leverage Ratios

Proctor Gamble Leverage Ratios- An analysis

Proctor Gamble Leverage Ratios- An analysis

Author

Author Affiliation

Abstract

This research essay analyses the Proctor and Gamble leverage ratios for the past three financial years and compare the same with that of industry average

Proctor Gamble Leverage Ratios- An analysis

Analysis

Proctor and Gamble is one of the American multinational companies which manufactures and sells a broad variety of consumer goods and is a Fortune 500 company . Its during 2008 .

G net earning during 2008 is 12075 millions

Table

1-

G Leverage Ratios- Debt to Equity

Ratio Year ending

30 /6 /2008 Year ending

30 /6 /2007 Year ending

30 /6 /2006 Industry

Average Debt to Equity

0 .36

0 .39

0 .60 0 .75 Protector and Gamble leverage ratios are strong . Long -term debts and cautious in borrowing . A wise financial management is to trade on leveraging . Normally , a debt -equity ratio is allowed up to 1 . Thus , a company can avail loan up to 100 of its equity to fund its expansion diversification or working capital . Expansion , diversification and acquisition helps to improve the profitability The

G should think of expanding or acquiring new business to improve its profitability and to increase its market share

Since ,

G is having strong debt -equity ratio , it can further trade on leverage by borrowing more funds to fund...