Proctor & Gamble (PG) and Church & Dwight (CHD) are two iconic American consumer products companies with histories dating back to the mid-1800s and producing familiar products such as Tide, Bounty, Crest, Arm and Hammer, OxiClean, and Waterpik. Both companies primarily sell their products to retailers such as grocery stores, drug stores and other mass merchants In evaluating the two companies, it was determined that PG is approximately 15 times larger than CHD based on sales. A convenient way to analyze financial results when companies are of different sizes is through ratio analysis. Obtain the financial statements of PG for the year ended June 30, 2021, and CHD for the year ended December 31, 2021, and compute the following ratios for both companies. 1. Gross Profit % for 2021 and gross profit 2020 2. Income from operations (operating income) as a % of net sales for 2021 and for 2020. 3. Current ratio for 2021 and 2020 See following information for CHG company CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data) Year Ended December 31, 2021 2020 2019 Net Sales $ 5,190.1 $ 4,895.8 $ 4,357.7 Cost of sales 2,926.6 2,681.6 2,373.7 Gross Profit 2,263.5 2,214.2 1,984.0 Marketing expenses 577.7 591.2 515.0 Selling, general and administrative expenses 606.7 593.3 628.8 Income from Operations 1,079.1 1,029.7 840.2 Equity in earnings of affiliates 9.4 6.7 6.6 Investment earnings 0.0 0.5 1.6 Other income (expense), net (2.3 ) (2.1 ) (1.1 ) Interest expense (54.5 ) (61.0 ) (73.6 ) Income before Income Taxes 1,031.7 973.8 773.7 Income taxes 204.2 187.9 157.8 Net Income $ 827.5 $ 785.9 $ 615.9 Weighted average shares outstanding - Basic 244.9 246.8 246.2 Weighted average shares outstanding - Diluted 249.6 252.2 252.1 Net income per share - Basic $ 3.38 $ 3.18 $ 2.50 Net income per share - Diluted $ 3.32 $ 3.12 $ 2.44 Cash dividends per share $ 1.01 $ 0.96 $ 0.91 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2021 2020 2019 Net Income $ 827.5 $ 785.9 $ 615.9 Other comprehensive income, net of tax: Foreign exchange translation adjustments (3.8 ) 10.4 5.7 Defined benefit plan loss (0.6 ) 0.0 (0.9 ) Income (loss) from derivative agreements 13.8 (21.3 ) (17.9 ) Other comprehensive income (loss) 9.4 (10.9 ) (13.1 ) Comprehensive income $ 836.9 $ 775.0 $ 602.8 See Notes to Consolidated Financial Statements. 51 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except share and per share data) December 31, December 31, 2021 2020 Assets Current Assets Cash and cash equivalents $ 240.6 $ 183.1 Accounts receivable, less allowances of $5.5 and $3.7 405.5 398.8 Inventories 535.4 495.4 Other current assets 51.9 35.1 Total Current Assets 1,233.4 1,112.4 Property, Plant and Equipment, Net 652.7 612.8 Equity Investment in Affiliates 9.1 9.1 Trade Names and Other Intangibles, Net 3,494.3 3,110.2 Goodwill 2,274.5 2,229.6 Other Assets 332.5 340.4 Total Assets $ 7,996.5 $ 7,414.5 Liabilities and Stockholders' Equity Current Liabilities Short-term borrowings $ 252.8 $ 351.4 Current portion of long-term debt 699.4 0.0 Accounts payable and accrued expenses 1,119.7 1,024.5 Income taxes payable 3.3 12.7 Total Current Liabilities 2,075.2 1,388.6 Long-term Debt 1,610.7 1,812.5 Deferred Income Taxes 745.1 707.3 Deferred and Other Long-term Liabilities 298.3 367.7 Business Acquisition Liabilities 34.0 118.0 Total Liabilities 4,763.3 4,394.1 Commitments and Contingencies Stockholders' Equity Preferred Stock, $1.00 par value, Authorized 2,500,000 shares; none issued 0.0 0.0 Common Stock, $1.00 par value, Authorized 600,000,000 shares; 292,855,100 shares issued as of December 31, 2021 and 2020 292.8 292.8 Additional paid-in capital 310.3 274.4 Retained earnings 5,366.0 4,786.0 Accumulated other comprehensive loss (68.2 ) (77.6 ) Common stock in treasury, at cost: 50,309,124 shares as of December 31, 2021 and 47,494,982 shares as of December 31, 2020 (2,667.7 ) (2,255.2 ) Total Stockholders' Equity 3,233.2 3,020.4 Total Liabilities and Stockholders’ Equity $ 7,996.5 $ 7,414.5 See Notes to Consolidated Financial Statements.
Proctor & Gamble (PG) and Church & Dwight (CHD) are two iconic American consumer products companies with histories dating back to the mid-1800s and producing familiar products such as Tide, Bounty, Crest, Arm and Hammer, OxiClean, and Waterpik. Both companies primarily sell their products to retailers such as grocery stores, drug stores and other mass merchants In evaluating the two companies, it was determined that PG is approximately 15 times larger than CHD based on sales. A convenient way to analyze financial results when companies are of different sizes is through ratio analysis.
Obtain the financial statements of PG for the year ended June 30, 2021, and CHD for the year ended December 31, 2021, and compute the following ratios for both companies.
1. Gross Profit % for 2021 and gross profit 2020
2. Income from operations (operating income) as a % of net sales for 2021 and for 2020.
3.
See following information for CHG company
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
|
|
Year Ended December 31, |
|
|||||||||
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|||
|
Net Sales |
$ |
5,190.1 |
|
|
$ |
4,895.8 |
|
|
$ |
4,357.7 |
|
|
Cost of sales |
|
2,926.6 |
|
|
|
2,681.6 |
|
|
|
2,373.7 |
|
|
Gross Profit |
|
2,263.5 |
|
|
|
2,214.2 |
|
|
|
1,984.0 |
|
|
Marketing expenses |
|
577.7 |
|
|
|
591.2 |
|
|
|
515.0 |
|
|
Selling, general and administrative expenses |
|
606.7 |
|
|
|
593.3 |
|
|
|
628.8 |
|
|
Income from Operations |
|
1,079.1 |
|
|
|
1,029.7 |
|
|
|
840.2 |
|
|
Equity in earnings of affiliates |
|
9.4 |
|
|
|
6.7 |
|
|
|
6.6 |
|
|
Investment earnings |
|
0.0 |
|
|
|
0.5 |
|
|
|
1.6 |
|
|
Other income (expense), net |
|
(2.3 |
) |
|
|
(2.1 |
) |
|
|
(1.1 |
) |
|
Interest expense |
|
(54.5 |
) |
|
|
(61.0 |
) |
|
|
(73.6 |
) |
|
Income before Income Taxes |
|
1,031.7 |
|
|
|
973.8 |
|
|
|
773.7 |
|
|
Income taxes |
|
204.2 |
|
|
|
187.9 |
|
|
|
157.8 |
|
|
Net Income |
$ |
827.5 |
|
|
$ |
785.9 |
|
|
$ |
615.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Basic |
|
244.9 |
|
|
|
246.8 |
|
|
|
246.2 |
|
|
Weighted average shares outstanding - Diluted |
|
249.6 |
|
|
|
252.2 |
|
|
|
252.1 |
|
|
Net income per share - Basic |
$ |
3.38 |
|
|
$ |
3.18 |
|
|
$ |
2.50 |
|
|
Net income per share - Diluted |
$ |
3.32 |
|
|
$ |
3.12 |
|
|
$ |
2.44 |
|
|
Cash dividends per share |
$ |
1.01 |
|
|
$ |
0.96 |
|
|
$ |
0.91 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
|
|
Year Ended December 31, |
|
|||||||||
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|||
|
Net Income |
$ |
827.5 |
|
|
$ |
785.9 |
|
|
$ |
615.9 |
|
|
Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation adjustments |
|
(3.8 |
) |
|
|
10.4 |
|
|
|
5.7 |
|
|
Defined benefit plan loss |
|
(0.6 |
) |
|
0.0 |
|
|
|
(0.9 |
) |
|
|
Income (loss) from derivative agreements |
|
13.8 |
|
|
|
(21.3 |
) |
|
|
(17.9 |
) |
|
Other comprehensive income (loss) |
|
9.4 |
|
|
|
(10.9 |
) |
|
|
(13.1 |
) |
|
Comprehensive income |
$ |
836.9 |
|
|
$ |
775.0 |
|
|
$ |
602.8 |
|
See Notes to Consolidated Financial Statements.
51
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED
(In millions, except share and per share data)
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2021 |
|
|
2020 |
|
||
|
Assets |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
240.6 |
|
|
$ |
183.1 |
|
|
|
|
405.5 |
|
|
|
398.8 |
|
|
Inventories |
|
535.4 |
|
|
|
495.4 |
|
|
Other current assets |
|
51.9 |
|
|
|
35.1 |
|
|
Total Current Assets |
|
1,233.4 |
|
|
|
1,112.4 |
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment, Net |
|
652.7 |
|
|
|
612.8 |
|
|
Equity Investment in Affiliates |
|
9.1 |
|
|
|
9.1 |
|
|
Trade Names and Other Intangibles, Net |
|
3,494.3 |
|
|
|
3,110.2 |
|
|
|
|
2,274.5 |
|
|
|
2,229.6 |
|
|
Other Assets |
|
332.5 |
|
|
|
340.4 |
|
|
Total Assets |
$ |
7,996.5 |
|
|
$ |
7,414.5 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Short-term borrowings |
$ |
252.8 |
|
|
$ |
351.4 |
|
|
Current portion of long-term debt |
|
699.4 |
|
|
|
0.0 |
|
|
Accounts payable and accrued expenses |
|
1,119.7 |
|
|
|
1,024.5 |
|
|
Income taxes payable |
|
3.3 |
|
|
|
12.7 |
|
|
Total Current Liabilities |
|
2,075.2 |
|
|
|
1,388.6 |
|
|
|
|
|
|
|
|
|
|
|
Long-term Debt |
|
1,610.7 |
|
|
|
1,812.5 |
|
|
|
|
745.1 |
|
|
|
707.3 |
|
|
Deferred and Other Long-term Liabilities |
|
298.3 |
|
|
|
367.7 |
|
|
Business Acquisition Liabilities |
|
34.0 |
|
|
|
118.0 |
|
|
Total Liabilities |
|
4,763.3 |
|
|
|
4,394.1 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
0.0 |
|
|
|
0.0 |
|
|
Common Stock, $1.00 par value, Authorized 600,000,000 shares; 292,855,100 shares issued as of December 31, 2021 and 2020 |
|
292.8 |
|
|
|
292.8 |
|
|
Additional paid-in capital |
|
310.3 |
|
|
|
274.4 |
|
|
|
|
5,366.0 |
|
|
|
4,786.0 |
|
|
Accumulated other comprehensive loss |
|
(68.2 |
) |
|
|
(77.6 |
) |
|
Common stock in treasury, at cost: 50,309,124 shares as of December 31, 2021 and 47,494,982 shares as of December 31, 2020 |
|
(2,667.7 |
) |
|
|
(2,255.2 |
) |
|
Total Stockholders' Equity |
|
3,233.2 |
|
|
|
3,020.4 |
|
|
Total Liabilities and Stockholders’ Equity |
$ |
7,996.5 |
|
|
$ |
7,414.5 |
|
See Notes to Consolidated Financial Statements.
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