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Term project.pdf

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Answered Same Day Nov 22, 2021

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Preeta answered on Dec 04 2021

156 Votes

The annual report of Procter & Gamble for the year 2019 and 2020 has been analysed to check the ratios of the company and to draw inferences from those ratios.
Liquidity ratios:
These ratios check the ability of the company to pay off its short-term obligations (Chiaramonte and Casu 2017).
· Cu
ent ratio – This ratio shows if the company will be able to pay off its liabilities and debts in the next twelve months. The cu
ent ratio of the company has been presented below.

    Cu
ent ratio
    2019
    0.85
    2020
    0.75
The ideal cu
ent ratio should be 2 and clearly the ratios of the company are much below the required level and the company should try to improve it.
· Quick ratio – This ratio checks if the company will be able to pay off its cu
ent obligations just at the moment with the marketable assets. The cu
ent ratio of the company has been presented below.

    Quick ratio
    2019
    0.68
    2020
    0.58
The ideal cu
ent ratio should be 1 and clearly the ratios of the company are much below the required level and the company should try to improve it.
The overall analysis revealed that the liquidity position of the company is not satisfactory.
Activity ratios:
These ratios check if the company is conducting its operations efficiently (Bitar, Pukthuanthong and Walker 2018).
· Inventory Turnover – This ratio shows how efficiently the company is managing its inventory and if the required level is being maintained since neither overstocking nor understocking is beneficial for the company. The inventory turnover ratio of the company has been presented below.

    Inventory Turnove
    2019
    6.70
    2020
    7.13
The ratios reveal that the company has good inventory policy and so the ratio is good.
· Receivable Turnover – This ratio shows if the credit policy of the company is efficient and...

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