PPT Slide: Gillette Leverage Ratios Analysis from 1996 Report

Gillette Leverage Ratios Analysis from 1996 Report PPT

This PPT slide, part of the 48-slide Financial Ratio Analysis PowerPoint presentation, presents a detailed analysis of leverage ratios for Gillette, derived from its 1996 annual report. It includes 3 key ratios: the DuPont leverage ratio, the debt to equity ratio, and the debt to total capital ratio. Each ratio is calculated using specific financial figures, providing a quantitative assessment of the company's financial structure.

The DuPont leverage ratio is calculated by dividing total assets by equity, yielding a value of 2.32. This indicates how effectively the company is utilizing its assets relative to its equity base. A higher ratio suggests a greater reliance on debt to finance assets, which can imply increased financial risk.

Next, the debt to equity ratio is computed by summing long-term debt and dividing it by equity, resulting in a ratio of 0.40. This figure reflects the proportion of equity financing relative to debt. A lower ratio may suggest a conservative approach to leveraging, indicating that the company is less dependent on borrowed funds.

The final ratio, debt to total capital, is calculated by dividing total liabilities by total assets, producing a ratio of 0.57. This ratio provides insight into the overall capital structure, showing how much of the company's assets are financed through debt. A ratio above 0.5 could raise concerns regarding financial stability, depending on industry norms.

Overall, these ratios offer valuable insights into Gillette's financial health and risk profile. They can guide potential investors or stakeholders in assessing the company's leverage and financial strategy, informing decisions regarding investment or partnership opportunities.

This slide is part of the Financial Ratio Analysis PowerPoint presentation.

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