Question

Final Paper for accounting
3 pages long

Format:             
Typed, double- space, references – MLA or APA format. Font times new roman size 12
 
References to Text, finance book, journal articles

Three references or more
 
Paper has strong message, easy to read, and well-organized.
Financial Ratios
Use of at least 6 different financial ratios, properly formatted
look at PepsiCo and go their website and obtain the most recent annual income statement and balance sheet.  Your paper will explain these two statements in terms of what you have learned so far this semester.  Suggested topics to cover:
Total Revenue, Gross Margin and Net Income

Earnings per share

Total Assets and total equity

Percent of debt to total equity

Current Ratio

Inventory turnover ratio

Receivables turnover ratio

Days Sales Outstanding

Method of Inventory costing and valuation

How does this company’s ratios compare to its peers?

Is this company’s performance improving, staying the same or getting worse?

Also spend some time talking about what this company does…Pick a company that you like their product or service.

Based on your analysis would you invest in this company?

Answer 1

Pepsi co Performance in current quarter is not upto the mark . Revenue growth as compared to last year same Quarter Only 4% . As per latest earning call , we noticed following points :

1. The performance of Frito Lays is showing good Organic growth .They have very good innovation across the big brands and small brand . they are confident that a very broad portfolio that play across all the different consumer segment . As a holistic view , business is continuing perform at a very high level compared to other consumer package goods . They are looking different solutions for different type of consumer
2. They are keep pon adding Brand , CSD Brand , Water brand ( Aquafina) Coffee- starbucks, Tea- pure Leaf. They are now introducing Gatorade brand . they generate $ 500 Mio of additional revenue in 1 year time . they are confident about brand .
3. They are also confident about that they are well positioned better than their competitor
4. Pioneer – Africa – They are putting capital against market opportunity that will deliver itself in the next 20 years . Pioneer will give them more success in future mainly due to good infrastructure , good go to market , good manufacturing , consumer taste and good talent
5. Their aim to Grow ... Quaker product – they will continue to invest to make sure that business continues to grow may be not at the levels that they have Frito lay but just good Levels
6. They noticed that at present customer going after functionality , going after health and wellness ,. They are planning to give the consumer more choice
7. They are in stage of introduction of small packs is not only in beverages but also on snacks
8. Gross Margin Analysis – they have gotten very good price realization across the company this year. As they will move into Q4 , they will start to lap some of the pricing that they took last Q4 , so they will get less of pricing benefit to gross margin
9. Their productivity quite strong in this year Same trend will continue in near future
10. Soda stream – is doing good across multiple parts of the world
11. They currently having almost $ 5 Billion cash balance in hand .
12. Cash flow analysis – We noticed that in the current year due to acquisition of Soda Stream , Company landed with Negative cash flow from Investment activity . But they have noticed that this unit started giving positive EBITDA now .
13. Very good part is , Company keep on paying Dividend to shareholders as well as they are repaying long term loan liability Overall cash flow from Financing activity is showing lower trend , which have a positive impact on Closing cash Balance
14. Because of Merger and Acquisition , presently they are having little high debtors collection days but it will come down in due course
15. At present due to certain Geo political issue is impacting business but they are confident that World wise – Like Mexico is growing double , Russia is having a very good year ,high volume growth in China , very high growth In India , Saudi Arabia ( earlier challenge ) – now going great . they are keep on increasing share in this market
16. Mountain dew brand is flat at this point and they will continue to Invest to make it a positive brand in coming Quarter

Pepsi co Most recent Q3 '19 Income as well as balance Sheet and derived couple of Key performance Indicator
			Amount $			Amount $
			12 Week Ended			36 Week Ended
			09-07-2019	09-08-2018		09-07-2019	09-08-2018
	Net Revenue		17,188	16,485		46,521	45,137
	Growth in Revemue		4%			3%
	Cost of Sales		7,694	7,527		20,786	20,445
	Gross Profit		9,494	8,958		25,735	24,692
	Gross Profit %		55%	54%		55%	55%
	Selling and G&A		6,639	6,114		18,143	17,013
	Opertaing Profit		2,855	2,844		7,592	7,679
	Opertaing Profit %		17%	17%		16%	17%
	Interest Expenses		(262)	(302)		(790)	(904)
	Interest income		38	81		139	248
	Other pension and retiree Medical		38	74		163	231
	Income before Income Tax		2,669	2,697		7,104	7,254
	Margin %		16%	16%		15%	16%
	Income Tax		559	188		1,529	1,562
	Net Income		2,110	2,509		5,575	5,692
	Net Income %		12%	15%		12%	13%
	EPS- Diluted		1.49	1.75		3.94	3.97

	Amnt($)	Amnt($)
Asset	09-07-2019	12-09-2018
Current Asset
Cash and cash Equivalent	5,494	8,721
Short term Investment	287	272
Restricted Cash	127	1,997
Account Receivable	8,735	7,142
Inventory
Raw Material	1,509	1,312
Wip	316	178
Finished Goods	1,842	1,638
	3,667	3,128
Prepaid	888	633
Total Current Asset	19,198	21,893
Property Plant and Equipment	17,586	17,589
Amortized Intangile Asset ( Net)	1,437	1,644
Goodwill + Others	29,713	28,989
Other Assets	9,510	7,533
Total Assets	77,444	77,648
Total current Liability	20,131	22,138
Long term Liability	29,630	28,295
Other Liability	13,459	12,613
Total Liability	63,220	63,046
Total Equity	14,224	14,602
Total Liability & Equity	77,444	77,648
Current ratio
Current Asset- Current Liability	(933)	(245)

My suggestion there room still open to Invest in Pepsi Co and they have tremendous future growth and they are designing strategy as per Customer taste . So They are well aware about customer preference , they have seen past trend . Presentky because of major acquisition , their balance sheet is not showing correct ratio PLUS EPS also dropped but this Investment ( capex) will give future benefit and we can Invest money on Company share