Procter & Gamble Company (PG)

Activity ratios

Short-term

Turnover ratios

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Inventory turnover	9.48	9.12	9.09	9.82	10.26
Receivables turnover	13.74	14.99	15.59	16.11	16.98
Payables turnover	4.33	4.42	4.23	4.28	4.67
Working capital turnover	—	—	—	—	—

Procter & Gamble Company's activity ratios exhibit some noteworthy trends over the past five years.

1. Inventory turnover has remained relatively stable, fluctuating between 9.09 and 10.26. This ratio indicates the efficiency with which the company manages its inventory levels, with a higher ratio generally being more favorable. The consistent levels suggest that P&G has a structured approach to managing its inventory turnover.

2. Receivables turnover has shown a gradual decline over the years, from 16.98 in 2020 to 13.74 in 2024. A decreasing ratio could indicate that P&G is taking longer to collect payments from its customers, which may impact its cash flow and working capital management.

3. Payables turnover has also experienced a slight decrease, from 4.67 in 2020 to 4.33 in 2024. This ratio reflects how quickly the company pays its suppliers. A lower ratio may imply that P&G is taking longer to settle its payables, which could potentially strain its supplier relationships.

4. Unfortunately, the working capital turnover ratio data is missing for all the years provided. This ratio is used to assess how efficiently the company is utilizing its working capital to generate sales and is a key indicator of operational efficiency. The absence of this data limits the comprehensive analysis of P&G's overall activity ratios.

In conclusion, while P&G maintains a strong inventory turnover, the declining trends in receivables turnover and payables turnover raise some concerns about the company's accounts receivable and accounts payable management. Further insights could be gained by examining the working capital turnover ratio to evaluate the overall effectiveness of P&G's working capital management.

Average number of days

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	38.51	40.01	40.15	37.15	35.59
Days of sales outstanding (DSO)	days	26.57	24.35	23.41	22.66	21.49
Number of days of payables	days	84.34	82.57	86.30	85.20	78.14

Procter & Gamble Company's activity ratios provide valuable insights into the efficiency of its operations and management of working capital.

1. Days of Inventory on Hand (DOH): The trend in DOH over the past five years shows that Procter & Gamble has been able to slightly decrease the number of days it holds inventory on hand. This indicates that the company has been managing its inventory levels effectively, possibly through better inventory control and demand forecasting.

2. Days of Sales Outstanding (DSO): The DSO ratio has been increasing steadily over the years, implying that Procter & Gamble is taking longer to collect payments from its customers. This trend could be a red flag, signaling potential issues with credit policies or the collection process that may need to be addressed to improve cash flow.

3. Number of Days of Payables: Procter & Gamble's payables period has been fluctuating over the years but is generally within a reasonable range. The increase in payables days can indicate that the company is taking longer to pay its suppliers, which could be a deliberate strategy to preserve cash or negotiate more favorable payment terms.

In summary, while Procter & Gamble has been effectively managing its inventory levels, there may be room for improvement in its accounts receivable management to shorten the collection period and maintain healthy relationships with suppliers to avoid any liquidity issues.

Long-term

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Fixed asset turnover	3.79	3.74	3.78	3.51	3.43
Total asset turnover	0.69	0.68	0.68	0.64	0.59

The long-term activity ratios of Procter & Gamble Company indicate how efficiently the company is utilizing its assets to generate sales. The fixed asset turnover has been relatively stable over the past five years, ranging between 3.43 and 3.79. This ratio measures how effectively the company is using its fixed assets to generate sales, and the upward trend indicates improved efficiency in utilizing these assets.

On the other hand, the total asset turnover ratio, which measures the company's ability to generate sales from all assets, has also shown a positive trend over the years, increasing from 0.59 in 2020 to 0.69 in 2024. This suggests that Procter & Gamble is becoming more efficient in generating sales revenue relative to its total assets.

Overall, both the fixed asset turnover and total asset turnover ratios indicate an improvement in Procter & Gamble's long-term asset utilization efficiency over the years, reflecting positively on the company's operational performance and resource management.