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Procter and Gamble Company is operating in 180 countries and region all over the world. Its key driver in generating its cash flow is its business territory at USA which is more than 39 percent of its worldwide total sales. The largest segment in its revenue is coming up from Fabric care and home care which is 32 % of total revenue. The second segment is beauty product which is at 24 % of sales.

According to IMF, economic growth of USA is predicted at 2 % It means the company has good opportunity to grow better. The last sales growth in 2012-2013 is 0.6 percent. The company categorizes its territory in to five major areas which are North America, Western Europe, Asia, Latin America and CEEMEA.

	2011	2012	2013
North America	41.0	39.0	39.0
western Europe	20.0	19.0	18.0
Asia	16.0	18.0	18.0
Latin America	9.0	10.0	10.0
CEEMEA	14.0	14.0	15.0

Segments	Percentage
Fabric Care and Home Care	32
Beauty	24
Grooming	9
Healthcare	15
Baby care and Family care	20

Forecast of Net sales

There is a significant correlation between its Capital expenditure and net sales. With in simple analysis we could find its correlation is more than 0.7 which means indicating strong correlation. Based on data of economic growth of USA in 2008 -2012 and data of its worldwide net sales in 2008 -2012, there is strong correlation between economic growth of USA and its net sales. It could be concluded that USA economy still having strong influence to its revenue.

If I used CAGR of Capital expenditure in 2008 – 2012, I find its CAGR is at 6 %. Within assumption of 6 % growth of its capex in 2014, I make assumption that its worldwide sales will grow 2 % up. In another factor IMF has prediction that US economy will grow 2 percent.

The forecasting of financial condition between in 2012-2016 is as the following table:

ROE 2012 2013 2014 2015 2016 Net Profit margin 13.0 13.5 13.5 13.3 13.1 Asset Turn Over 63.3 60.4 55.9 51.4 47.7 ROA 8.2 8.2 7.5 6.8 6.2 Financial Leverage 208.5 204.6 193.0 186.8 182.1 ROE 17.2 16.8 14.5 12.7 11.3 2013 2014 2015 2016 CFO 8071.0 10254.8 10425.7 10580.5 Net Addition of Fixed Asset -3087.0 -4208.4 -4292.5 -4378.4 Free Cash Flow 4984.0 6046.4 6133.2 6202.1

From table at above the assumption of free cash flow in 2016 is forecasted to 6202.1, the result is calculated with steady net sales growth at annually in 2 % from 2014 until 2016 and capital expenditure is  at 5% net sales in 2014-205. 

The company is mature and it is the market leader in almost all segments and its territory. It causes its sales growth very low in 0-2 percent in the last five years.

The CEO encourages all employees to make innovation as in his book in Game Changer. The company tends to decrease its employee in several years. In 2008 the number of employee was 135,000. It was decreased in to 121,000 people. The company looks using more technology and more outsourcing to reduce cost and enhance its profit.

All products and its manufacture process are protected with patent and license. Its good will and intangible assets in 2013 are more than 60 percent of its total asset. That means trade mark and its patent right are valuable asset for the company as their trademarks are market leader in each segment.