Pj568

Decline in Procter & Gamble Is Overdone

While PG continues to generate significant earnings, it seems they also continue to neglect the balance sheet.

At first glance it looks OK with leverage around 2.5 then you notice they have negative working capital of 12B, intangibles of 87B versus total equity of 63B results in negative tangible assets of 24B and total debt of 32B. In other words poor liquidity.

With solid earnings they might not have any earnings impairment but they need to get liquidity back into their balance sheet without more debt. Stopping the buybacks would help. They could also reduce dividends if needed. Recently buybacks and dividends were partially funded by increased debt.

I'd prefer to know how the're going to fix their problem before becoming a buyer.