Procter & Gamble Company (PG)
Solvency ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.21 | 0.20 | 0.19 | 0.19 | 0.20 |
| Debt-to-capital ratio | 0.33 | 0.34 | 0.33 | 0.33 | 0.33 |
| Debt-to-equity ratio | 0.50 | 0.52 | 0.49 | 0.50 | 0.50 |
| Financial leverage ratio | 2.42 | 2.57 | 2.50 | 2.56 | 2.57 |
Solvency ratios provide valuable insights into a company's ability to meet its long-term financial obligations. Procter & Gamble Company's solvency ratios over the last five years demonstrate a consistent and stable financial position.
The debt-to-assets ratio has remained relatively stable, hovering around 0.20, indicating that a significant portion of the company's assets are funded by debt. This suggests that Procter & Gamble has a conservative level of debt relative to its total assets.
The debt-to-capital ratio, which measures the proportion of a company's capital that is financed through debt, has also remained relatively steady at around 0.33. This suggests that Procter & Gamble maintains a balanced capital structure with a moderate reliance on debt financing.
The debt-to-equity ratio has shown a slight variation over the years but has largely remained consistent around 0.50. This ratio indicates that the company's shareholders' equity covers half of its total debt, reflecting a healthy mix of debt and equity in its capital structure.
The financial leverage ratio, which measures the extent to which a company is using debt to finance its operations, has shown a decreasing trend over the years, indicating a reduction in financial risk. The ratio of 2.42 as of June 30, 2024, suggests that Procter & Gamble's assets are financed more by equity than debt.
Overall, Procter & Gamble's solvency ratios paint a picture of a financially stable company with a conservative approach to debt management and a well-balanced capital structure. These favorable solvency indicators suggest that the company is well-equipped to meet its long-term financial obligations and sustain its operations effectively.
Coverage ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 20.05 | 25.16 | 41.87 | 36.00 | 34.89 |
Procter & Gamble Company's interest coverage has shown a decreasing trend over the past five years, indicating a potential deterioration in its ability to service interest payments from operating income. The interest coverage ratio has declined from 41.87 in 2022 to 20.05 in 2024.
Despite the decreasing trend, the company's interest coverage ratio remains above 1, which indicates that Procter & Gamble's operating income is still more than sufficient to cover its interest obligations. However, investors and creditors may be concerned about the decreasing trend, as a lower interest coverage ratio could indicate increased financial risk and potential difficulties in meeting future interest payments.
It is important for Procter & Gamble to closely monitor its interest coverage ratio and take necessary steps to improve it, such as increasing operating income or reducing debt levels, to ensure its long-term financial stability and solvency.