FINANCIAL REPORTING
Financial Reporting Problem
The Procter & Gamble Company (P&G)
Instructions
Refer to P&G’s financial statements and the accompanying notes to answer the following questions.
(a) How does P&G value its inventories? Which inventory costing method does P&G use as a basis for reporting its inventories?
(b) How does P&G report its inventories in the balance sheet? In the notes to its financial statements, what three descriptions are used to classify its inventories?
(c) What costs does P&G include in Inventory and Cost of Products Sold?
(d) What was P&G’s inventory turnover ratio in 2009? What is its gross profit percentage? Evaluate P&G’s inventory turnover ratio and its gross profit percentage.