Stock Analysis on Net

Procter & Gamble Co. (NYSE:PG)

Analysis of Operating Leases

Microsoft Excel

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Adjustments to Financial Statements for Operating Leases

Procter & Gamble Co., adjustments to financial statements

US$ in millions

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
Adjustment to Total Assets
Total assets (as reported) 122,370 120,829 117,208 119,307 120,700 115,095
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 1,143
Total assets (adjusted) 122,370 120,829 117,208 119,307 120,700 116,238
Adjustment to Total Debt
Total debt (as reported) 32,460 34,607 31,493 31,988 34,720 30,092
Add: Operating lease liability (before adoption of FASB Topic 842)2 1,143
Add: Current operating lease liabilities 243 222 205 219 239
Add: Noncurrent operating lease liabilities 666 595 595 631 652
Total debt (adjusted) 33,369 35,424 32,293 32,838 35,611 31,235

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

1, 2 Equal to total present value of future operating lease payments.


Procter & Gamble Co., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Procter & Gamble Co., adjusted financial ratios

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
Total Asset Turnover1
Reported total asset turnover 0.69 0.68 0.68 0.64 0.59 0.59
Adjusted total asset turnover 0.69 0.68 0.68 0.64 0.59 0.58
Debt to Equity2
Reported debt to equity 0.65 0.74 0.68 0.69 0.75 0.64
Adjusted debt to equity 0.66 0.76 0.69 0.71 0.77 0.66
Return on Assets3 (ROA)
Reported ROA 12.16% 12.13% 12.58% 11.99% 10.79% 3.39%
Adjusted ROA 12.16% 12.13% 12.58% 11.99% 10.79% 3.35%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Procter & Gamble Co. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Procter & Gamble Co. adjusted debt to equity ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Procter & Gamble Co. adjusted ROA deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Procter & Gamble Co., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Net sales 84,039 82,006 80,187 76,118 70,950 67,684
Total assets 122,370 120,829 117,208 119,307 120,700 115,095
Activity Ratio
Total asset turnover1 0.69 0.68 0.68 0.64 0.59 0.59
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net sales 84,039 82,006 80,187 76,118 70,950 67,684
Adjusted total assets 122,370 120,829 117,208 119,307 120,700 116,238
Activity Ratio
Adjusted total asset turnover2 0.69 0.68 0.68 0.64 0.59 0.58

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 84,039 ÷ 122,370 = 0.69

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 84,039 ÷ 122,370 = 0.69

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Procter & Gamble Co. adjusted total asset turnover ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

Adjusted Debt to Equity

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Total debt 32,460 34,607 31,493 31,988 34,720 30,092
Shareholders’ equity attributable to Procter & Gamble 50,287 46,777 46,589 46,378 46,521 47,194
Solvency Ratio
Debt to equity1 0.65 0.74 0.68 0.69 0.75 0.64
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 33,369 35,424 32,293 32,838 35,611 31,235
Shareholders’ equity attributable to Procter & Gamble 50,287 46,777 46,589 46,378 46,521 47,194
Solvency Ratio
Adjusted debt to equity2 0.66 0.76 0.69 0.71 0.77 0.66

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

1 Debt to equity = Total debt ÷ Shareholders’ equity attributable to Procter & Gamble
= 32,460 ÷ 50,287 = 0.65

2 Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity attributable to Procter & Gamble
= 33,369 ÷ 50,287 = 0.66

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Procter & Gamble Co. adjusted debt-to-equity ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

Adjusted Return on Assets (ROA)

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Procter & Gamble (P&G) 14,879 14,653 14,742 14,306 13,027 3,897
Total assets 122,370 120,829 117,208 119,307 120,700 115,095
Profitability Ratio
ROA1 12.16% 12.13% 12.58% 11.99% 10.79% 3.39%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net earnings attributable to Procter & Gamble (P&G) 14,879 14,653 14,742 14,306 13,027 3,897
Adjusted total assets 122,370 120,829 117,208 119,307 120,700 116,238
Profitability Ratio
Adjusted ROA2 12.16% 12.13% 12.58% 11.99% 10.79% 3.35%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

1 ROA = 100 × Net earnings attributable to Procter & Gamble (P&G) ÷ Total assets
= 100 × 14,879 ÷ 122,370 = 12.16%

2 Adjusted ROA = 100 × Net earnings attributable to Procter & Gamble (P&G) ÷ Adjusted total assets
= 100 × 14,879 ÷ 122,370 = 12.16%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Procter & Gamble Co. adjusted ROA deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.