6.15 Using Valuation Tutor’s Quality of Earnings Calculator

The Valuation Tutor Calculator provides a comprehensive earnings quality analysis.  For P&G this is provided as follows:

To reconcile this we will need to access all three of P&G’s major statements:  The Consolidated Income Statement, the Consolidated Balance Sheet and the Consolidated Statement of Cash Flows.  We can do this by first setting up the screen as described in section 5.2 as follows:

Next click on View Filings and select SEC Filing Viewer Right.  This lets you set up the third major statement in the RHS of the screen as depicted below (replacing the online textbook window).

The reconciliation from the three statements is provided below.  First, selected parts from the three major statements are provided:

The Valuation Tutor Calculator screen can then be reconciled as follows:

Under US GAAP each firm must disclose certain items in their change to Stockholders Equity section that may not flow through the regular income statement.  These additional items flow in the concept of “Comprehensive Income.”