The Procter & Gamble Company (P&G) pg.254 The financial statements of P&G are presented in Appendix B.

The companys complete annual report, including the notes to the financial statements, is available online. Refer to P&G's financial statements and the related information in the annual report to answer the following questions.

(A) What alternative formats could P&G have adopted for its balance sheet? Which format did it adopt?

(B) Identify the various techniques of disclosure P&G might have used to disclose additional pertinent financial information. Which technique does it use in its financials?

(C) In what classifications are P&G's investments reported? What valuation basis does P&G use to report its investments? How much working capital did P&G have on June 30, 2014? On June 30, 2013?

(D)What were P&G's cash flows from its operating, investing, and financing activities for 2014? What were its trends in net cash provided by operating activities over the period 2012 to 2014? Explain why the change in accounts payable and in accrued and other liabilities is added to net income to arrive at net cash provided by operating activities.

(E) Compute P&G's (1) current cash debt coverage, (2) cash debt coverage, and (3) free cash flow for 2014. What do these ratios indicate about P&G's financial condition?

Consolidated Balance Sheets

Amounts in millions; June 30

Assets

2014

2013

CURRENT ASSETS

Cash and cash equivalents

$ 8,558

$ 5,947

Available-for-sale investment securities

2,128

Accounts receivable

6,386

6,508

INVENTORIES

Materials and supplies

1,742

1,704

Work in process

684

722

Finished goods

4,333

4,483

Total inventories

6,759

6,909

Deferred income taxes

1,092

948

Prepaid expenses and other current assets

3,845

3,678

Assets held for sale

2,849

TOTAL CURRENT ASSETS

31,617

23,990

PROPERTY, PLANT AND EQUIPMENT, NET

22,304

21,666

GOODWILL

53,704

55,188

TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET

30,843

31,572

OTHER NONCURRENT ASSETS

5,798

6,847

TOTAL ASSETS

$ 144,266

$ 139,263

Liabilities and Shareholders' Equity

CURRENT LIABILITIES

Accounts payable

$ 8,461

$ 8,777

Accrued and other liabilities

8,999

8,828

Liabilities held for sale

660

Debt due within one year

15,606

12,432

TOTAL CURRENT LIABILITIES

33,726

30,037

LONG-TERM DEBT

19,811

19,111

DEFERRED INCOME TAXES

10,218

10,827

OTHER NONCURRENT LIABILITIES

10,535

10,579

TOTAL LIABILITIES

74,290

70,554

SHAREHOLDERS' EQUITY

Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)

1,111

1,137

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: 2014 - 4009.2, 2013 -

4,009.2)

4,009

4,009

Additional paid-in capital

63,911

63,538

Reserve for ESOP debt retirement

(1,340)

(1,352

)

Accumulated other comprehensive income/(loss)

(7,662)

(7,499

)

Treasury stock, at cost (shares held: 2014 - 1,298.4, 2013 - 1,266.9)

(75,805)

(71,966

)

Retained earnings

84,990

80,197

Noncontrolling interest

762

645

TOTAL SHAREHOLDERS' EQUITY

69,976

68,709

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 144,266

$ 139,263

The Procter & Gamble Company

49

See accompanying Notes to Consolidated Financial Statements.

Consolidated Balance Sheets

Amounts in millions; June 30

Assets

2014

2013

CURRENT ASSETS

Cash and cash equivalents

$ 8,558

$ 5,947

Available-for-sale investment securities

2,128

Accounts receivable

6,386

6,508

INVENTORIES

Materials and supplies

1,742

1,704

Work in process

684

722

Finished goods

4,333

4,483

Total inventories

6,759

6,909

Deferred income taxes

1,092

948

Prepaid expenses and other current assets

3,845

3,678

Assets held for sale

2,849

TOTAL CURRENT ASSETS

31,617

23,990

PROPERTY, PLANT AND EQUIPMENT, NET

22,304

21,666

GOODWILL

53,704

55,188

TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET

30,843

31,572

OTHER NONCURRENT ASSETS

5,798

6,847

TOTAL ASSETS

$ 144,266

$ 139,263

Liabilities and Shareholders' Equity

CURRENT LIABILITIES

Accounts payable

$ 8,461

$ 8,777

Accrued and other liabilities

8,999

8,828

Liabilities held for sale

660

Debt due within one year

15,606

12,432

TOTAL CURRENT LIABILITIES

33,726

30,037

LONG-TERM DEBT

19,811

19,111

DEFERRED INCOME TAXES

10,218

10,827

OTHER NONCURRENT LIABILITIES

10,535

10,579

TOTAL LIABILITIES

74,290

70,554

SHAREHOLDERS' EQUITY

Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)

1,111

1,137

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: 2014 - 4009.2, 2013 -

4,009.2)

4,009

4,009

Additional paid-in capital

63,911

63,538

Reserve for ESOP debt retirement

(1,340)

(1,352

)

Accumulated other comprehensive income/(loss)

(7,662)

(7,499

)

Treasury stock, at cost (shares held: 2014 - 1,298.4, 2013 - 1,266.9)

(75,805)

(71,966

)

Retained earnings

84,990

80,197

Noncontrolling interest

762

645

TOTAL SHAREHOLDERS' EQ