Legendary fund manager Peter Lynch once said that you shouldn't invest in any idea you couldn't illustrate with a crayon.
Though I'm not much for crayons, I do love the pithiness of that line. We regularly preach the same idea at the Fool: Don't buy what you don't understand. And if you can't simply sketch out a company's business model -- how it actually makes money -- then maybe you shouldn't be investing in it.
If you made the transition this morning from bed to functioning member of society, then it's highly likely that you've come in contact with one or more of Procter & Gamble's products along the way. This diverse company touches many aspects of our lives, some you might not even suspect. Today I'd like to share a very simple visual of how Procter & Gamble (NYS: PG) makes money. (Note: I'm focusing on revenues here, not earnings.)
Source: Procter & Gamble 2010 10-K.
Think I missed something in this illustration? General thoughts on this exercise? Let me know in the comments section below. And if you haven't already, be sure to follow our Procter & Gamble news and commentary using the Fool's free new My Watchlist tool.
At the time thisarticle was published Fool.com graphics/photo/art editor Dari FitzGerald doesn't own shares of Procter & Gamble.Motley Fool newsletter serviceshave recommended buying shares of Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insightsmakes us better investors. The Motley Fool has a disclosure policy.
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