Question

Locate a publicly traded company’s most recent annual 10-K filing. You can use the EDGAR electronic data gathering, analysis, and retrieval system with the SEC to acquire those financials.

You must post your initial response to the discussion board by Wednesday at 11:59 p.m. In your initial post, answer the following questions related to the company’s property, plant, and equipment:

Name the different types of assets the company lists in its balance sheet under property, plant, and equipment.

How much cash was used for the acquisition of property, plant, and equipment during the year? How does this compare with purchases in previous years?

Compute the fixed-asset turnover ratio for the fiscal year. What is the ratio intended to measure?

Answer 1

The PROCTER and GAMBLE Company (June 30, 2018)

i) Property, plant and equipment includes

- Buildings

- Machinery and Equipments

- Land

- Construction in progress

ii) Cash used in acquisition of PP&E during the year is $3,717 millions.

In previous year $3,384 millions cash is used. Therefore, during the  

$ 333 millions is increase in cash usage which is 9.84% increase.

iii) Fixed asset turnover ratio = Net sales ÷ average net fixed asset

= 66,832 ÷ (20,600 + 19,893)/2

= 3.3

  Fixed Asset Turnover (FAT) is an efficiency ratio that indicates how well or efficiently the business uses fixed assets to generate sales. This ratio divides net sales by net fixed assets, over an annual period. The net fixed assets include the amount of property, plant, and equipment, less the accumulated depreciation. Generally, a higher fixed asset ratio implies more effective utilization of investments in fixed assets to generate revenue.