Course Code: Fin301 Semester: Spring

Group name:

“GROUP CONQUERORS”

Topic: Investigating the Ratio Analysis & performance of PPG Industries,

Inc.

Group Representative / Leader Name: Avishake Saha

ID # ------ 1921232

Phone Number: ----- 01859440358 Submitted By

Name ID contribution

1) Alif Mohammad Solaiman 1910029 Literature Review

2) Dipta Chakraborty 1931082 Inventory Period, Account

Receivables Period

3) Avishake Saha 1921232 Payable Period, Operating

Cycle

4) Tuha khan 1830180 Current Ratio, Total Asset

Turnover

5) Fatema Rahman Shorna 1920909 Executive Summary,

Conclusion

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LETTER OF TRANSMITTAL

April 2, 2022

Mr. Anwar Zahid

Department of Finance,

School of Business & Entrepreneurship

Subject: Investigating the Ratio Analysis & performance of PPG Industries, Inc.

Dear Sir,

With due respect, it is our pleasure and honor to be your student and have this opportunity to
present the Semester final project on “Investigating the Ratio Analysis & performance of PPG
Industries, Inc." that you assigned us on 27th Feb 2022. This report is an essential part of our
course. We have tried our best to complete this with perfection and have gathered enough
information about what We have learned from the course "FIN301". The study We conducted
enhanced our knowledge to make an executive report. This report has given us an exceptional
experience that might have immense uses in future endeavors and we sincerely hope it would be
able to fulfill your expectations. While preparing this plan, We Alif Mohammad Solaiman, Dipta
Chakraborty, Avishake Saha, Tuha khan, Fatema Rahman Shorna gave our best effort
thoroughly on the topic and also provided all relevant information regarding this matter. We also
greatly enjoyed designing this mission, which has contributed substantially to an appreciation of
the fundamentals and value of functional experience. Finally, We would love to express our
gratefulness for your support and kind consideration inside & outside our classroom.

Thank you, Sir.

Yours Sincerely,

“Group Conquerors”

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Acknowledgment

At the commence of this assignment, we would like to show our gratitude to almighty Allah for
giving me the opportunity, mercy, grace, strength, and ability to go through the process of
information collection to complete the report in a scheduled time despite many hurdles. The
completion and success of any assignment largely depend on encouraging and guidelines of
many individuals. We would like to express our gratitude to the people who have been
instrumental in a successful completion. Independent University, Bangladesh (IUB) is one of the
best universities in Bangladesh; Thanks to us for offering us a chance to obtain a realistic
experience. It's impossible to gather this professional experience if I did not participate in this
course (FIN301). Our respected faculty Mr. Anwar Zahid sir acted as a silent backbone; deserves
our greatest gratitude. He gave us an opportunity, direction, guidance, and support in this entire
semester that helped us a lot. He helped us to determine the objective and guided us through the
user-friendly format. And We Alif Mohammad Solaiman, Dipta Chakraborty, Avishake Saha,
Tuha khan, Fatema Rahman Shorna worked very hard for making this project.

Thank You, Sir.

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Contents
LETTER OF TRANSMITTAL............................................................................................................................2
Acknowledgment.........................................................................................................................................3
Executive-Summary.....................................................................................................................................5
Literature review.........................................................................................................................................5
Working capital management.................................................................................................................5
The Importance of Working Capital Management..................................................................................6
Inventory Period..........................................................................................................................................7
Account Receivable Period:.........................................................................................................................8
Account Payable Period:..............................................................................................................................9
Operating Cycle:........................................................................................................................................10
Asset Turnover Ratio.................................................................................................................................12
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

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Executive-Summary
In this report, we perfume an industry analysis on PPG Industries Inc. For this purpose of
industry analysis, we performed Operating cycle, Inventory period, Payable period, Account
receivable period, Current ratio, Total Asset Turnover etc. on PPG Industry Inc. of 2017 to 2019
(before corona) and 2020&2021 (after corona). Beside this analysis we also done literature
review on past research’s regarding Working Capital Management. We do this analysis to know
overall view on how the company is doing before and after corona pandemic.

Literature review
A literature review is a piece of academic writing that demonstrates knowledge and mastery of
academic literature on a certain topic. A literature review differs from a literature report in that it
includes a critical evaluation of the material.
Types of literature review
Many other forms of literature reviews have developed throughout time, but the four most
common are traditional or narrative, systematic, meta-analysis, and meta-synthesis.
A literature review is a systematic examination of scholarly sources (such as books, journal
articles, and theses) that are relevant to a certain topic or research question. It's usually written as
part of a thesis, dissertation, or research paper to help you place your work in context with what's
already out there.

Working capital management

Working capital management is a business approach for ensuring that a firm functions efficiently
by monitoring and maximizing the use of its current assets and liabilities. Ratio analysis can be
used to measure the efficiency of working capital management.

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The Importance of Working Capital Management
Working capital is a prevalent metric for the efficiency, liquidity and overall health of a
company. Management of working capital includes inventory management and accounts
receivables and accounts payables. An effective working capital management system helps
businesses not only cover their financial obligations but also boost their earnings.

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Inventory Period
Inventory period is the average number of days that a company holds its inventory before selling
it. The days inventory outstanding calculation shows how quickly a company can turn inventory
into cash. It is a liquidity metric and also an indicator of a company’s operational and financial
efficiency.
A low number of days inventory outstanding shows that a corporation is able to convert its
inventory into revenue more rapidly. As a result, a low inventory period indicates a firm that is
efficient in terms of inventory management and sales performance.
A high number of days inventory outstanding shows that a firm is unable to convert its inventory
into sales rapidly. This might be due to poor sales performance or an excess of goods purchased.
Having too much idle inventory maybe harmful to a business since it can cause inventory to
become outdated and unsellable. Excess inventory has a detrimental effect on cash flow as well.
Inventory period of PPG Industries, Inc (2017 to 2021):

Inventory Period
82
80
78
76
74
72
81
70
68 74
72 71
66 69
64
62
2017 2018 2019 2020 2021

As we can see from 2017 to 2019 (Before corona pandemic) PPG Industries, Inc. have 72,
71&74 days inventory period respectively. But in 2020 (after corona pandemic) the inventory
period goes up to 81 days which is quite bad for the company because we know that A high
number of days inventory outstanding shows that a firm is unable to convert its inventory into
sales rapidly. But in 2021 (after corona pandemic) they overcome the situation strongly as they
drop it to 69 days.

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Account Receivable Period:
The term account receivable period refers to that a company’s effectiveness in collecting its
accounts receivable. This ratio measures how well a company uses and manages the credit it
extends to customers and how quickly that short-term debt is collected or is paid.
A high receivables period indicates that a company's accounts receivable collection process is
efficient and that it has a high number of high-quality customers who pay their bills on time. A
high receivables period might also imply that a business is run on a cash basis.
It's not a good idea to have a low receivables period. This is because it might be the result of a
poor collection procedure, poor credit policies, or consumers that are not financially viable or
creditworthy. A low account receivable period usually indicates that the company's credit rules
need to be reviewed in order to ensure prompt recovery of receivables. If a corporation with a
low ratio improves its collection procedure, it may result in an influx of cash from collecting on
old credit or receivables.
Accounts receivable period of PPG Industries, Inc. (2017 to 2021):

Account Receivable Period

74

72

70

68

66
72
64
69 68 67
62
64
60

58
2017 2018 2019 2020 2021

As we can see from 2017 to 2019 (Before corona pandemic) PPG Industries, Inc. have 69,
68&67 days account receivable period respectively. In 2020 (After corona pandemic) the
account receivable period goes up to 72 days which is good because A high receivables period
indicates that a company's accounts receivable collection process is efficient and that it has a
high number of high-quality customers who pay their bills on time. But in 2021 (after corona
pandemic) the account receivable period goes down to 64 days which is quite bad for the

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company because it's not a good idea to have a low receivables period. It might be the result of a
poor collection procedure, poor credit policies, or consumers that are not financially viable or
creditworthy.

Account Payable Period:

The accounts payable period formula calculates how long it takes a corporation to pay its
suppliers. If the number of days grows from one period to the next, it suggests that the firm is
paying its suppliers more slowly, which might signal a worsening financial situation. A change
in the number of payable days can also signal changed payment conditions with suppliers, albeit
this seldom has more than a minor influence on the overall number of days because the terms
must be changed for numerous suppliers to have a major impact on the ratio. (accountingtools,
2022)
If a firm pays its suppliers rapidly, it may indicate that the suppliers are seeking quick payment
terms, either because short terms are part of their business models or because they believe the
company is too risky to accept longer payment terms.
Account Payable Period of PPG Industries, Inc (2017 to 2021):

Account payable period

250

200

150

100 216
181 185 170
168

50

0
2017 2018 2019 2020 2021

 In 2017: Through the Graph and chart we can see PPG Industries Account payable
period is 181 in 2017.
 In 2018: Through the Graph and chart we can see PPG Industries Account payable
period is 168 in 2018. Here, the changes of 2017 to 2018 is impressive cause its
decreased.
 In 2019: Through the Graph and chart we can see PPG Industries Account payable
period is 185 in 2019. The changes from 2018 to 2019 is not good then previous record.
 In 2020: Through the Graph and chart we can see PPG Industries Account payable
period is 216 in 2020. The changes of 2019 to 2020 is increasing that means the company
takes time to making profit to pay their suppliers.

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  In 2021: Through the Graph and chart we can see PPG Industries Account payable
period is 170 in 2021. The changes of 2020 to 2021 is very good come back, because it’s
like down to the earth.
In 2017 & 2018 Account payable period was pretty average but 2019 & 2020 when the covid
period comes in the days turned increasing it’s likely happen for the pandemic but after the
pandemic in 2021 the company starts growing just decreased with period days in 170.

Operating Cycle:
The time it takes a corporation to acquire items, sell them, and earn income from the sale of these
goods is referred to as the operational cycle. In other words, it is the time it takes for a
corporation to convert its inventories into cash. The length of an operational cycle varies
according to the industry. Understanding a company's operational cycle may assist assess its
financial health by predicting whether or not it will be able to pay off any creditors.
For example, if a company has a short operating cycle, it indicates it will get payments at a
consistent pace. The sooner the firm makes cash, the more quickly it will be able to pay off any
outstanding obligations or grow its operation.
Business owners must analyze their operating cycle in order to measure a company's efficiency.
To do this computation, follow these steps:
1. Determine the inventory period:
When estimating the operational cycle of a firm, the owner must first determine its
inventory period. An inventory period is the amount of time a corporation keeps its goods
before selling it.
2. Determine the company's accounts receivable:
In order to calculate the operational cycle, business owners must also know their accounts
receivable. Accounts receivable refers to the amount of money owed by a client to a
business.
3. Calculate the operating cycle: (indeed, 2021)

Operating Cycle of PPG Industries, Inc (2017 to 2021):

Account Receivable Period

155

150

145

140
153
135

130 141 141

139
133
125

120
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2017 2018 2019 2020 2021
  In 2017: Through the Graph and chart we can see PPG Industries Operating Cycle is 141
in 2017.
 In 2018: Through the Graph and chart we can see PPG Industries Operating Cycle is 139
in 2018. Here, the changes of 2017 to 2018 is impressive cause its decreased.
 In 2019: Through the Graph and chart we can see PPG Industries Operating Cycle is 141
in 2019. The changes from 2018 to 2019 is average like previous record.
 In 2020: Through the Graph and chart we can see PPG Industries Operating Cycle is 153
in 2020. The changes of 2019 to 2020 is increasing that means the company takes time to
making cash to the inventory.
 In 2021: Through the Graph and chart we can see PPG Industries Operating Cycle is 133
in 2021. The changes of 2020 to 2021 is very good come back, because it’s like down to
the earth.
In 2017, 2018 & 2019 Operating Cycle period was pretty average but 2020 when the covid
period comes in the days turned increasing it’s likely happen for the pandemic but after the
pandemic in 2021 the company starts growing just decreased with period days in 133.

Current Ratio
Current ratio is a liquidity ratio and it used to measure a company’s ability to pay the short-term
liabilities. By using this method investors and analysts can tell how a company can maximize the
current assets on its balance sheet to satisfy its current debt and other payables. Current ratio
under 1.00 indicates that the company’s debt due in a year or less are greater that it’s assets or
other short-term assets expected to be converted to cash within a year or less. On the hand
current ratio more than 3.00 indicates that the company can cover its current liabilities three
times and also the company is not using its current assets efficiently. So current ratio between
1.00 and 3.00 can be considered good for the company.

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As we can see here’s the current ratio of PPG industries from 2017 to 2021. We can see that the
company’s current ratio before the corona pandemic which is 2017 to 2019 is above 1.00. In
2017 current ratio of PPG industries was 1.66 percent, then it decreased to 1.36 percent in 2018
and increased in 2019 to 1.41 percent.
However, if see the ratios after the corona pandemic which 2020 to 2021 it can be seen that the
number didn’t change very much. In 2020 current ratio was 1.40 percent and in 2021 it slightly
increased to 1.42 percent.
If we compare before and after percentages of Current ratio before and after pandemic, then there
is not any major difference between 2019 and 2020.

Asset Turnover Ratio

Asset turnover ratio measures the efficiency of how well a company can use its assets to produce
sales. It compares the amount of sales to its total assets as an annualized percentage. Asset
turnover ratio can vary widely from one industry to another. In that case comparing two different
companies from two different sectors would not be very productive. The comparison will be
meaningful when they are done for different companies within the same sector. High asset
turnover is good because it tells that the company is efficient in generating revenue from its
asset. On the other hand, a lower ratio indicates that a company is not using its assets efficiently.
As PPG industries is a manufacturing industry most analysts consider a ratio above 1.00 to be
good in this industry. As the ratio varies from industry to industry there’s no universal value to
strive towards.

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As we see here is the total asset turnover ratio of PPG industries from 2017 to 2021. We can see
that the asset turnover ratio before the corona pandemic which is from 2017 to 2019 and after the
corona pandemic is 2020 to 2021.
In 2017 we can see that the ratio is about 0.89 percent which increased in 2018 to 0.95 percent.
In 2019 it decreased to 0.85 percent.
However, if we look in 2020 the number decreased to 0.70 percent and in 2021 in increased to
0.78 percent.
If we compare before and after the pandemic we can see that the percentage has a good
difference and along that the lowest ratio was in 2020 the pandemic year.

Conclusion

PPG said that the US Securities and Exchange Commission (SEC) inquiry into PPG's financial
reporting from December 2016 to April 2018 has been settled as to the Company. PPG originally
reported and disclosed the situation in April 2018, and on June 22, 2018, it submitted an updated
Form 10-K. There is no monetary penalty associated with the settlement. The SEC noted PPG's
self-reporting, continuous cooperation throughout the inquiry, and rapid corrective efforts in its
ruling. PPG further stated that the United States Attorney's Office for the Western District of
Pennsylvania (USAO) has told the company that it would not pursue any action against the
company. On January 17, 2019, PPG revealed and disclosed the existence of the USAO inquiry.
"We are glad to have addressed this situation with both the SEC and the USAO without any
financial or other consequence," stated Michael McGarry, chairman and CEO of PPG. "As we
move forward, our focus will be on maintaining our steadfast commitment to our fundamental
principles, especially financial honesty, which must and will remain a key priority and focus for
all PPG employees." Finally, I'd want to express my gratitude to all of our stakeholders for your
patience as we worked our way through this inquiry. We are devoted to conducting business with
the highest integrity and transparency, as well as in accordance with all applicable laws and
regulations." The restatement of PPG's audited consolidated financial statements for the years
ended December 31, 2016 and 2017 was included in the updated Annual Report on Form 10-K/A
for the fiscal year ended December 31, 2017, which was submitted on June 22, 2018. PPG also
updated some unaudited quarterly results for the quarters ending December 31, 2016, March 31,
2017, June 30, 2017, September 30, 2017, and December 31, 2017. In addition, PPG submitted
its Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, bringing the
company's filings with the SEC up to date.
WE PROTECT AND BEAUTIFY THE WORLDTM is a trademark of PPG.

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payable-days-formula

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Exchange, P. S., & Exchange, P. S. PPG Industries, Inc.

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