Question

1. PepsiCo, near the top of Table 2-5 in the chapter, is a company that provides
comprehensive financial statements. Go to finance.yahoo.com. In the box next to
“Get Quotes,” type in its ticker symbol PEP and click.

2. Scroll all the way down to “Financials” and click on “Income Statement.” Compute
the annual percentage change between the three years for the following:
a. Total revenue.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
b. Net income applicable to common shares.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)

3. Now click on “Balance Sheet” and compute the annual percentage change
between the three years for the following: (PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
a. Total assets.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
b. Total liabilities.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)

4. Write a one-paragraph summary of how the company is doing.

TO FIND THE DATA:

1. PepsiCo, near the top of Table 2-5 in the chapter, is a company that provides
comprehensive financial statements. Go to finance.yahoo.com. In the box next to
“Get Quotes,” type in its ticker symbol PEP and click.

2. Scroll all the way down to “Financials” and click on “Income Statement.” Compute
the annual percentage change between the three years for the following:

Answer 1

The income statement for Pepsico is as follows:

2.a)

The annual percentage change in total revenue is as follows:

% change in 2015= (Total revenue in 2015 -Total value in 2014)/ Total revenue in 2014

=(6,30,56,000-6,66,83,000)/6,66,83,000 = -0.031 = -3.1%

% change in 2016= (Total revenue in 2016 -Total value in 2015)/ Total revenue in 2015

=(6,27,99,000-6,30,56,000)/6,30,56,000=-0.004=-0.4%

2.b)

The annual percentage change in net income is as follows:

% change in 2015= (Net income in 2015 -Net income in 2014)/ Net income in 2014

=(54,52,000-65,13,000)/65,13,000= -0.162 = -16.2%

% change in 2016= (Net income in 2016 -Net income in 2015)/ Net income in 2015

=(63,29,000-54,52,000)/54,52,000=-0.1608=16.08%

Balance Sheet

3.a)

The annual percentage change in Total Assets is as follows:

% change in 2015= (Total Assets in 2015 -Total Assets in 2014)/ Total Assets in 2014

=(6,96,67,000-7,05,09,000)/7,05,09,000= -0.011 = -1.1%

% change in 2016= (Total Assets in 2016 -Total Assets in 2015)/ Total Assets in 2015

=(7,41,29,000-6,96,67,000)/6,96,67,000 =0.064=6.4%

3.b)

The annual percentage change in Total liabilities is as follows:

% change in 2015= (Total liabilities in 2015 -Total liabilities in 2014)/ Total liabilities in 2014

=(5,77,44,000-5,30,71,000)/5,30,71,000= 0.088 = 8.8%

% change in 2016= (Total liabilities in 2016 -Total liabilities in 2015)/ Total liabilities in 2015

=(6,30,34,000-5,77,44,000)/5,77,44,000 =0.0916= 9.16%

Seeing the statements, it is pretty clear that the company is investing in more divisions, as the assets have sown to increase over a period of time. The negative value for reveneus have declined over the period of time, indicating that the sales will increase in the forthcoming year. Furthermore, the company's liabilities are increasing more than the assets. hence, the company should lag the payables and lead the receivables to have a favourable current ratio and increase in net income.