,009 63,641 63,714 (1,249) (1,290) (14,632) (15,907) (93,715) (82,176) 96,124 87,953 594 642 55,778 57,983 $ 120,406 $ 127,136 See accompanying Notes to Consolidated Financial Statements. Consolidated Statements of Shareholders' Equity Accumulated Total Common Additional Reserve for Other Non Dollars in millions; Common Preferred Treasury Retained Share- Shares Paid-In ESOP Debt Comprehensive controlling Shares in thousands Stock Stock Stock Earnings holders Outstanding Capital Retirement Income Interest Equity (Loss) 2,710,808 $4,009 $1,111 S63,911 ($1,340) (57,662) ($75,805) $84,990 7,036 (5,1181 $762 $69,976 108 7.144 (5,118) (7,028) (7.028) (259) (269) (54,6701 54,100 4,335 (4,604) 3,153 (4.804) 3,309 156 4 30 20 68 88 (239) (219) $63,852 (454) $631 $63,050 2,714,571 $4,009 $1,077 ($1,320) ($12,780) ($77,226) $84,807 () ($) 10,50B 13,1271 96 10,604 (3,127) (7,181) (255) BALANCE JUNE 30, 2014 Net earnings Other comprehensive loss Dividends to shareholders Common Preferred, net of tax benefits Treasury purchases Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2015 Net earnings mo Other comprehensive loss Dividends to shareholders: Common Preferred, net of tax benefits Treasury purchases! Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2016 Net carrings Other comprehensive loss Dividends to sharchakders: Common Preferred, net of tax benefits Treasury purchases!?) Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2017 (7.181) (255) (8.217) 3,090 (103,4401 52,089 4,863 (144) 6 18,2171 3,234 33 (39) 30 74 104 (65) 185) 2,688,074 $4,009 $1,038 $63,714 ($1,290) $642 $67,983 ($15,907) ($62,176) $87,953 15,326 1,275 85 15,411 1.275 (6,989) (247) (6,989) (247) (14,625) (164,866) 45,848 4.241 (77) (14,625) 3,058 28 2,981 (32) 81 122 (133) (133) 2,553,297 $4,009 $1,006 $63,641 ($1,249) ($14,632) ($93,715) $06,124 $594 $55,778 11) Includes $4,213 of treasury shares acquired in the civestiture of the Batteries business (see Note 13). 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 2017 2016 2015 $ 7,102 $ 6,836 $ 8,548 15,411 2,820 10,604 3,078 7,144 3,134 543 351 335 337 (815) (601) (5,490) (803) (766) 2,028 2,174 349 450 35 (322) 71 (149) 116 313 1,285 (43) 204 928 (976) 746 14,608 162 12,753 184 15,435 (3,384) (3,314) 571 432 (3,736) 4,498 (908) (137) (3,647) 1,203 Amounts in millions; Years ended June 30 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR OPERATING ACTIVITIES Net earnings 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 closing related to the Beauty Brands divestiture Release restricted cash upon closing of the Beauty Brands divestiture Cash transferred in Batteries divestiture Change in other investments TOTAL INVESTING ACTIVITIES FINANCING ACTIVITIES Dividends shareholders Change in short-term debt Additions to long-term debt Reductions of long-term debt Treasury stock purchases Treasury stock from cash infused Batteries divestiture Impact of stock options and other TOTAL FINANCING ACTIVITIES EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL DISCLOSURE Cash payments for interest Cash payment income taxes Divestiture of Batteries business in exchange for shares of P&G stock(2) Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt Assets acquired through non-cash capital leases are immaterial for all periods. (16) (186) (4,843) (2,815) 1,488 1,354 (874) (996) (475) 1,870 (143) (26) 93 (5,689) (5,575) (163) (2.890) 2,138 (7,236) (7,436) (7,287) 2,727 (418) (2,580) 3,603 3,916 (4,931) (1) (2,213) (3,512) (5,204) (4,004) (4,604) (1,730) 2,473 2.672 2,826 (8,568) (9.213) (13.019) (29 (381) (411) (1,533) 266 $ 5,569 $ 7,102 $ 6,836 (1.712) $ 678 4,558 $ 518 $ 569 3,714 3,730 4.213 11,360 (1) Includes $543 of costs related early extinguishment of debt. 2) Includes $1,730 from cash infused into the Batteries business pursuant to the divestiture agreement (see Note 13). See accompanying Notes to Consolidated Financial Statements. Question 4 One of the more closely watched ratios by investors is the price/earnings (P/E) ratio. By dividing price per share by earnings per share, analysts get insight into the value the market attaches to a company's earnings. More specifically, a high P/E ratio (in comparison to companies in the same industry) may suggest the stock is overpriced. Also, there is some evidence that companies with low P/E ratios are underpriced and tend to outperform the market. However, the ratio can be misleading. P/E ratios are sometimes misleading because the E (earnings) is subject to a number of assumptions and estimates that could result in overstated earnings and a lower P/E. Some analysts conduct "revenue analysis to evaluate the quality of an earnings number. Revenues are less subject to management estimates and all earnings must begin with revenues. These analysts also compute the price-to-sales ratio (PSR price per share = sales per share) to assess whether a company is performing well compared to similar companies. If a company has a price-to-sales ratio significantly higher than its competitors, investors may be betting on a stock that has yet to prove itself. [Source: Janice Revell, "Beyond P/E," Fortune (May 28, 2001), p. 174.] = (b) Compute the P/E ratio and the PSR for Tootsie Roll and Hershey for 2017. (Round answers to 2 decimal places, e.g. 52.23.) December 31, 2017 P/E Ratio PSR Tootsie Roll Hershey 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. How much working capital did P&G have on June 30, 2017? On June 30, 20167 (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 million million 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 2015 Net cash provided by operating activities millions $ millions $ millions Net cash used in investing activities millions $ millions millions Net cash used in financing activities millions $ millions millions (Round answers to 1 decimal place, e.g. 52.7.) % from 2015 to 2016. P&G's net cash provided by operating activities P&G's net cash provided by operating activities by v by % from 2016 to 2017 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.) :1 Current Cash Debt Coverage Cash Debt Coverage : 1 Free cash flow 5 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 these financial statements and the accompanying notes to answer the following questions. What were P&G's total assets at June 30, 2017? At June 30, 2016? June 30, 2016 June 30, 2017 120406 million Total assets $ $ 127316 million How much cash (and cash equivalents) did P&G have on June 30, 2017? Cash and cash equivalents $ 5569 million What were P&G's research and development costs in 2016? In 2017? 2017 2016 Research and development costs 1874 million 1879 million What were P&G's revenues in 2016? In 2017? 2017 2016 Net sales 65058 million 65299 million What were the amounts of P&G's depreciation and amortization expense in 2015, 2016, and 2017? 2017 2016 2015 Depreciation and amortization expense 15411 million $ 10604 million $ 7144 million Kellogg Company has its headquarters in Battle Creek, Michigan. The company manufactures and sells ready-to-eat breakfast cereals and convenience foods including cookies, toaster pastries, and cereal bars. Selected data from Kellogg Company's recent annual report follows (dollar amounts in millions). Sales Gross profit % Operating profit Net cash flow less capital expenditures Net earnings Current Year $14,580 34.73 1,024 1,211 633 Prior Year $14,792 41.26 2,837 1,170 1808 2 Years Ago $14,197 38.28 1,562 1,225 961 In its annual reports, Kellogg Company has indicated that it plans to achieve sustainability of its operating results with operating principles that emphasize profit-rich, sustainable sales growth, as well as cash flow and return on invested capital. Kellogg believes its steady earnings growth, strong cash flow, and continued investment during a multi-year period demonstrates the strength and flexibility of its business model. Compute the percentage change in sales, operating profit, net cash flow less capital expenditures, and net earnings from year to year for the years presented. (Round answers to 2 decimal places, e.g. 52.75%. If an amount reduces the account balance then enter with negative sign.) % Change Current Year % Change Last Year Sales -1.43% 4.19% Operating profit -63.91% 81.63 J% Net cash flow less capital expenditures 3.50 -4.49% % Net earnings -64.99 J% 88.14 % 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 accompanying notes to answer the following questions. (c1) Compute P&G's gross profit for each of the years 2015-2017. 2017 2016 2015 Gross profit $ 32523 million 32390 million $ $ 33693 million Consolidated Statements of Comprehensive Income 2017 2016 2015 Amounts in millions; Years ended June 30 NET EARNINGS $ 15,411 $ 10,604 $ 7,144 239 (1,679) (7,220) 1 1,234 28 24 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/(losses) on defined benefit retirement plans (net of $551, $(621) and $328 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 (306) (59) 1,401 1,275 (1,477) 844 (3,127) (5,118) 7,477 2,026 16,686 85 96 108 $ 16,601 $ 7,381 $ 1,918 Consolidated Statements of Earnings Amounts in millions except per share amounts; Years ended June 30 NET SALES 2017 2016 2015 $ 65,058 $ 65,299 $ 70,749 32,535 32,909 37,056 18,568 18,949 20,616 Cost of products sold Selling, general and administrative expense Venezuela deconsolidation charge OPERATING INCOME 2,028 13,955 13,441 11,049 Interest expense 465 579 626 Interest income 171 182 149 325 440 (404) 13,257 13,369 11,012 3,063 2,725 3,342 10,027 10,194 8,287 5,217 577 (1,143) 7,144 15,411 10,604 85 96 108 $ 15,326 $ 10,508 $ 7,036 Other non-operating income/(expense), net EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income taxes on continuing operations 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 $ 3.79 $ 3.59 $ 2.92 2.01 0.21 (0.42) $ 5.80 $ 3.80 $ 2.50 $ 3.69 $ 3.49 $ 2.84 1.90 0.20 (0.40) $ 5.59 $ 3.69 $ 2.44 $ 2.70 $ 2.66 $ 2.59 (1) Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble. Consolidated Balance Sheets 2017 2016 $ 5,569 $ 7,102 9,568 6,246 4,594 4,373 1,308 1,188 529 563 2,787 2,965 4,624 4,716 1,507 2,139 2,653 7,185 26,494 33,782 19,893 19,385 44,699 44,350 24,187 24,527 5,133 5,092 $ 120,406 $ 127,136 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 inventories 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 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 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 $ 9,632 $ 9,325 7,024 7,449 2,343 13,554 30,210 11,653 30,770 18.945 18,038 8,126 9,113 8,254 10,325 64,628 69,153 1,006 1,038 4,009 4,009 63,641 63,714 (1,249) (1,290) (14,632) (15,907) (93,715) (82,176) 96,124 87,953 594 642 55,778 57,983 $ 120,406 $ 127,136 See accompanying Notes to Consolidated Financial Statements. Consolidated Statements of Shareholders' Equity Accumulated Total Common Additional Reserve for Other Non Dollars in millions; Common Preferred Treasury Retained Share- Shares Paid-In ESOP Debt Comprehensive controlling Shares in thousands Stock Stock Stock Earnings holders Outstanding Capital Retirement Income Interest Equity (Loss) 2,710,808 $4,009 $1,111 S63,911 ($1,340) (57,662) ($75,805) $84,990 7,036 (5,1181 $762 $69,976 108 7.144 (5,118) (7,028) (7.028) (259) (269) (54,6701 54,100 4,335 (4,604) 3,153 (4.804) 3,309 156 4 30 20 68 88 (239) (219) $63,852 (454) $631 $63,050 2,714,571 $4,009 $1,077 ($1,320) ($12,780) ($77,226) $84,807 () ($) 10,50B 13,1271 96 10,604 (3,127) (7,181) (255) BALANCE JUNE 30, 2014 Net earnings Other comprehensive loss Dividends to shareholders Common Preferred, net of tax benefits Treasury purchases Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2015 Net earnings mo Other comprehensive loss Dividends to shareholders: Common Preferred, net of tax benefits Treasury purchases! Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2016 Net carrings Other comprehensive loss Dividends to sharchakders: Common Preferred, net of tax benefits Treasury purchases!?) Employee plan issuances Preferred stock conversions ESOP debt impacts Noncontrolling interest, net BALANCE JUNE 30, 2017 (7.181) (255) (8.217) 3,090 (103,4401 52,089 4,863 (144) 6 18,2171 3,234 33 (39) 30 74 104 (65) 185) 2,688,074 $4,009 $1,038 $63,714 ($1,290) $642 $67,983 ($15,907) ($62,176) $87,953 15,326 1,275 85 15,411 1.275 (6,989) (247) (6,989) (247) (14,625) (164,866) 45,848 4.241 (77) (14,625) 3,058 28 2,981 (32) 81 122 (133) (133) 2,553,297 $4,009 $1,006 $63,641 ($1,249) ($14,632) ($93,715) $06,124 $594 $55,778 11) Includes $4,213 of treasury shares acquired in the civestiture of the Batteries business (see Note 13). 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 2017 2016 2015 $ 7,102 $ 6,836 $ 8,548 15,411 2,820 10,604 3,078 7,144 3,134 543 351 335 337 (815) (601) (5,490) (803) (766) 2,028 2,174 349 450 35 (322) 71 (149) 116 313 1,285 (43) 204 928 (976) 746 14,608 162 12,753 184 15,435 (3,384) (3,314) 571 432 (3,736) 4,498 (908) (137) (3,647) 1,203 Amounts in millions; Years ended June 30 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR OPERATING ACTIVITIES Net earnings 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 closing related to the Beauty Brands divestiture Release restricted cash upon closing of the Beauty Brands divestiture Cash transferred in Batteries divestiture Change in other investments TOTAL INVESTING ACTIVITIES FINANCING ACTIVITIES Dividends shareholders Change in short-term debt Additions to long-term debt Reductions of long-term debt Treasury stock purchases Treasury stock from cash infused Batteries divestiture Impact of stock options and other TOTAL FINANCING ACTIVITIES EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL DISCLOSURE Cash payments for interest Cash payment income taxes Divestiture of Batteries business in exchange for shares of P&G stock(2) Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt Assets acquired through non-cash capital leases are immaterial for all periods. (16) (186) (4,843) (2,815) 1,488 1,354 (874) (996) (475) 1,870 (143) (26) 93 (5,689) (5,575) (163) (2.890) 2,138 (7,236) (7,436) (7,287) 2,727 (418) (2,580) 3,603 3,916 (4,931) (1) (2,213) (3,512) (5,204) (4,004) (4,604) (1,730) 2,473 2.672 2,826 (8,568) (9.213) (13.019) (29 (381) (411) (1,533) 266 $ 5,569 $ 7,102 $ 6,836 (1.712) $ 678 4,558 $ 518 $ 569 3,714 3,730 4.213 11,360 (1) Includes $543 of costs related early extinguishment of debt. 2) Includes $1,730 from cash infused into the Batteries business pursuant to the divestiture agreement (see Note 13). See accompanying Notes to Consolidated Financial Statements. Question 4 One of the more closely watched ratios by investors is the price/earnings (P/E) ratio. By dividing price per share by earnings per share, analysts get insight into the value the market attaches to a company's earnings. More specifically, a high P/E ratio (in comparison to companies in the same industry) may suggest the stock is overpriced. Also, there is some evidence that companies with low P/E ratios are underpriced and tend to outperform the market. However, the ratio can be misleading. P/E ratios are sometimes misleading because the E (earnings) is subject to a number of assumptions and estimates that could result in overstated earnings and a lower P/E. Some analysts conduct "revenue analysis to evaluate the quality of an earnings number. Revenues are less subject to management estimates and all earnings must begin with revenues. These analysts also compute the price-to-sales ratio (PSR price per share = sales per share) to assess whether a company is performing well compared to similar companies. If a company has a price-to-sales ratio significantly higher than its competitors, investors may be betting on a stock that has yet to prove itself. [Source: Janice Revell, "Beyond P/E," Fortune (May 28, 2001), p. 174.] = (b) Compute the P/E ratio and the PSR for Tootsie Roll and Hershey for 2017. (Round answers to 2 decimal places, e.g. 52.23.) December 31, 2017 P/E Ratio PSR Tootsie Roll Hershey 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. How much working capital did P&G have on June 30, 2017? On June 30, 20167 (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 million million 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 2015 Net cash provided by operating activities millions $ millions $ millions Net cash used in investing activities millions $ millions millions Net cash used in financing activities millions $ millions millions (Round answers to 1 decimal place, e.g. 52.7.) % from 2015 to 2016. P&G's net cash provided by operating activities P&G's net cash provided by operating activities by v by % from 2016 to 2017 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.) :1 Current Cash Debt Coverage Cash Debt Coverage : 1 Free cash flow 5
