ACCT523 MSU Procter & Gamble Financial Statement Analysis Assignment

timer Asked: Mar 29th, 2019
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Question Description

1. You are to select two companies which are competitors (same SIC classifications). One firm will be a publicly-traded U.S. company which reports under GAAP and the other will be a foreign competitor, also publicly-traded, which reports under IFRS. 2. You are to briefly describe, in your own words and citing company literature where appropriate, the companies under consideration 3. The majority of the project is a complete ratio analysis of the two companies. You are to follow the format listed in our course textbook which is the first chapter of Subramanyan, Financial Statement Analysis. 4. For additional reference about the project, please consult the perfect student submission which can be found in Canvas.

5. You are to use the two most recent years of financial statements for your analysis.

6. You are to graph the common stock price for the years under consideration. Please appropriately label the source of your stock-price graph.

7. Finally, you are to answer the question, “Which company would be the better investment?” based upon your ratio analysis.

Tutor Answer

School: University of Virginia



Financial Statement Analysis
Institutional affiliations




Financial Statement Analysis

Company Overview
This analysis focuses on the fast moving consumer goods (FMCG) companies mainly Procter &
Gamble Co. (P&G) and Unilever Group.

Procter & Gamble Inc.
P&G is among the leading FMCG organizations globally. The company manufactures goods
across beauty, health, home care, baby, family, and personal care such as shampoos, blades,
toothbrushes, diapers, baby wipes and detergents. P&G’s common brands are Ariel, Pantene,
Pampers, Bounty, and Oral-B. It operates in the Americas, Europe, Asia Pacific, Middle East and
Africa. P&G is headquartered in Cincinnati, Ohio, US (Procter & Gamble SWOT Analysis,
2018). It is a publicly traded company that reports under GAAP.

Unilever Inc.
Unilever is among the largest FMCG firms in the world and one of the fierce P&G competitors.
It offers products across food, personal care, home care, and refreshments. It operates in the
Americas, Europe, the Middle East, and Africa. Unilver’s head office is based in London, UK
(Unilever SWOT Analysis, 2017). The company is foreign but trades publicly in the US stock
exchange; thus, it reports under IFRS.



Ratio Analysis of P&G
The financial analysis seeks to examine the companies’ financial positions and performance in
order to provide a systematic and effective value of the businesses. Based on the information
gathered, it will be less difficult to decide the organization that would make a better investment.
Subramanyam (2014) indicates that financial analysis focuses on three broad areas mainly
profitability analysis, risk analysis, and the analysis of sources and uses of funds.
All workings have been done in the Excel workbook attached.

Credit Risk Analysis
Risk is one of the biggest concerns to creditors, thus more often discussed as credit risk analysis.
According to Subramanyam (2014), credit analysis entails examining the creditworthiness of an
organization of honor its financial obligations. The primary purpose is to analyze the risk and
that means the liquidity and solvency of Unilever and P&G will be analyzed. Liquidity ratio
measures the ability to meet short term obligation and depends heavily on the organization’s cash
flows, current assets, and current liabilities. Solvency measures the ability of the firm to meet its
long-term obligations and this depends heavily on long-term profitability and capital structure
The current ratio is one of the most imperative liquidity ratios that measure the ability of the
current asset to satisfy the current liabilities. P&G’s current ratio for 2018 and 2017 was 0.826
and 0.877 respectively while Unilever recorded 0.783 and 0.733 within the two rears. What this
implies is P&G had 0.826 cents for every dollar of current asset in 2018, and 0.877 for every
dollar of current asse...

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Thanks, good work

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