Topic > Financial Ratio Analysis: Financial Stability and…

For example, just last year P&G issued product recalls involving pet food brands Iams and Eukanuba “after its own inspections found the potential for salmonella contamination in a separate batch" (Barney, 2013, para. The recalls occurred soon after the Food and Drug Administration's on-site inspection found cases of Salmonella in the company's Nature pet food products. Since the pet food industry was one of P&G's slow-moving divisions due to poor sales, the company has now divested it, thereby reducing costs and boosting financial numbers or worse, even death, the recall was enough to cause a decline in the company's sales; furthermore, the possibility of raising consumer doubts about other P&G product brands. Numerous additional recalls have been made in previous years relating to faulty child-resistant packaging, mismatched expiry dates and other forms of bacteria present in healthcare products (Procter & Gamble, 2014, para. 1). These types of expenses disrupt financial performance, as product recalls result in the replacement of defective products and increase the chances of a lawsuit in the event of life-threatening suffering.