Financial analysis for The Proctor and Gamble Company
The company’s liabilities, both long term, and short term include a long-term debt, which has been reducing over the years. As at 2010, the debt stood at 21,360 dollars, which reduced to 18,329 dollars in the financial year 2015. The short-term liabilities can be said to be the operation costs that the company put into its daily operations. These costs have remained constant over the years. The variance in operation costs including advertising, research and development as well as capital expenditures was less than a thousand dollars either reducing or increasing slightly in each financial year sec.gov, 2015).
The debt level is maintained at a manageable level. To manage emergencies, the company looks at expected cash flows. It also results into short-term borrowings. For instance, the company’s liquidity level for the financial year 2015 report saw the current liabilities exceed the current assets by about 144 million dollars. This situation would be handled through generating cash from operations (sec.gov, 2015).
Communication of the company’s financial position is open. It is aimed at achieving objectivity, accuracy, and transparency. The management maintains strong internal controls. The companies financial is communicated to its employees who committed the company’s purpose. This enables the company to deal with any emergencies effectively (sec.gov, 2015).
The company runs a stock-based compensation, which is in three ways, namely, restricted stock, restricted stock unit and performance stock unit. These stocks are granted annually. The performance stock unit is granted to managers and directors who are significant to the company. The prices are set according to the market price of the shares on the date they are granted. In the year 2014, the company issued stocks amounting to 185 million in common stock. In the year 2015, a total of 223 dollars was paid as compensation to common stockholders. This was a slight drop from the year 2014, which was 246 dollars. It should be noted that the issuance of stocks to managers and directors is based on the decision of the shareholders (sec.gov, 2015).
The accumulated other comprehensive income or loss for three years showed a rise in 2014 from 2013 financial years which dropped in the year 2015. On hedges, there was a rise from 3,529 dollars in 2013 to 3,876 dollars in 2014, which dropped to 2,642 dollars in 2015. The investment securities dropped from 27 in 2013 to 18 in 2014 and then dropped to six in 2015. Pension and retirees benefits stood at 4296 dollars in 2013, 5165 dollars in 2014 and dropped to 4321 dollars in 2015 (sec.gov, 2015).
The company has disclosed the investment in securities. It has investments in companies where it does not have direct control over the financial and operating decisions. There are other investments that the company does not have influence over and these are clearly disclosed in the company’s financial reports. If any information remains unreported, it is more a result of generalization rather than the issue of materiality. The company maintains a transparent reporting of its financial status to the stakeholders (sec.gov, 2015).
On revenue recognition, sales are recognized when revenue has been earned revenue is presented as net of sales and the taxes the company collects on behalf of the government. This revenue is inclusive of shipping and handling costs are included in the customer’s list price. Revenue records include sales from overseas subsidiaries of the company (sec.gov, 2015).
The company makes projected cash flows for every financial year. These are used to estimate the cash requirements. The estimated cash flow for the half period ending June 30th 2016 for the retirement plans and other retiree benefits was 215 dollars and 34 dollars respectively. The cash flow takes into consideration other cash requirements such as stock ownership plans. Records are before and after taxes.
The computation of tax is done to take into consideration uncertainty in tax positions, which bring about changes in liability (PG, 2016). These computations also take into account the effects that are brought about by foreign subsidiaries due to the statutory rates of the United States and other rates apart from those of the United States. Tax computation charged to shareholders equity, for instance, amounted to 634 dollars for the year ending June 2015. The tax benefits to shareholders amounted to 716 dollars for the year 2014 (sec.gov, 2015).
Proctor and Gamble financial records are done in the most transparent way. Shareholders have many benefits and get disclosures of all the financial records they need including those from foreign subsidiaries. Tax computation is done to take into account statutory laws of the United States as well as those of other countries where the subsidiaries are located. The company also invests in securities in companies where it has influence over though not having financial control as well as those companies the company does not have influence over. These financial records are disclosed to the shareholders of the company in a transparent manner (PG, 2016).