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FINANCIAL STATEMENT ANALYSIS
Name of the student PG Roll No:Preeti Arora PGP20112074
Bubbles Thadani PGP20112181
Jyoti Punj Prakash PGP20112004
Mohini Rathore PGP20112121
Rahul Bhardwaj PGP20112268
Yogendra Singh Chauhan PGP20112137
Shubham Kumar PGP20112256
Submitted to KIRTIKA MALHOTRA
Subject BASIC OF ACCOUNTANCY
Submitted on 22-09-2011
Marks Allotted
Remarks(if any)
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PEPSI CO PVT LTDPepsiCo is an American multinational corporation headquartered in Purchase, Harrison, New
York, United States. It manufactures, marketing & distribution of grain- based snack foods,
beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-
Cola Company and Frito-Lay. PepsiCo has since expanded from its namesake product Pepsi
to a broader range of food & beverages brands, the largest of which include an acquisition of
Tropicana in 1998 and a merger with Quaker Oats in 2001, which added the Gatorade brand
to its portfolio as well. PepsiCo is a SIC 2080(beverage) company.
As of 2009, 19 of PepsiCos product lines generated retail sales of more than $ 1 billion
each. PepsiCo products were distributed across more than 200 countries in 2009, which
generated $ 43.3 billion net revenue in annual. Based on NET REVENUE, PepsiCo is
the second largest food & beverage business in the world. Within North America,
PepsiCo is ranked as the largest food & beverage business in terms of NET REVENUE.
Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006.
Approximately 285,000 people employed worldwide in PepsiCo as of 2010.
PRODUCTPepsiCos product mix consists of 63% foods and 37% beverages. On a worldwide
basis, the companys current product lines include several hundred brands like Pepsi,Mountain Dew, Lays, Tropicana, 7UP, Miranda, Aquafina, etc
AREA OF BUSINESS
The structure ofPepsiCos global operations has shifted multiple times in its history as a
result of international expansion, and as of 2010 it is separated into four main divisions:
PepsiCo Americas Foods PepsiCo Americas Beverages
PepsiCo Europe PepsiCo Asia, Middle East & Africa
As of 2009, 71% of the companys net revenue came from North and South America, 16%
from Europe and13% from Asia, the Middle East & Africa.
CORPORATE SOCIAL RESPONSIBILITY
PepsiCo has maintained a philanthropic program since 1962 called the PepsiCo Foundation,
in which it primarily funds nutrition and activity, safe water and water usage efficiencies,
and education, according to the foundations website
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FINANCIAL STATEMENT ANALYSISFinancial statement analysis is the collective name for the tools and techniques that are
intended to provide relevant information to decision-makers. The purpose of such analysis is
to assess a companys financial health and performance. Financial statement analysis
consists of comparisons for the same company over periods of time and for different
companies in the same industry or different industries.
Financial statement analysis enables investors and creditors to:
Evaluate past performance and financial position Predict future performance
SOURCES OF INFORMATION
Company reports Stock exchanges Business periodicals Information servicesTypes of financial statement analysis:
BALANCE SHEET
INCOME AND EXPENDITURE ACCOUNT
CASH FLOW ANALYSIS
RATIO ANALYSIS
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INTRA FIRM COMPARSION:
HORIZONTAL/ VERTICAL ANALYSIS
BALANCE SHEET:
A financial statement that summarizes a company's assets, liabilities and shareholders'
equity at a specific point in time. These three balance sheet segments give investors an idea
as to what the company owns and owes, as well as the amount invested by the shareholders.
It's called a balance sheet because the two sides balance out. This makes sense: a company
has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it
from shareholders (shareholders' equity).
Each of the three segments of the balance sheet will have many accounts within it that
document the value of each. Accounts such as cash, inventory and property are on the asset
side of the balance sheet, while on the liability side there are accounts such as accounts
payable or long-term debt. The exact accounts on a balance sheet will differ by company and
by industry, as there is no one set template that accurately accommodates for the differences
between different types of businesses.
ASSESTS
CURRENTSASSETS
FIXED ASSETS
LIABILITIES
CURRENTLIABILITIES
LONG TERMLIABILITIES
SHAREHOLDERS
FUNDS
SHAREHOLDERSEQUITY
OWENERS
LIABILITIES
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BALANCE SHEET OF 5 CONSEQUETIVE YEARS
PARTICULAR 2010 2009 2008 2007 2006
CURRENT ASSESTS
CASH & CASH EQUIVALENT 5943 3943 2064 910 1651SHORT TERM INVESTMENT 426 192 213 1571 1171
ACCOUNTS AND NOTES RECEIVABLE,NET 6323 4624 4683 4389 3725
INVENTORIES 3372 2618 2522 2290 1926
PREPAID EXPENSES & OTHER CURRENT ASSESTS 1505 1194 1324 991 657
TOTA CURRENT ASSESTS 17569 12571 10806 10151 9130
PROPERTY, PLANT & EQUIPMENT, NET 19058 12671 11663 11228 9687
AMORTIZATION INTANGIBLE ASSESTS, NET 2025 841 732 796 637
GOODWILL 14661 6534 5124 5169 4594
OTHER NON AMORTIZABLE INTANGIBLE ASSESTS 11783 1782 1128 1248 1212
NON AMORTIZABLE INTANGIBLE ASSESTS 26444 8316 6252 6417 5806INVESTMENT IN NON CONTROLLED AFFILIATES 1368 4484 3883 4354 3690
OTHER ASSESTS 1689 965 2658 1682 980
TOTAL ASSESTS 68153 39848 35994 34628 29930
LIABILITIES & EQUITY
CURRENT LIABILITY
SHORT TERN OBLIGATION 4898 464 369 274
ACCOUNT PAYABLE & OTHER C.L 10923 8127 8273 7602 6496
INCOME TAX PAYABLE 71 165 145 151 90
TOTAL CURRENT LIABILITY 15892 8756 8787 7753 6860
LONG TERM OBLIGATION 19999 7400 7858 4203 2550OTHERL IABILITY 6729 5591 7017 4792 4624
DEFERRRED INCOME TAXES 4057 659 226 646 528
TOTAL LIABILITIES 46677 22406 23888 17394 14562
COMMITMENTS ANS CONTIGENCIES
PREFERRED STOCK, NO. PER VALUE 41 41 41 41 41
REPURCHASED PREFERRED STOCK -150 -145 -138 -132 -120
PEPSI CO COMMON SHARE HOLDERS EQUITY
Common stock, PER SHARE 31 30 30 30 30
CAPITAL IN EXCESS OF PER VALUE 4527 250 351 450 584
RETAINED EARNINGS 37090 33805 30638 28184 24837ACCUMULATED OTHER COMPREHENSIVE LOSS -3630 -3794 -4694 -952 -2246
REPURCHASED COMMON STOCK -16745 -13383 -14122 -10387 -7758
TOTAL PEPSICO COMMON SHAREHOLDERS EQUITY 21273 16908 12203 17325 15447
NON- CONTROLLING INTERESTS 312 638
TOTAL EQUITY 21476 17442
TOTAL LIABILITIES & SHAREHOLDERS EQUITY 68153 39848 35994 34628 29930
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HORIZONTAL/VERTICAL ANALYSIS
2007-2008
PARTICULAR CHANGE CHANGE% VERTCAL
CURRENT ASSESTSCASH & CASH EQUIVALENT 1154 126.8131868 5.734289
SHORT TERM INVESTMENT -1358 -86.44175684 0.591765
ACCOUNTS AND NOTES RECEIVABLE,NET 294 6.698564593 13.0105
INVENTORIES 232 10.13100437 7.006723
PREPAID EXPENSES & OTHER CURRENT ASSESTS 333 33.6024218 3.678391
TOTA CURRENT ASSESTS 655 6.45256625 30.02167
PROPERTY, PLANT & EQUIPMENT, NET 435 3.874242964 32.40262
AMORTIZATION INTANGIBLE ASSESTS, NET -64 -8.040201005 2.033672
GOODWILL -45 -0.870574579 14.23571
OTHER NON AMORTIZABLE INTANGIBLE ASSESTS -120 -9.615384615 3.133856NON AMORTIZABLE INTANGIBLE ASSESTS -165 -2.571294998 17.36956
INVESTMENT IN NON CONTROLLED AFFILIATES -471 -10.81763895 10.78791
OTHER ASSESTS 976 58.02615933 7.384564
TOTAL ASSESTS 1366 3.944784567 100
LIABILITIES & EQUITY
CURRENT LIABILITY
SHORT TERN OBLIGATION 369 0 1.025171
ACCOUNT PAYABLE & OTHER C.L 671 8.826624572 22.98439
INCOME TAX PAYABLE -6 -3.973509934 0.402845
TOTAL CURRENT LIABILITY 1034 13.33677286 24.4124LONG TERM OBLIGATION 3655 86.96169403 21.83142
OTHERL IABILITY 2225 46.43155259 19.49492
DEFERRRED INCOME TAXES -420 -65.01547988 0.627882
TOTAL LIABILITIES 6494 37.33471312 66.36662
COMMITMENTS ANS CONTIGENCIES
PREFERRED STOCK, NO. PER VALUE 0 0 0.113908
REPURCHASED PREFERRED STOCK -6 4.545454545 -0.3834
PEPSI CO COMMON SHARE HOLDERS EQUITY 0 0
Common stock, PER SHARE 0 0 0.083347
CAPITAL IN EXCESS OF PER VALUE -99 -22 0.975163RETAINED EARNINGS 2454 8.70706784 85.11974
ACCUMULATED OTHER COMPREHENSIVE LOSS -3742 393.0672269 -13.0411
REPURCHASED COMMON STOCK -3735 35.95840955 -39.2343
TOTAL PEPSICO COMMON SHAREHOLDERS EQUITY -5122 -29.56421356 33.90287
NON- CONTROLLING INTERESTS 0 0
TOTAL EQUITY 0 0
TOATAL LIABILITIES & SHAREHOLDERS EQUITY 1366 3.944784567 100
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HORIZONTAL/VERTICAL ANALYSIS
2008-2009
PARTICULAR CHANGE CHANGE% VERTICAL
CURRENT ASSESTSCASH & CASH EQUIVALENT 1879 91.03682171 9.895101
SHORT TERM INVESTMENT -21 -9.85915493 0.481831
ACCOUNTS AND NOTES RECEIVABLE,NET -59 -1.259876148 11.6041
INVENTORIES 96 3.806502776 6.569966
PREPAID EXPENSES & OTHER CURRENT ASSESTS -130 -9.818731118 2.996386
TOTA CURRENT ASSESTS 1765 16.33351842 31.54738
PROPERTY, PLANT & EQUIPMENT, NET 1008 8.642716282 31.79833
AMORTIZATION INTANGIBLE ASSESTS, NET 109 14.89071038 2.11052
GOODWILL 1410 27.5175644 16.39731
OTHER NON AMORTIZABLE INTANGIBLE ASSESTS 654 57.9787234 4.471994NON AMORTIZABLE INTANGIBLE ASSESTS 2064 33.0134357 20.8693
INVESTMENT IN NON CONTROLLED AFFILIATES 601 15.47772341 11.25276
OTHER ASSESTS -1693 -63.69450715 2.421702
TOTAL ASSESTS 3854 10.70734011 100
LIABILITIES & EQUITY
CURRENT LIABILITY
SHORT TERN OBLIGATION 95 25.74525745 1.164425
ACCOUNT PAYABLE & OTHER C.L -146 -1.764776985 20.395
INCOME TAX PAYABLE 20 13.79310345 0.414073
TOTAL CURRENT LIABILITY -31 -0.3527939 21.9735LONG TERM OBLIGATION -458 -5.828455078 18.57057
OTHERL IABILITY -1426 -20.32207496 14.03082
DEFERRRED INCOME TAXES 433 191.5929204 1.653784
TOTAL LIABILITIES -1482 -6.203951775 56.22867
COMMITMENTS ANS CONTIGENCIES
PREFERRED STOCK, NO. PER VALUE 0 0 0.102891
REPURCHASED PREFERRED STOCK -7 5.072463768 -0.36388
PEPSI CO COMMON SHARE HOLDERS EQUITY 0 0
Common stock, PER SHARE 0 0 0.075286
CAPITAL IN EXCESS OF PER VALUE -101 -28.77492877 0.627384RETAINED EARNINGS 3167 10.33683661 84.83487
ACCUMULATED OTHER COMPREHENSIVE LOSS 900 -19.17341287 -9.52118
REPURCHASED COMMON STOCK 739 -5.232969834 -33.5851
TOTAL PEPSICO COMMON SHAREHOLDERS EQUITY 4705 38.55609276 42.43124
NON- CONTROLLING INTERESTS 638 0 1.601084
TOTAL EQUITY 17442 0 43.77133
TOATAL LIABILITIES & SHAREHOLDERS EQUITY 3854 10.70734011 100
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HORIZONTAL/VERTICAL ANALYSIS
2009-2010
PARTICULAR CHANGE(2010) CHANGE% VERTICAL
CURRENT ASSESTSCASH & CASH EQUIVALENT 2000 50.7227999 8.720086
SHORT TERM INVESTMENT 234 121.875 0.625064
ACCOUNTS AND NOTES RECEIVABLE,NET 1699 36.74307958 9.277655
INVENTORIES 754 28.80061115 4.947691
PREPAID EXPENSES & OTHER CURRENT ASSESTS 311 26.04690117 2.208267
TOTA CURRENT ASSESTS 4998 39.75817357 25.77876
PROPERTY, PLANT & EQUIPMENT, NET 6387 50.4064399 27.96355
AMORTIZATION INTANGIBLE ASSESTS, NET 1184 140.78478 2.971256
GOODWILL 8127 124.3801653 21.51189
OTHER NON AMORTIZABLE INTANGIBLE ASSESTS 10001 561.2233446 17.28904NON AMORTIZABLE INTANGIBLE ASSESTS 18128 217.989418 38.80093
INVESTMENT IN NON CONTROLLED AFFILIATES -3116
-
69.49152542 2.007248
OTHER ASSESTS 724 75.02590674 2.478247
TOTAL ASSESTS 28305 71.03242321 100
LIABILITIES & EQUITY
CURRENT LIABILITY
SHORT TERN OBLIGATION 4434 955.6034483 7.186771
ACCOUNT PAYABLE & OTHER C.L 2796 34.40383906 16.02717
INCOME TAX PAYABLE -94 -56.96969697 0.104177
TOTAL CURRENT LIABILITY 7136 81.4984011 23.31812
LONG TERM OBLIGATION 12599 170.2567568 29.34427
OTHERL IABILITY 1138 20.35414058 9.873373
DEFERRRED INCOME TAXES 3398 515.629742 5.952783
TOTAL LIABILITIES 24271 108.3236633 68.48855
COMMITMENTS ANS CONTIGENCIES
PREFERRED STOCK, NO. PER VALUE 0 0 0.060159
REPURCHASED PREFERRED STOCK -5 3.448275862 -0.22009
PEPSI CO COMMON SHARE HOLDERS EQUITY 0 0Common stock, PER SHARE 1 3.333333333 0.045486
CAPITAL IN EXCESS OF PER VALUE 4277 1710.8 6.642408
RETAINED EARNINGS 3285 9.717497412 54.42167
ACCUMULATED OTHER COMPREHENSIVE LOSS 164
-
4.322614655 -5.32625
REPURCHASED COMMON STOCK -3362 25.1214227 -24.5697
TOTAL PEPSICO COMMON SHAREHOLDERS EQUITY 4365 25.81618169 31.21359
NON- CONTROLLING INTERESTS -326
-
51.09717868 0.457793
TOTAL EQUITY 4034 23.12808164 31.51145
TOATAL LIABILITIES & SHAREHOLDERS EQUITY 28305 71.03242321 100
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ANALYSISThe statement of financial position provides creditors, investors, and analysts with information on
company's resources (assets) and its sources of capital (its equity and liabilities). It normally also
provides information about the future earnings capacity of a company's assets as well as an indicationof cash flows that may come from receivables and inventories. Assets are resources controlled by the
company as a result of past events and from which future economic benefits are expected to flow to
the entity.
Total current assets- current assets are assets which will normally be converted into cash within a
fiscal year or within an operating cycle. The total current assets are increasing from 2008 to 2009 and
then again from 2009 to 2010. Current assets include:-
cash and cash equivalent- PepsiCo Inc.'s cash and cash equivalents increased from 2 008to 2009 and from 2009 to 2010.
Short term investment- Investments which are intended to be sold in the short term (lessthan one year) including trading securities, available-for-sale securities, held-to-maturitysecurities, and other short-term investments. PepsiCo short-term investments declined from2008 to 2009 but then increased from 2009 to 2010 exceeding 2008 level.
Inventories- in case of manufacturing firms, inventory would mainly consist of materials andcomponents required for the manufacturing of the finished goods, goods in the process ofconversion remaining with the factory at various stages of completion. Inventories have beencontinuously increasing for all the years.
Prepaid expenses- some of the items of expenses are usually paid in advance such as rent,taxes, subscription and insurance. The rationale behind including these prepayments ascurrent assets is that in case these prepayments had not been made, they would have requireduse of cash during the period. the prepaid expenses decreased in 2009 and then againincreased in 2010.
Fixed assets- fixed assets are relatively long lived items owned by the business. the purposeof holding these asets is very different from that of holding current assets. the benefit of theseassets is available not only in the accounting period in which the cost is incurred but overallseveral accounting periods. these assets include:-
plant property and equipment-Tangible assets that are held by an entity for use in theproduction or supply of goods and services, for rental to others, or for administrative purposesand that are expected to provide economic benefit for more than one year; net of accumulateddepreciation. Examples include land, buildings, and production equipment. PepsiCo property,plant and equipment, net increased from 2008 to 2009 and from 2009 to 2010.
Goodwill- the goodwill of the company is increasing from 2008 to 2009 and from 2009 to 2010 whichis a positive sign for the company.
Total liabilities- Liabilities represents obligations of a company arising from past events, thesettlement of which is expected to result in an outflow of economic benefits from the entity. Sum ofthe carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities areprobable future sacrifices of economic benefits arising from present obligations of an entity to transferassets or provide services to other entities in the future. PepsiCo total liabilities declined from 2008 to2009 but then increased from 2009 to 2010 exceeding 2008 level.
Account payable- bills payable to vendors for goods and services received that are used in an entity'sbusiness. Used to reflect the current portion of the liabilities within one year or within the normal
operating cycle. PepsiCo Inc.'s accounts payable increased from 2008 to 2009 and from 2009 to 2010.
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INTRA FIRM COMPARSION
INCOME AND EXPENDITURE STATEMENT:-
INCOME AND EXPENDITUREACCOUNT is merely another name for profit and lossaccount. such type of profit and loss account is generally adopted by non trading concerns
like clubs, societies, hospitals, and like etc. this account is credited with a all earnings (both
realized and unrealized ) and debited with all expenses (both paid and unpaid ) . The
difference represents a surplus of deficiency for a given period which is carried to the capital
account. It should be noted that items of receipts or payments of capital nature such as
legacies, purchases or sales of any fixed assets must not be included in this account.
INCOME AND EXPENDITURE ACCOUNT OF 5
CONCEQUETIVE YEARS
PARTICULAR 2010 2009 2008 2007 2006
NET REVENUE 57838 43232 43251 39474 35137
COGS 26575 20099 20351 18038 15762
GROSS PRIFIT 31263 23133 22900 21436 19375
SELLING, GENERAL & ADM. EXPENSE 22814 15026 15877 14208 12711
AMORTZATION OF INTANGIBE ASSESTS 117 63 64 58 162
OPERATING PROFIT 8332 8044 6959 7170 6502
BOTTLING EQUITY INCOME 735 365 374 560 553
INTEREST EXPENSES -903 -397 -329 -224 -239
INTEREST INCOME 68 67 41 125 173
INCOME BEFORE INCOME TAX 8232 8079 7045 7631 6989
PROVISION FOR INCOME TAX 1894 2100 1879 1973 1347
NET INCOME 6338 5979 5166 5658 5642
HORIZONTAL/VERTICAL ANAYLSIS (2006-2007)
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PARTICULAR CHANGE(2007) CHANGE% VERTICAL
NET REVENUE 4337 12.3431141 100
COGS 2276 14.4397919 45.6959011
GROSS PRIFIT 2061 10.63741935 54.3040989
SELLING, GENERAL & ADM. EXPENSE 1497 11.77720085 35.99331205
AMORTZATION OF INTANGIBE ASSESTS -104 -64.19753086 0.146932158
OPERATING PROFIT 668 10.27376192 18.16385469
BOTTLING EQUITY INCOME 7 1.265822785 1.418655317
INTEREST EXPENSES 15 -6.276150628 -0.567462127
INTEREST INCOME -48 -27.74566474 0.316664133
INCOME BEFORE INCOME TAX 642 9.1858635 19.33171201
PROVISION FOR INCOME TAX 626 46.47364514 4.998226681
NET INCOME 16 0.28358738 14.33348533
HORIZONTAL/VERTICAL ANALYSIS (2007-2008)
PARTICULAR CHANGE(2008) CHANGE% VERTICAL
NET REVENUE 3777 9.568323453 100
COGS 2313 12.82292937 47.05324732
GROSS PRIFIT 1464 6.829632394 52.94675268
SELLING, GENERAL & ADM. EXPENSE 1669 11.74690315 36.70897783
AMORTZATION OF INTANGIBE ASSESTS 6 10.34482759 0.147973457
OPERATING PROFIT -211 -2.942817294 16.08980139
BOTTLING EQUITY INCOME -186 -33.21428571 0.864719891
INTEREST EXPENSES -105 46.875 -0.760676054
INTEREST INCOME -84 -67.2 0.094795496
INCOME BEFORE INCOME TAX -586 -7.67920325 16.28864073
PROVISION FOR INCOME TAX -94 -4.764318297 4.344408222
NET INCOME -492 -8.695652174 11.9442325
HORIZONTAL/VERTICAL ANALYSIS (2009-2008)
PARTICULAR CHANGE2009 CHANGE%2009 VERTICAL
NET REVENUE -19 -0.04392962 100
COGS -252 -1.23826839 46.49102517
GROSS PRIFIT 233 1.017467249 53.50897483
SELLING, GENERAL & ADM. EXPENSE -851 -5.359954651 34.75666173
AMORTZATION OF INTANGIBE ASSESTS -1 -1.5625 0.145725389
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OPERATING PROFIT 1085 15.59132059 18.60658771
BOTTLING EQUITY INCOME -9 -2.406417112 0.844282013
INTEREST EXPENSES -68 20.66869301 -0.918301258
INTEREST INCOME 26 63.41463415 0.154977794
INCOME BEFORE INCOME TAX 1034 14.67707594 18.68754626
PROVISION FOR INCOME TAX 221 11.76157531 4.857512953
NET INCOME 813 15.73751452 13.83003331
HORIZONTAL/VERTICAL ANALYSIS (2010-2009)
PARTICULAR CHANGE(2010) %CHANGE(2010) vertical analysis(2010)
NET REVENUE 14606 33.78515914 100
COGS 6476 32.22050848 45.94730108
GROSS PRIFIT 8130 35.14459863 54.05269892
SELLING, GENERAL & ADM. EXPENSE 7788 51.83016105 39.44465576
AMORTZATION OF INTANGIBE ASSESTS 54 85.71428571 0.202289152
OPERATING PROFIT 288 3.580308304 14.405754
BOTTLING EQUITY INCOME 370 101.369863 1.27079083INTEREST EXPENSES -506 127.4559194 -1.561257305
INTEREST INCOME 1 1.492537313 0.117569764
INCOME BEFORE INCOME TAX 153 1.893798737 14.23285729
PROVISION FOR INCOME TAX -206 -9.80952381 3.274663716
NET INCOME 359 6.004348553 10.95819358
ANALYSISNet revenue- PepsiCo Inc.'s net revenue declined from 2008 to 2009 but then increased from2009 to 2010 exceeding 2008 level. In 2009, they incurred a charge of $36 million inconjunction with the Productivity for Growth program that began in 2008. The programincludes actions in all divisions of the business, including the closure of six plants that theybelieve will increase cost competitiveness across the supply chain, upgrade and streamlinethe product portfolio, and simplify the organization for more effective and timely decision-making. In 2010, they incurred merger and integration charges of $799 million related to theacquisitions of PBG and PAS.The merger and integration charges related to our acquisitions of PBG and PAS are beingincurred to help create a more fully integrated supply chain and go-to-market Businessmodel, to improve the effectiveness and efficiency of the Distribution of our brands and to
enhance our revenue growth. These charges also include closing costs, one-time financingcosts and advisory fees related to our acquisitions of PBG and PAS. In addition, we recorded
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$9 million of merger-related charges, representing our share of the respective merger costs ofPBG and PAS, in bottling equity income.
Operating profit-`PepsiCo Inc.'s operating profit increased from 2008 to 2009 and from 2009to 2010 because the impact on market of the commodity hedges and lower reconstructing,impairment charges related to the productivity of growth program were low thereby
increasing operating profit of the company.
Net income- PepsiCo Inc.'s income before income taxes increased from 2008 to 2009 andfrom 2009 to 2010. The net income which tells the consolidated profit or loss for the periodincreased from 2008 to 2009 and then again decreased in 2010.because the interest expensesincurred in 2010 were large.
CASH FLOW STATEMENT
In financial accounting, a cash flow statement is also known as fund flow statement or
statement of cash flow. It is a financial statement that shows how changes in balance sheetand income and expenditure account affects the cash and cash equivalents, and breaks down
the analysis into operating, investing and financial activities. Essentially the cash flow
statement is concerned with flow of cash in and cash out of the business.
The statement captures both the current operating results and the accompanying changes in
the balance sheet . As an analytical tool , the statement of cash flows is useful in determining
the short term viability of a company , particularly its ability to pay bills
The cash flow statement is intended to
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Provide information on a firms liquidity and solvency and its ability to change cashflows in future circumstances
Provide additional information for evaluating changes in assets , liabilities and equity Improve the comparability of different accounting methods Indicate the amount , timing and probability of future cash flows
CASH FLOW STATEMENT OF 5 CONCEQUETIVE
YEARS
PARTICULARS 2010 2009 2008 2007
Operating Activities
Net Income 6338 5979 5166 5670
Depreciation and Amortization 2327 1635 1543 1426
Stock-Based compensation expense 299 227 238 260
Restructuring and Impairment Charges 36 543 102
Cash payment for restructuring charges -31 -196 -180 -22
Merger and Integration costs 808 50Cash Payments for merger and integration costs -385 -49
OPERATING ACTIVITIES
INVESTING ACTIVITIES
FINANACIAL ACTIVITIES
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Gain on previously held equity interests in PBG and PAS -958
Assets Write Off 145
Non-cash foreign exchange loss related to Venezuela devaluation 120
Excess tax benefits from share-based payment arrangements -107 -42 -107 -208
Pension and retiree medical plan contributions -1734 -1299 -219 -310
Pension and retiree medical plan expenses 453 423 459 535
Bottling equity income, net of dividends 42 -235 -202 -441
Deferred income taxes and other tax charges and credits 500 284 573 118
Change in accounts and notes receivable -268 188 -549 -405
Change in inventories 276 17 -345 -204
Change in prepaid expenses and other current assets 144 -127 -68 -16
Change in accounts payable and other current liabilities 488 -133 718 522
Change in income taxes payable 123 319 -180 128
Other, net -132 -281 -391 -221
Net Cash Provided by Operating Activities 8448 6796 6999 6934
Investing Activities 2010 2009 2008 2007
Capital spending -3253 -2128 -2446 -2430
Sales of property, plant and equipment 81 58 98 47
Acquisitions of PBG and PAS, net of cash and cash equivalents
acquired -2833
Acquisition of manufacturing and distribution rights from DPSG -900
Investment in WBD -463
Other acquisitions and investments in no controlled affiliates -83 -500 -1925 -1320
Divestitures 12 99 6Cash restricted for pending acquisitions 15 -40
Cash proceeds from sale of PBG and PAS stock 358 315
Short-term investments, by original maturity
More than three months purchases -12 -29 -156 -83
More than three months maturities 29 71 62 113
Three months or less, net -229 13 1376 -413
Other investing, net -17 27
Net Cash Used for Investing Activities -7668 -2401 -2667 -3744
Financing Activities 2010 2009 2008 2007
Proceeds from issuances of long-term debt 6451 1057 3719 2168
Payments of long-term debt -59 -226 -649 -579
Debt repurchase -500
Short-term borrowings, by original maturity
More than three months proceeds 227 26 89 83
More than three months payments -96 -81 -269 -133
Three months or less, net 2351 -963 625 -345
Cash dividends paid -2978 -2732 -2541 -2204
Share repurchases common -4978 -4720 -4300
Share repurchases preferred -5 -7 -6 -12
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Proceeds from exercises of stock options 1038 413 620 1108
Excess tax benefits from share-based payment arrangements 107 42 107 208
Acquisition of no controlling interest in Lebedyansky from PBG -159
Other financing -13 -26
Net Cash Provided by/(Used for) Financing Activities 1386 -2497 -3025 -4006
Effect of exchange rate changes on cash and cash equivalents -166 -19 -153 75
Net Increase in Cash and Cash Equivalents 2000 1879 1154 -741
Cash and Cash Equivalents, Beginning of Year 3943 2064 910 1651
Cash and Cash Equivalents, End of Year 5943 3943 2064 910
CASH FLOW ANAYSIS (2009-2010)
PARTICULARS change change%
Operating Activities
Net Income 359 6.004349
Depreciation and Amortization 692 42.32416Stock-Based compensation expense 72 31.71806
Restructuring and Impairment Charges -36 -100
Cash payment for restructuring charges 165 -84.1837
Merger and Integration costs 758 1516
Cash Payments for merger and integration costs -336 685.7143
Gain on previously held equity interests in PBG and PAS -958
Assets Write Off 145
Non-cash foreign exchange loss related to Venezuela devaluation 120
Excess tax benefits from share-based payment arrangements -65 154.7619
Pension and retiree medical plan contributions -435 33.4873Pension and retiree medical plan expenses 30 7.092199
Bottling equity income, net of dividends 277 -117.872
Deferred income taxes and other tax charges and credits 216 76.05634
Change in accounts and notes receivable -456 -242.553
Change in inventories 259 1523.529
Change in prepaid expenses and other current assets 271 -213.386
Change in accounts payable and other current liabilities 621 -466.917
Change in income taxes payable -196 -61.442
Other, net 149 -53.0249
Net Cash Provided by Operating Activities 1652 24.30842
Investing Activities change change%
Capital spending -1125 52.86654
Sales of property, plant and equipment 23 39.65517
Acquisitions of PBG and PAS, net of cash and cash equivalents
acquired -2833
Acquisition of manufacturing and distribution rights from DPSG -900
Investment in WBD -463
Other acquisitions and investments in noncontrolled affiliates 417 -83.4
Divestitures -87 -87.8788
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Cash restricted for pending acquisitions -15 -100
Cash proceeds from sale of PBG and PAS stock 0
Short-term investments, by original maturity 0
More than three months purchases 17 -58.6207
More than three months maturities -42 -59.1549
Three months or less, net -242 -1861.54
Other investing, net -17
Net Cash Used for Investing Activities -5267 219.3669
Financing Activities change change%
Proceeds from issuances of long-term debt 5394 510.3122
Payments of long-term debt 167 -73.8938
Debt repurchase -500
Short-term borrowings, by original maturityMore than three months proceeds 201 773.0769
More than three months payments -15 18.51852
Three months or less, net 3314 -344.133
Cash dividends paid -246 9.004392
Share repurchases common -4978
Share repurchases preferred 2 -28.5714
Proceeds from exercises of stock options 625 151.3317
Excess tax benefits from share-based payment arrangements 65 154.7619
Acquisition of noncontrolling interest in Lebedyansky from PBG -159
Other financing 13 -50Net Cash Provided by/(Used for) Financing Activities 3883 -155.507
CASH FLOW ANALYSIS (2008-2009)
PARTICULARS change change%
Operating Activities
Net Income 813 15.73751
Depreciation and Amortization 92 5.962411
Stock-Based compensation expense -11 -4.62185
Restructuring and Impairment Charges -507 -93.3702
Cash payment for restructuring charges -16 8.888889
Merger and Integration costs 50
Cash Payments for merger and integration costs -49
Gain on previously held equity interests in PBG and PAS 0
Assets Write Off 0
Non-cash foreign exchange loss related to Venezuela devaluation 0
Excess tax benefits from share-based payment arrangements 65 -60.7477
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Pension and retiree medical plan contributions -1080 493.1507
Pension and retiree medical plan expenses -36 -7.84314
Bottling equity income, net of dividends -33 16.33663
Deferred income taxes and other tax charges and credits -289 -50.4363
Change in accounts and notes receivable 737 -134.244
Change in inventories 362 -104.928
Change in prepaid expenses and other current assets -59 86.76471
Change in accounts payable and other current liabilities -851 -118.524
Change in income taxes payable 499 -277.222
Other, net 110 -28.133
Net Cash Provided by Operating Activities -203 -2.90041
Investing Activities change change%
Capital spending 318 -13.0008
Sales of property, plant and equipment -40 -40.8163
Acquisitions of PBG and PAS, net of cash and cash equivalents acquired 0
Acquisition of manufacturing and distribution rights from DPSG 0
Investment in WBD 0
Other acquisitions and investments in noncontrolled affiliates 1425 -74.026
Divestitures 93 1550
Cash restricted for pending acquisitions 55 -137.5
Cash proceeds from sale of PBG and PAS stock -358 -100
Short-term investments, by original maturity 0
More than three months purchases 127 -81.4103
More than three months maturities 9 14.51613
Three months or less, net -1363 -99.0552
Other investing, net 0
Net Cash Used for Investing Activities 266 -9.97375
Financing Activities change change%
Proceeds from issuances of long-term debt -2662 -71.5784
Payments of long-term debt 423 -65.1772
Debt repurchase 0
Short-term borrowings, by original maturityMore than three months proceeds -63 -70.7865
More than three months payments 188 -69.8885
Three months or less, net -1588 -254.08
Cash dividends paid -191 7.516726
Share repurchases common 4720 -100
Share repurchases preferred -1 16.66667
Proceeds from exercises of stock options -207 -33.3871
Excess tax benefits from share-based payment arrangements -65 -60.7477
Acquisition of noncontrolling interest in Lebedyansky from PBG 0
Other financing -26
Net Cash Provided by/(Used for) Financing Activities 528 -17.4545
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Effect of exchange rate changes on cash and cash equivalents 134 -87.5817
Net Increase in Cash and Cash Equivalents 725 62.82496
Cash and Cash Equivalents, Beginning of Year 1154 126.8132
Cash and Cash Equivalents, End of Year 1879 91.03682
CASH FLOW ANALYSIS (2007-2008)PARTICULARS change change%
Operating Activities
Net Income -504 -8.88889
Depreciation and Amortization 117 8.204769
Stock-Based compensation expenses -22 -8.46154
Restructuring and Impairment Charges 441 432.3529
Cash payment for restructuring charges -158 718.1818
Merger and Integration costs 0
Cash Payments for merger and integration costs 0Gain on previously held equity interests in PBG and PAS 0
Assets Write Off 0
Non-cash foreign exchange loss related to Venezuela devaluation 0
Excess tax benefits from share-based payment arrangements 101 -48.5577
Pension and retiree medical plan contributions 91 -29.3548
Pension and retiree medical plan expenses -76 -14.2056
Bottling equity income, net of dividends 239 -54.195
Deferred income taxes and other tax charges and credits 455 385.5932
Change in accounts and notes receivable -144 35.55556
Change in inventories -141 69.11765Change in prepaid expenses and other current assets -52 325
Change in accounts payable and other current liabilities 196 37.54789
Change in income taxes payable -308 -240.625
Other, net -170 76.92308
Net Cash Provided by Operating Activities 65 0.93741
Investing Activities change change%
Capital spending -16 0.658436
Sales of property, plant and equipment 51 108.5106
Acquisitions of PBG and PAS, net of cash and cash equivalents acquired 0
Acquisition of manufacturing and distribution rights from DPSG 0
Investment in WBD 0
Other acquisitions and investments in no controlled affiliates -605 45.83333
Divestitures 6
Cash restricted for pending acquisitions -40
Cash proceeds from sale of PBG and PAS stock 43 13.65079
Short-term investments, by original maturity 0
More than three months purchases -73 87.95181
More than three months maturities -51 -45.1327
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Three months or less, net 1789 -433.172
Other investing, net -27 -100
Net Cash Used for Investing Activities 1077 -28.766
Financing Activities change change%
Proceeds from issuances of long-term debt 1551 71.54059
Payments of long-term debt -70 12.08981
Debt repurchase 0
Short-term borrowings, by original maturity
More than three months proceeds 6 7.228916
More than three months payments -136 102.2556
Three months or less, net 970 -281.159
Cash dividends paid -337 15.29038
Share repurchases common -420 9.767442Share repurchases preferred 6 -50
Proceeds from exercises of stock options -488 -44.0433
Excess tax benefits from share-based payment arrangements -101 -48.5577
Acquisition of noncontrolling interest in Lebedyansky from PBG 0
Other financing 0
Net Cash Provided by/(Used for) Financing Activities 981 -24.4883
Effect of exchange rate changes on cash and cash equivalents -228 -304
Net Increase in Cash and Cash Equivalents 1895 -255.735
Cash and Cash Equivalents, Beginning of Year -741 -44.8819
Cash and Cash Equivalents, End of Year 1154 126.8132
ANALYSISOperating ActivitiesIn 2009, our operations provided $6.8 billion of cash, compared to $7.0 billion in the prior year,reflecting a $1.0 billion ($0.6 billion after-tax) discretionary pension contribution to our U.S. pension
plans, $196 million of restructuring payments related to the Productivity for Growth program and $49million of PBG/PAS merger cost payments. Operating cash flow also reflected net favourableworking capital comparisons to the prior year.
In 2008 operations provided $7.0 billion of cash, compared to $6.9 billion in the prior year, primarilyreflecting solid business results. The operating cash flow in 2008 reflects restructuring payments of$180 million, including $159 million related to the Productivity for Growth program, and pension andretiree medical contributions of $219 million, of which $23 million were discretionary.Investing ActivitiesIn 2009, net cash used for investing activities was $2.4 billion, primarily reflecting $2.1 billion forcapital spending and $0.5 billion for acquisitions.
In 2008, $2.7 billion of investing activities, primarily reflecting $2.4 billion for capital spending and$1.9 billion for acquisitions. Significant acquisitions included the joint acquisition with PBG in Russia
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and the acquisition of a snacks company in Serbia. The use of cash was partially offset by netproceeds from sales of short-term investments of $1.3 billion and proceeds from sales of PBG andPAS stock of $358 million.
Net capital spending of about $3.6 billion in 2010. Additionally, in connection with the December 7,2009 agreement with Dr Pepper Snapple Group, Inc. (DPSG) to manufacture and distribute certain
DPSG products in the territories where they are currently sold by PBG and PAS, they will make anupfront payment of $900 million to DPSG upon closing of the proposed mergers with PBG and PAS.Financing ActivitiesIn 2009, net cash used for financing activities was $2.5 billion, primarily reflecting the return ofoperating cash flow to our shareholders through dividend payments of $2.7 billion. Net proceeds fromissuances of long-term debt of $0.8 billion and stock option proceeds of $0.4 billion were mostlyoffset by net repayments of short-term borrowings of $1.0 billion.
In 2008, $3.0 billion was used for financing activities, primarily reflecting the return of operating cashflow to shareholders through common share repurchases of $4.7 billion and dividend payments of$2.5 billion. The use of cash was partially offset by proceeds from issuances of long-term debt, net of
payments, of $3.1 billion, stock option proceeds of $620 million and net proceeds from short-termborrowings of $445 million.
Subsequent to year-end 2009, $4.25 billion of fixed and floating rate notes were issued. The netproceeds from this offering to finance a portion of the purchase price for the PBG and PAS mergersand to pay related fees and expenses in connection with the mergers. Annually review of the capitalstructure with the Board, including the dividend policy and share repurchase activity was done. In thesecond quarter of 2009, the Board of Directors approved a 6% dividend increase from $1.70 to $1.80per share. No shares were repurchased in 2009.The current $8.0 billion authorization hasapproximately $6.4 billion remaining for repurchase. It was anticipated that in 2010 share repurchasestogether with a voluntary $600 million pre-tax pension plan contribution will total about $5 billion.
.
RATIO ANALYSIS
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PROFITABILITY RATIO FORMULA 2010 2009 2008
PROFIT MARGIN RATIO PAT/SALES*100 10.95819 13.83003 11.88874
ASSETS TURN OVER RATIO SALES/AVG. TOTAL ASSETS 1.071064 1.140054 1.224859
RETURN ON INVESTMENT
RATIOPAT/AVG. TOTAL ASSETS* 100 11.73693 15.76699 14.56203
RETURN ON EQUITYPAT/ AVG. SHAREHOLDERS EUITY *
10033.19976 41.07754 34.82796
EARNING PER SHARE PAT/ WEIGHTED AVG. NO. OF EQUITY 3.97 3.81 3.26
LIQUIDITY RATIO
CURRENT RATIOCURRENT ASSETS/CURRENT
LIABILITIES1.105525 1.435701 1.229771
QUICK RATIO CA-INVENTORY/CL 0.893343 1.136706 0.942756
DEBTOR TURN OVER RATIO SALES/AVG. DEBTORS
INVENTORY TURN OVER RATIO COGS/AVG. INVENTORY 8.873122 7.820623 8.458437
SOLVENCY RATIO
DEBT. EQUITY RATIO TOTAL DEBT/SHAREHOLDERS EQUITY 1.170357 0.465105 0.674178
INTEREST COVERAGE RATIO PBIT/INTEREST EXPENSE 10.04097 21.18136 22.28875
The ratio are calculated from the balance sheet of the year ending 2010 andincome and expenditure account of the year ending 2010
ANALYSIS
PROFITABILITY
IT TELLS US ABOUT OVERALL OPERATING SUCCESS
AS AN INVESTOR, WE NEED TO KNOW , IS THE COMPANY CAPABLE ENOUGHTO PAY US THE DIVIDENDS
LIQUIDITY
CURRENT RATIO:THIS RATIO SHOWS THE AMOUNT OF C.A A COMPANY HASFOR EVERY RE.1 OF CURRENT LIABILITY
QUICK RATIO: THIS RATIO SHOWS RELATIONSHIP BETWEEN HIGHLY LIQUIDCURRENT ASSETS OF THE COMPANY
SOLVENCY
SHOWS ABILITY OF A COMPANY TO PAY BACK ITS CREDITORS AND LENDERS
DEBT-EQUITY RATIO :TOTAL DEBTS/ SHAREHOLDERS EQUITY
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Profitability ratio: It measures the degree of operating success of a company. The reasonwhy investors are interested in a company is that they think they will earn a reasonable return
in the form of capital gain and dividend on their investment. Therefore they are keen to learn
about the ability of a company to earn revenues in excess of expenses, which can be done
only by analyzing the profitability ratios. They can be categorized into five types which are asfollows:-
Profit margin ratio: This ratio measures the amount of net profit earned per rupee of
revenue. It shows the cushion or relaxation available to the company in case of
increase in cost or decrease in the sales price due to recession or increased
competition. As calculated above we can see that the profit margin ratio has increased
in the year 2009 with respect to the year 2008 and then again decreased in 2010.
Assets turnover ratio: Average total assets are calculated as opening balance of total
assets + closing balance of total assets / 2. This ratio tells how many times the assets
are turned over in a period and thereby generated sales. Higher assets turnover ratio
means that the company is managing its assets efficiently and a lower ratio would
denote that the company has more assets than what it really requires. The funds are
blocked up in the form of assets lying idle. The company has a lower asset turnover
ratio stating that it is not able to manage its funds efficiently and has more assets than
required in the company.
Return on investment/ return on assets: This ratio tells the amount of net profit
earned per rupee of investment made in the assets. It measures the profitability from a
given level of investment.
Return on equity: This ratio tells the amount of net profit earned per rupee of
shareholders equity. It measures the efficiency of the company in utilizing the
shareholders funds. The return on equity rate has increased in 2009 with respect to the
year 2008 and then again has decreased in the year 2010.
Earnings per share: Earnings per share tells the amount of net profit earned by thecompany on one share. E.P.S is basically used for intra- firm comparisons where the
earning of one year is compared to the previous year. It cannot be used for inter firm
comparisons unless the number of equity shares of both the firms is same. The E.P.S
of the company has increased substantially over the years indicating that the amount
of net profit earned by the company has increased per share.
Liquidity ratio:
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Liquidity is the ability of the company to meet its short term obligations whenever
they fall due. An enterprise must have enough cash and other current assets which can
be readily converted into cash so that they can pay the creditors and lenders on time.
In order to analyse the liquidity position of the company we have a tool in the form of
liquidity ratios which are as follows:-
1) Current ratio :This ratio shows the amount of current assets a company has for
every one rupee of current liability. It shows the firm's ability to pay the debt in the
short-term. The idle ratio is 2:1. The current ratio of the year 2009 is increasing with
respect to the year 2008 and then again decreasing in 2010. Overall the current ratio is
more than 1 it means company is in the condition to repay its liability.
2) Quick ratio: this ratio shows the relationship between highly liquid current assets
that is current assets- inventories and current liabilities of the company. we exclude
inventories because it is two steps away from the conversion into cash(sales and
collection). The idle quick ratio is 1:1. As we can see the quick ratio is almost near to
1:1 this is a good sign for company. 3.Inventory turnover ratio-
It shows the number of times inventory is converted into sales. A higher ratio mean
efficient inventory management. Pepsico inventory turnover ratio is high which
indicates efficient inventory management.
3)Solvency ratio: Solvency is the ability of the company to pay back its creditors and
lenders. The long term solvency of a company would depend upon the extent to which
company is using debt in financing its assets. Solvency ratios are broadly of twotypes:-
Debt equity ratio- this ratio measures the relationship between the capitalprovided by the lenders or creditors and funds provided by the shareholders of the
company. A higher debt equity ratio would mean highly leveraged company and a
low debt equity ratio indicates conservative use of debt. Pepsico shows a high debt
equity ratio which means pepsico is highly leveraged company.
Interest coverage ratio- this ratio shows the protection available to the creditors forthe payments of interest by the company. A higher ratio would mean adequatesafety for the payment of interest even if there is a drop in the companys
earnings. There is a slight decrease in the interest coverage ratio but they are able
to pay the interest.
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The coco-cola is an American multinational beverage corporation of manufacturer, retailers
and marketer of non-alcoholic beverage concentrates and syrups. The company is best known
for its flagship product coca-cola, invented in 1886. The coca-cola formula and brand was
bought in 1889 by asa Candler who incorporated the coca-cola beverage, coca-cola currently
offers more than 500 brands in over 200 countries or territories and serves over 1.6 billion
servings each day.
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INTER FIRM COMPARISON
INCOME AND EXPENDITURE ACCOUNT
PEPSI 2010 COCA COLA 2010
HORIZONTAL VERTICAL HORIZONTAL VERTICAL
PARTICULAR CHANGE(%) CHANGE CHANGE CHANGE
NET OPERATING REVENUE 33.79 100 13.32 85
COST OF GOODS SOLD 33.23 45.95 14.47 36.14
GROSS PROFIT 35.15 54.05 12.68 63
OPERATING INCOME 3.59 14.4 2.64 24.05
INTEREST INCOME 1.5 0.11 27.3 0.9
INTEREST EXPENSE 127.45 -1.56 106.47 -2.08
INCOME BEFORE INCOMETAX 1.9 14.23 59.21 40.55
INCOME TAX -9.08 3.27 16.86 6.78
NET INCOME 6.05 10.96 71.72 33.76
ANALYSIS:NET REVENUE: net revenue of Pepsi co far better than coca-cola. Pepsi earn
higher revenue than the coke. The reasons behind those Pepsi co mergers with
PGB &PABs. New products launched and in coca-cola cost of goods sold are
increased.
Gross profit: gross profit of Pepsi co continuously increased from 2008
2010.
Because Pepsi made certain acquisitions Volume of product sold is increased
But for coke
They do well in diet drinks They earn more from diet drinks &coca-cola won leadership of best
selling diet soft drinks
Operating profit: it is decreased because higher raw material cost, difficulteconomic condition &investment in emerging markets.
And in coca-cola selling &advertising expenses increased
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CASH FLOW STATEMENT
PEPSI COCA-COLAHORIZONTAL ANALYSIS
(%)
PARTICULAR 2010 2010
OPERATING ACTIVITIES
NET INCOME 6.004 71.72
Net cash provided by operating activities 24.3 16.44
INVESTING ACTIVITIES
Net cash provided by (used in) investing activities 219.36 6.17
FINANCING ACTIVITIES
Net cash provided by (used in) financing activities -155.5 51.11
CASH AND CASH EQUIVALENTS 6.43 -35.51
Balance at beginning of year 91.03 49.35
Balance at end of year 50.72 21.3
BALANCE SHEET
PEPSI 2010 COCA COLA 2010
HORIZONTAL VERTICAL HORIZONTAL VERTICAL
PARTICULAR CHANGE (%) CHANGE CHANGE CHANGE
TOTAL CURRENT ASSETS 39.75 25.77 22.95 29.64
TOTAL ASSETS 71.03 100 49.55 100
TOTAL CURRENT LIABILITY 81.49 23.31 34.88 25.38
TOTAL LIABILITIES 108.32 68.48 49.82 100
TOTAL EQUITY 23.12 31.51 23.55 42.94
TOTAL LIABILITIES
&EQUITY 71.03 100 49.82 100
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RATIO ANALYSIS:
pepsi coca cola
CONSUMER
INDUSTRY
PROFITABILITY RATIO 2010 2010 2010
PROFIT MARGIN RATIO 10.95819358 33.76804579 6.66
ASSETS TURN OVER RATIO 1.071064157 0.578271394 0.66
RETURN ON INVESTMENT
RATIO11.73692836
19.527094895.92
RETURN ON EQUITY 33.19975904 35.61 14.05
EARNING PER SHARE 3.97 5.12
LIQUIDITY RATIO
CURRENT RATIO 1.105524792 1.165928247 1.17
QUICK RATIO 0.893342562 1.02274692 0.79
DEBTOR TURN OVER RATIO
INVENTORY TURN OVER RATIO 8.87312187 5.073141487 5.92
SOLVENCY RATIO
DEBT. EQUITY RATIO 1.17035679 25.16022727 0.9
INTEREST COVERAGE RATIO 10.04097453 18.99863574 9.39
ANALYSIS:PROFITIBILITY RATIO
1. PROFIT MARGIN RATIOProfit Margin Ratio of Pepsi is increased in 2009 but slightly decreased in
2010. Whereas the profit margin ratio of coca cola is increased in both years. And the
profit margin ratio of coca cola is greater than Pepsi, it means coca cola is better than
in term of profit earned per dollar. There is some reason for the less profit margin
ratio of Pepsi.
Due to increase in profit after tax of coca cola. Cost of goods sold of Pepsi is higher than coca cola. This is the main reason due to
which the Pepsis profit margin ratio is less than Coca-cola.
Expense of PepsiCo is high.Profit margin ratio of both companies is higher than the profit margin ratio of
consumer goods industry, it means that both company is growing.
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1.ASSESTS TURNOVER RATIO:
Assets turnover ratio of Pepsi is more than 1 time whereas coca cola is less
than 1time. It means that Pepsi is efficiently utilizing its assets than Coca-
Cola. The assets turnover ratio is less than 1 time means Coca-Cola has more
assets than what it really requires.Assets turnover ratio of both companies is higher than the assets turnover ratio of
consumer goods industry, it means that both company is growing.
2. RETURN ON INVESTMENT RATIO:Return on investment ratio is approximately equal in 2008 & 2009 but there is a small
decrease in Pepsi ROI in 2010 at the same time The ROI of coca cola increased. It
means that
PepsiCos Rate of return on investment made in assets was lower than theCoca-Cola
Investment made in those assets which did not give good returns.Return on investment ratio of both companies is higher than the return on
investment ratio of consumer goods industry, it means that both company is doing
well.
3. RETURN ON EQUITY RATIOReturn on investment of Pepsi is Greater than Coca Cola but in 2010, there is
slight decrease in Pepsis ROE. Overall in term of Return on equity, Pepsi is
Stronger than Coca-Cola. It means that PepsiCo is More efficient than coca-cola in utilizing the shareholders funds.
05
10
15
20
25
30
35
40
PROFIT
MARGIN
RATIO
ASSETS TURN
OVER RATIO
RETURN ON
INVESTMENT
RATIO
RETURN ON
EQUITY
RATIO
PEPSICO
COCACOLA
CONSUMERGOODS
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LIQUIDITY RATIOCURRENT RATIO
Current ratio of both companies is good and approximately similar to each other and
also approximately equal to industry current ratio. It means that both companies are doingwell.
QUICK RATIO
Quick Ratio of both companies is approximately similar to each other and also higher
than the industry quick ratio. It means that both companies are doing well in consumer goods
industry.
INVENTORY TURN OVER RATIO
Pepsi has higher turnover ratio than coca cola. It means that PepsiCo efficiently
manage their inventory.
Inventory turnover Ratio of both companies is higher than the industry inventory turn over
Ratio. It means that both the companies is doing well in consumer goods industry. Pepsi
ITOR is higher than industry.
0123456789
10
AxisTitle
LIQUIDITY RATIO
PEPSICO
COCACOLA
CONSUMER GOODS
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SOLVENCY RATIODEBT TO EQUITY RATIO
Debt equity ratio of Coca cola is much better than PepsiCo. Coca-Cola used their debt
aggressively, which results in volatile earnings & Pepsi used their debt conservately.Debt to
equity ratio of Coca-Cola is higher than industry debt to equity ratio.
INTEREST COVERAGE RATIO
Interest coverage ratio of Coca cola is better than PepsiCo. It means that coca cola is more
able to pay its interest than PepsiCo. The Interest coverage ratio is higher than the industry
interest coverage ratio. It means that both companies is doing well in consumer goods
industry.
0
5
10
15
20
25
30
DEBT EQUITY
RATIO
INTEREST
COVERAGE
RATIO
Category 3 Category 4
PEPSICO
COCACOLA
CONSUMER GOODS
INDUSTRY
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ConclusionAs per the analysis above we came to the conclusion that the industryperformance of both the companies is good in consumer goods industry.
In some aspect Pepsi is performing well than the cola-cola company.
As we all know that both the companies are completing at the highest
level in future we could see more of products and more of profits
REFERENCES
WWW.WIKIPEDIA.COM
WWW.PEPSI.CO.IN
WWW.COCA-COLA.COM
www.stock-analysis-on.net
http://www.wikipedia.com/http://www.pepsi.co.in/http://www.pepsi.co.in/http://www.coca-cola.com/http://www.stock-analysis-on.net/http://www.stock-analysis-on.net/http://www.stock-analysis-on.net/http://www.coca-cola.com/http://www.pepsi.co.in/http://www.wikipedia.com/