Answers To Assignment 2 1 
List of Assignments-Week 2
Be Sure to submit these assignments by 09/27/2014 on BlackBoard, under “Assignment-Week 2. Answers must be labeled properly, with all pertinent information. No late submissions will be accepted.
Assignment-1
The Procter & Gamble Company (P&G)
The financial statements of P&G are Posted in BlackBoard, under “Handouts”
Instructions
Refer to P&G's financial statements and the accompanying notes to answer the following questions.
(a)
What type of income statement format does P&G use? Indicate why this format might be used to present income statement information.
(b)
What are P&G's primary revenue sources?
(c)
Compute P&G's gross profit for each of the years 2009-2011. Explain why gross profit decreased in 2011.
(d)
Why does P&G make a distinction between operating and nonoperating revenue?
(e)
What financial ratios did P&G choose to report in its “Financial Summary” section covering the years 2001-2011?
Answer:
(a) P&G uses the multiple-step income statement because it separates operating from nonoperating activities. A multiple-step income statement is used to recognize additional relationships related to revenues and expenses. P&G recognizes a separation of operating transactions from nonoperating transactions. As a result, trends in income from continuing operations should be easier to understand and analyze. Disclosure of operating income may assist in comparing different companies and assessing operating efficiencies.
(b) P&G operates in the consumer products market. The company separates its operations into six global segments: (sales by segment)
Fabric and Home Care, 30% Beauty, 24% Baby and Family Care, 19% Health Care, 14% Snacks and Pet Care, 4% Grooming, 9%
(c) P&G’s gross profit (Net Sales – Cost of Products Sold) was $41,791 million in 2011, $41,019 million in 2010, and $38,004 million in 2009. P&G’s gross profit
Be Sure to submit these assignments by 09/27/2014 on BlackBoard, under “Assignment-Week 2. Answers must be labeled properly, with all pertinent information. No late submissions will be accepted.
Assignment-1
The Procter & Gamble Company (P&G)
The financial statements of P&G are Posted in BlackBoard, under “Handouts”
Instructions
Refer to P&G's financial statements and the accompanying notes to answer the following questions.
(a)
What type of income statement format does P&G use? Indicate why this format might be used to present income statement information.
(b)
What are P&G's primary revenue sources?
(c)
Compute P&G's gross profit for each of the years 2009-2011. Explain why gross profit decreased in 2011.
(d)
Why does P&G make a distinction between operating and nonoperating revenue?
(e)
What financial ratios did P&G choose to report in its “Financial Summary” section covering the years 2001-2011?
Answer:
(a) P&G uses the multiple-step income statement because it separates operating from nonoperating activities. A multiple-step income statement is used to recognize additional relationships related to revenues and expenses. P&G recognizes a separation of operating transactions from nonoperating transactions. As a result, trends in income from continuing operations should be easier to understand and analyze. Disclosure of operating income may assist in comparing different companies and assessing operating efficiencies.
(b) P&G operates in the consumer products market. The company separates its operations into six global segments: (sales by segment)
Fabric and Home Care, 30% Beauty, 24% Baby and Family Care, 19% Health Care, 14% Snacks and Pet Care, 4% Grooming, 9%
(c) P&G’s gross profit (Net Sales – Cost of Products Sold) was $41,791 million in 2011, $41,019 million in 2010, and $38,004 million in 2009. P&G’s gross profit