Refer to P&G's financial statements and the accompanying notes to answer the following questions. (a) What alternative formats could P&G have adopted for its balance sheet? Which format did it adopt? (b) Identify the various techniques of disclosure P&G might have used to disclose additional pertinent financial information. Which technique does it use in its financials? (c) In what classifications are P&G's investments reported? What valuation basis does P&G use to report its investments? How much working capital did P&G have on June 30, 2007? On June 30, 2006? (d) What were P&G's cash flows from its operating, investing, and financing activities for 2007? What were its trends in net cash ...view middle of the document...
As of June 30, 2007, P&G had negative working capital (current assets less than current liabilities) of $6,686,000,000. At June 30, 2006, P&G’s positive working capital was $4,344,000,000.
(d) The following table summarizes P&G’s cash flows from operating, investing, and financing activities in the 2005–2007 time period
| | 2007 | 2006 | 2005 |
|Net cash provided by operating activities |$ 13,435 |$11,375 |$ 8,679 |
|Net cash used in investing activities |(2,483) |(730) |(2,336) |
|Net cash used in financing activities |(12,478) |(10,578) |(4,125) |
P&G’s net cash provided by operating activities increased by 31% from 2005 to 2006, and by 18% from 2006 to 2007. When accounts payable, accrued and other liabilities increase, cost of goods sold and operating expenses are higher on an accrued basis than they are on a cash basis. To convert to net cash provided by operating activities, the increase in accounts payable, accrued and other liabilities must be added to net income.
(e) 1. Net Cash Provided by Operating Activities ÷ Average Current Liabilities = Current Cash Debt Ratio
| |($30,717 + $19,985) | |
|$13,435 ÷ | |=...