1. PepsiCo, near the top of Table 2-5 in the chapter, is a company that provides...

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.
b. Net income applicable to common shares.
3. Now click on “Balance Sheet” and compute the annual percentage change
between the three years for the following:
a. Total assets.
b. Total liabilities.
4. Write a one-paragraph summary of how the company is doing.

Solutions

Expert Solution

Pepsi Co	FY2014	FY2015	FY2016
Total Revenue ( In $ Bn)	66.68	63.06	62.80
Annual Percentage Change		-5.4%	-0.4%
Compounded Annual Growth Percentage			-3.0%
Net Applicable Income to Common Share ( In $ Bn)	6.51	5.45	6.33
Annual Percentage Change		-16.3%	16.1%
Compounded Annual Growth Percentage			-1.4%
Total Assets (In $ Bn)	70.51	69.67	74.13
Annual Percentage Change		-1.2%	6.4%
Compounded Annual Growth Percentage			2.5%
Total Liabilities (In $ Bn)	53.07	57.74	63.03
Annual Percentage Change		8.8%	9.2%
Compounded Annual Growth Percentage			9.0%

Pepsico has been declining in terms of revenu over the last 3 years. This might mean that its losing its sales to its competitors, which can most possibly be Coca- Cola or maybe an emergence of an alternative to sweet soda.

But at the same time it seems that the profit margins have risen in FY2016 which means that possibly while revenues are declining, the company is looking at greater cost control and hence is able to make more money even out of declining revenues.

At the same time, liabilities are increasing, which possibly means that company is taking on more debt on its books. While assets are increasing, it is primarily driven by increase in current assets, which can mean that greater amount of money is getting locked in working capital. Overall the company seems to be in a declining phase, but is looking at improving its margins by greater cost control and financial management

jeff jeffy answered 1 year ago

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