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PepsiCo, Inc., the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current...

PepsiCo, Inc., the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years: Current Year (in millions) Previous Year (in millions) Cash and cash equivalents $6,297 $4,067 Short-term investments, at cost 322 358 Accounts and notes receivable, net 7,041 6,912 Inventories 3,581 3,827 Prepaid expenses and other current assets 1,479 2,277 Short-term obligations 4,815 6,205 Accounts payable 12,274 11,949 a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.

Solutions

Expert Solution

Current Year Previous Year
(1) Current ratio 1.1 1.0
(2) Quick ratio 0.8 0.6
Workings:
Current Year Previous Year
Cash and cash equivalents 6297 4067
Short-term investments, at cost 322 358
Accounts and notes receivable, net 7041 6912
Inventories 3581 3827
Prepaid expenses and other current assets 1479 2277
Total Current Assets 18720 17441
Current Year Previous Year
Cash and cash equivalents 6297 4067
Short-term investments, at cost 322 358
Accounts and notes receivable, net 7041 6912
Total quick Assets 13660 11337
Current Year Previous Year
Short-term obligations 4815 6205
Accounts payable 12274 11949
Total Current Liabilities 17089 18154
Current Year Previous Year
Total Current Assets 18720 17441
Divide by Total Current Liabilities 17089 18154
Current ratio 1.1 1.0
Current Year Previous Year
Total quick Assets 13660 11337
Divide by Total Current Liabilities 17089 18154
Quick ratio 0.8 0.6

ekkarill92 answered 2 years ago
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