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Analysis of Cash Flows: Procter \& Gamble II Exhibit 11.3 presents the 2010 comparative cash flow statement for Procter \& Gamble (P\&G). If you worked the Procter \& Gamble case in the last chapter (Minicase M10.1), you will have some familiarity with the company. Working that case will set you up to deal with this installment quickly, but in any case you should have the financial statements in the case (in Exhibit 10.15) before you when you work this case. The firm's statutory tax rate is 38 percent. A. Using Method 1, calculate P\&G's free cash flow for 2010. Then calculate the free cash flow from the cash flow statement in Exhibit 11.3, making the necessary adjustments to correct misclassifications. Do the two numbers agree? Why might they differ? B. Using the Method 2 calculation for free cash flow, can you back out the net payout to shareholders? C. Calculate the net payout to shareholders from the cash flow statement. Does it agree with your calculation in Part B of the case? Does it agree with the number from the shareholders' equity statement? D. What is the relevance of the supplemental disclosure at the bottom of Procter \& Gamble's cash flow statement? E. Present a reformulated statement of cash flows for the firm. F. State in words the message that this reformulated statement is conveying. Analysis of Cash Flows: Procter \& Gamble II Exhibit 11.3 presents the 2010 compamtive cath flow statement for Procter & Gieble, (PEG). If you worked the Procter L Gamble case is the last chapter (Miricase M will have some familiarity with the company. Workisg that ease will set you up to deal vis (in Exhibit 10.15) before you when you work this case. The firm stationsts in the A. Using Method 1, calculate PQeG's frec cash flow for 20t0. Then calculate the froc ces flow from the eavh flow statement in Exhibit 11,3, making the nocessary adjastreteren correet miselassifications. Do the two numbers apree? Why might they differ? B. Using the Method 2 calculation for free cably flow. can you back out the net payours shareholders? C. Calculate the net payout to shareholders from the casb tlow statement. Docs it apte with your calculation in Part B of the case? Does if agree with the number froe the shareholders' equity statement? D. What is the relevance of the supplemental disclosure at the bottom of Procter 4 Gamblo' cash flow statement? E. Presest a reformulated statement of cash flows for the firm. F. State in words the message that this reformulated statement is conveying. EXHIBIT 11.3 Comparative Cash Fow Statement for Procter and Gamble for 2010 Real World Connection Minicases M12.1, M13.1, M15.1, and M16.1 continue the analysis and valuation of Procter \& Gamble. EXHIBIT 10.15 Comparative Financial Statements (or Fiscal Year 2010 for Procter \& Gamble Co. The financial statements should be ratd with the accompanying potmotesi (continand)

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