Economic and Industry Analysis Cincinnati Ohio-based Procter & Gamble (PG), incorporated in 1905, provides branded consumer products. The company markets more than 300 branded products and operates through three global business units: Beauty, Health & Wellness, and Home Care. The company's products are sold primarily through mass retailers, grocery stores, pharmacies and sales at Wal-Mart. The direction of economic activity, such as government and monetary policy, has little effect on Procter & Gamble. Interest rate cuts may help PG, but the economic crisis will be harmful. Other economic factors play a more important role; an increase in inflation may cause consumers to spend their money on generic brands over PG name brands. The company is also exposed to market risk through changes in interest rates and exchange rates. If the property were not managed, the company could lose billions. To protect against sudden exchange rates, PG uses the forward contract option which provides a fixed exchange rate between the two currencies. Overall PG produces need-based products and not luxury items, which will keep the company in good standing during most economic crises. An industry analysis showed Procter & Gamble's main competitors; in the personal products sector there are Kimberly Clark, Elizabeth Arden, Colgate Palmolive and Avon. PG is a mature and saturated company and finds it difficult to expand market share for a company of its size. To cope with the expansion of market share and competition, PG focuses on reducing costs through reduction of promotions, coupons and involves heavy advertising. PG has recently partnered with Coke, Wrigley and Gillett and has the available cash flow to make several corporate investments such as acquisitions and mergers, and is not afraid of this business venture. Procter and Gamble has been around for a long time and its methods seemed to work for the company. Earnings growth has accelerated moderately over the past year, compared to growth over the past three years. Proctor & Gamble Ratio Analysis Using the 5-year income statement and balance sheet for Proctor & Gamble, we analyzed some of the key ratios and compared them to the industry standard. We have established that Proctor & Gamble is a strong company with a good profit margin. The company has good future growth prospects. Proctor & Gambles' liquidity position was slightly below average. The NWC also gave a negative rating, which may indicate a problem meeting financial obligations.