ACC Project
ACC 302 Project
02/28/2013
Ch. 12
a) P&G reported intangibles such as goodwill, brands, patents and technology, and customer relations on its 2009 financial statements and notes.
b) Research and development costs were expensed in 2009 for $2,044 and in 2008 for $2,212. R&D costs were 2.6% (2,044/79,029) of sales revenue in 2009 and 2.7% (2,212/81,748) in 2008. In 2009 the R&D costs were 15% (2,044/13,436) of net income and 18 %( 2,212/12,075) in 2008. (in millions)
Ch. 13
a) P&G’s short term debt in 2009 was $16,320 and the weighted average interest rate was 2.0%.
b) In 2009, P&G had $8,996 million (21,905 – 30,901) in working capital; their acid- test ratio was .34 times ((4,781+5,836)/30,901); and the current ratio was .71 times (21,905/30,901). Based on the ratios above, P&G’s liquidity is very poor. The acid-test and current ratios are both below a 1, indicating that they have current assets tied up. They may not do that well in the event of an economic crisis and are not as liquid as they should be.
c) P&G has reported purchase commitments for materials, supplies, services, and property, plant, and equipment; rental commitments for leases; as well as contingencies for legal proceedings and claims on their financial statements. Management’s reaction to the contingencies is that the results will not materially affect P&G’s financial position (although there is still uncertainty).
Ch. 14
a) P&G has cash outflow obligations over the next 5 years for their purchase contracts and rental commitments.
b) The financial flexibility of P&G is as follows: the debt to total assets ratio is 53% (71,734/134,833) which is slightly high. P&G may have some problems in the long run with repaying their maturing debt. The times interest earned is 13.9 times ((1,358+13,436+4,032)/1,358), which says that P&G earns their interest approximately 14 times a year, so they should be just fine in making interest payments. Overall, Proctor and Gamble should work on the
02/28/2013
Ch. 12
a) P&G reported intangibles such as goodwill, brands, patents and technology, and customer relations on its 2009 financial statements and notes.
b) Research and development costs were expensed in 2009 for $2,044 and in 2008 for $2,212. R&D costs were 2.6% (2,044/79,029) of sales revenue in 2009 and 2.7% (2,212/81,748) in 2008. In 2009 the R&D costs were 15% (2,044/13,436) of net income and 18 %( 2,212/12,075) in 2008. (in millions)
Ch. 13
a) P&G’s short term debt in 2009 was $16,320 and the weighted average interest rate was 2.0%.
b) In 2009, P&G had $8,996 million (21,905 – 30,901) in working capital; their acid- test ratio was .34 times ((4,781+5,836)/30,901); and the current ratio was .71 times (21,905/30,901). Based on the ratios above, P&G’s liquidity is very poor. The acid-test and current ratios are both below a 1, indicating that they have current assets tied up. They may not do that well in the event of an economic crisis and are not as liquid as they should be.
c) P&G has reported purchase commitments for materials, supplies, services, and property, plant, and equipment; rental commitments for leases; as well as contingencies for legal proceedings and claims on their financial statements. Management’s reaction to the contingencies is that the results will not materially affect P&G’s financial position (although there is still uncertainty).
Ch. 14
a) P&G has cash outflow obligations over the next 5 years for their purchase contracts and rental commitments.
b) The financial flexibility of P&G is as follows: the debt to total assets ratio is 53% (71,734/134,833) which is slightly high. P&G may have some problems in the long run with repaying their maturing debt. The times interest earned is 13.9 times ((1,358+13,436+4,032)/1,358), which says that P&G earns their interest approximately 14 times a year, so they should be just fine in making interest payments. Overall, Proctor and Gamble should work on the