Procter & Gamble Co. (NYSE:PG)

The financial performance, as measured by economic profit, demonstrates a generally positive trend over the analyzed period. Net operating profit after taxes (NOPAT) exhibits consistent growth, while the cost of capital remains relatively stable. Invested capital fluctuates, but ultimately increases, contributing to the overall economic profit trajectory.

NOPAT Trend

Net operating profit after taxes shows a consistent upward trend, increasing from US$12,785 million in 2020 to US$16,618 million in 2025. The growth is not strictly linear, with a slight deceleration between 2022 and 2023, but the overall pattern indicates improving operational profitability.

Cost of Capital

The cost of capital experiences a gradual increase from 9.22% in 2020 to 9.57% in 2024, followed by a slight decrease to 9.46% in 2025. This suggests a moderate increase in the required rate of return for investments, with a minor adjustment in the most recent year. The changes are relatively small, indicating stable financing conditions.

Invested Capital

Invested capital initially decreases from US$101,100 million in 2020 to US$93,924 million in 2022, potentially reflecting divestitures or improved capital efficiency. However, it then begins to rise, reaching US$100,282 million in 2025. This suggests a renewed focus on investment and expansion in later periods.

Economic Profit

Economic profit, the primary indicator of value creation, generally increases over the period. It rises from US$3,460 million in 2020 to US$7,134 million in 2025. While there is a slight dip between 2022 and 2023, the overall trend is strongly positive, indicating that the company is generating returns exceeding its cost of capital. The largest increase in economic profit occurs between 2024 and 2025.

In summary, the analyzed financial information suggests a company that is consistently improving its operational performance and generating increasing economic profit. The stable cost of capital and eventual increase in invested capital further support a positive outlook for future value creation.

Net earnings attributable to Procter & Gamble (P&G)

The net earnings of the company demonstrated a consistent upward trend over the analyzed periods. Starting at 13,027 million US dollars in mid-2020, earnings increased steadily each year, reaching 15,974 million US dollars by mid-2025. The growth, although steady, showed minor fluctuations in the rate of increase, with a slightly slower increment between mid-2022 and mid-2023, followed by renewed acceleration towards the end of the period.

Net operating profit after taxes (NOPAT)

NOPAT exhibited a parallel pattern to net earnings, indicating effective operational management and stable profitability. It rose from 12,785 million US dollars in mid-2020 to 16,618 million US dollars in mid-2025. The increment was generally consistent, with a slight deceleration in growth between mid-2021 and mid-2022, before regaining momentum through to the final period. This trend suggests sustained operational efficiency and the capacity to enhance profitability over time.

Tax Expense

Over the period from June 30, 2020, to June 30, 2025, the tax expense exhibits an overall upward trend. Starting at 2,731 million USD in 2020, it increases to 3,263 million USD in 2021. A slight decline occurs in 2022 with 3,202 million USD, followed by a renewed increase to 3,615 million USD in 2023. The upward trajectory continues through 2024 and 2025, reaching 3,787 million USD and 4,102 million USD, respectively. This reflects an aggregate growth of approximately 50% over the six-year span.

Cash Operating Taxes

Cash operating taxes also show an upward movement initially but with some fluctuation. Beginning at 3,400 million USD in 2020, the figure rises steadily through to 2023, peaking at 4,168 million USD. However, subsequent years see a slight decline, with values of 4,135 million USD in 2024 and further reduction to 4,054 million USD in 2025. Despite this late decrease, cash operating taxes overall have increased by roughly 19% compared to the initial 2020 figure.

Comparative Insights

Both tax expense and cash operating taxes show general increases across the analyzed timeframe, indicating a growing tax burden in absolute terms. The tax expense growth is more consistent and robust, whereas cash operating taxes peak earlier and then slightly decline. The divergence in the last two years could suggest changes in tax payment timing, cash management strategies, or variations in tax structures impacting cash taxes differently than accrued tax expenses.

Total Reported Debt & Leases

The total reported debt and leases showed a general decline from 35,611 million USD in mid-2020 to 32,293 million USD by mid-2022. However, this downward trend reversed slightly, with debt levels rising again to 35,424 million USD by mid-2023, followed by a moderate decrease in mid-2024 to 33,369 million USD, before increasing once more to 35,464 million USD by mid-2025. This pattern indicates fluctuations in debt levels, with no clear long-term reduction or increase over the six-year period.

Shareholders’ Equity Attributable to Procter & Gamble

Shareholders’ equity remained relatively stable between mid-2020 and mid-2023, fluctuating marginally between approximately 46,378 million USD and 46,777 million USD. From mid-2023 onward, equity showed a notable upward trend, rising to 50,287 million USD by mid-2024 and further to 52,012 million USD by mid-2025. This growth suggests an improvement in the company's net asset base and potential enhancement in shareholder value in recent years.

Invested Capital

Invested capital declined from 101,100 million USD in mid-2020 to 93,924 million USD by mid-2022, reflecting a reduction in the total funds employed in operations. After this trough, invested capital began to increase again, reaching 96,550 million USD in mid-2023 and continuing to rise steadily to 100,282 million USD by mid-2025. This trend implies a recovery in capital investment levels, trending toward the original 2020 amounts.

Overall Insights

The data reveals a cyclical pattern in key financial metrics over the six-year timeframe. Debt levels experienced a decrease followed by a rebound, while shareholders’ equity showed stability initially and then increased significantly in the later years. Invested capital decreased initially but reversed to a recovery path toward previous levels. Together, these trends indicate a period of financial adjustment followed by stabilization and growth in equity and capital investment, with debt management remaining somewhat variable.

The economic spread ratio demonstrates a generally positive trend over the observed period. Economic profit also exhibits an upward trajectory, though with some fluctuation. Invested capital shows a moderate decrease initially, followed by a period of stabilization and then growth.

Economic Spread Ratio

The economic spread ratio increased from 3.42% in 2020 to 5.71% in 2021, representing a substantial improvement. Further growth was observed in 2022, reaching 6.12%. A slight decrease to 5.72% occurred in 2023, but the ratio continued to climb to 5.90% in 2024. The most significant increase occurred between 2024 and 2025, with the ratio reaching 7.11%. This indicates an increasing ability to generate returns above the cost of capital.

Economic Profit

Economic profit increased significantly from US$3,460 million in 2020 to US$5,430 million in 2021. Growth continued, albeit at a slower pace, reaching US$5,751 million in 2022. A minor decline to US$5,525 million was noted in 2023, followed by a recovery to US$5,765 million in 2024. The largest absolute increase in economic profit occurred between 2024 and 2025, with a final value of US$7,134 million. This suggests improving profitability relative to the capital employed.

Invested Capital

Invested capital decreased from US$101,100 million in 2020 to US$95,095 million in 2021. A further decrease was observed in 2022, reaching US$93,924 million. However, from 2022 to 2023, invested capital increased to US$96,550 million. This upward trend continued, with values of US$97,641 million in 2024 and US$100,282 million in 2025. The increase in invested capital in the later years, coupled with the rising economic profit, supports the improved economic spread ratio.

Overall, the observed trends suggest a strengthening financial performance. The increasing economic spread ratio, driven by growth in economic profit and a stabilization/increase in invested capital, indicates improved value creation.

The economic profit margin demonstrates a generally positive trajectory over the observed period, though with some fluctuation. Initial values show growth followed by a slight contraction, ultimately culminating in a strong increase in the most recent year.

Economic Profit

Economic profit exhibits an increasing trend overall, rising from US$3,460 million in 2020 to US$7,134 million in 2025. The most significant increase occurred between 2020 and 2021, followed by a more moderate growth rate between 2021 and 2022. A slight decrease is noted between 2022 and 2023, before resuming growth through 2025.

Net Sales

Net sales consistently increased throughout the period, moving from US$70,950 million in 2020 to US$84,284 million in 2025. The rate of increase appears relatively stable, with a slight deceleration between 2023 and 2024.

Economic Profit Margin

The economic profit margin began at 4.88% in 2020 and increased to 7.13% in 2021, representing substantial improvement. It peaked at 7.17% in 2022 before declining to 6.74% in 2023. The margin then recovered to 6.86% in 2024 and experienced a notable increase to 8.46% in 2025, reaching its highest point in the observed timeframe. This suggests an improved ability to generate profit relative to sales in the latest year.

The correlation between increasing net sales and economic profit suggests effective operational performance. The fluctuation in the economic profit margin, despite consistent sales growth, indicates that factors beyond revenue, such as cost of capital or operational expenses, are influencing profitability. The substantial margin improvement in 2025 warrants further investigation to determine the underlying drivers.