The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso.
Instructions
Refer to P&G’s financial statements and the accompanying notes 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, 2009? On June 30, 2008?
(d) What were P&G’s cash flows from its operating, investing, and financing activities for 2009? What were its trends in net cash provided by operating activities over the period 2007 to 2009? 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 ratio, (2) cash debt coverage ratio, and (3) free cash flow for 2009. What do these ratios indicate about P&G’s financial condition?