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There are a number of reasons that attract investors to large cap companies such as The Procter & Gamble Company (NYSE: PG), with a market capitalization of US $ 196.14 billion.
One reason is its aura "too big for failure" which gives it the appearance of a solid and stable investment.
however,
its financial health remains the key to continued success.
I will provide an overview of Procter & Gamble's financial liquidity and leverage to give you an idea of Procter & Gamble's position to take advantage of potential acquisitions or comfortably withstand future declines.
Note that this information is entirely focused on financial health and is a high-level overview. I encourage you to look further.
in PG here.
Check out our latest badysis for Procter & Gamble
How does PG's operating cash flow compare to its debt?
In the last year, PG increased its debt from 30.41 billion US dollars to 35.30 billion US dollars.
– This includes both current debt and long-term debt.
With that
growth
indebted,
Current levels of cash and short-term investment are $ 15.53 billion.
to invest in the business.
Furthermore,
PG has
product
US $ 14.36 billion cash flow from operations
during the same period,
resulting in
a cash operating ratio on total debt of 40.67%,
which means that
PG
cash from operations is sufficient to cover its debt.
This ratio can also be a sign of operational efficiency
as an alternative to return on badets.
In the case of PG, it is able to generate 0.41 times the liquidity of its loan capital.
Can PG pay his short-term debts?
With a short-term liability of US $ 30.71 billion,
it seems that the company
has not maintained a sufficient level of short-term badets to meet its obligations, the current ratio having lastly established at 0.91 times, which is lower than the cautious ratio by sector of 3 times.
Is the level of PG debt acceptable?
PG is a relatively high leverage company with a debt ratio of 64.24%.
This is not unusual for large caps because debt tends to be cheaper than equity because interest payments are tax deductible.
As a result, large firms often have a lower cost of capital because of easy-to-obtain financing, which provides an advantage over small businesses.
No matter how much the company's debt, if it can easily cover interest payments, it is considered effective with its excessive leverage.
A company that generates profits after interest and taxes of at least three times its net interest payments is considered financially sound.
For PG, the ratio
of 59.96x suggests that the interest is
comfortably
covered.
High interest coverage is considered a responsible and safe practice, which highlights why most investors believe that large-cap companies such as PG are safe investments.
Next Steps:
Although the level of PG debt is up the ladder, its cash flow hedge seems sufficient to meet its obligations, which means that its debt is used efficiently.
Although
its lack of liquidity raises questions about current badet management practices for large caps.
Keep in mind that I have not considered other factors such as the performance of PG in the past.
I suggest you
continue to search Procter & Gamble for a
best picture
from the stock by looking at:
- Future Outlook : What are the well-informed industry badysts predicting the future growth of PG? Take a look at our free research report on the consensus of badysts for the prospects of PG
- Evaluation : What is the PG worth today? Is the stock undervalued, even if its growth prospects are taken into account in its intrinsic value? The infographic of intrinsic value in our free research report helps visualize if PG is currently misjudged by the market.
- Other high-performing stocks : Are there any other stocks offering better prospects with a proven track record? Explore our free list of these great actions here.
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