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.

Instructions

Refer to P&G’s financial statements and the accompanying notes to answer the following questions.

a. What type of income statement format does P&G use? Indicate why this format might be used to present income statement information.

b. What are P&G’s primary revenue sources?

c. Compute P&G’s gross profit for each of the years 2018–2020. Explain why gross profit decreased in 2020.

d. Why does P&G make a distinction between operating and nonoperating revenue?

e. What financial ratios did P&G choose to report in its “Financial Summary” section covering the years 2015–2020?