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Financial Reporting Problem PepsiCo, Inc. BYP18 1




Financial Reporting Problem PepsiCo, Inc. BYP18 1;Financial Analysis;**Your Name**;XACC/280;**Date**;INSTRUCTIONS ? The following are your instructions and some tips on how to complete the final. The actual final template starts on page 3.;Part I;Your parents are considering investing in PepsiCo, Inc. common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Fortunately, excerpts from a current annual report of PepsiCo are presented in Appendix A of the textbook.;(a);Make a 5-year trend analysis, using 2001 as the base year, of (1) net sales and (2) net income.;(The Trend should be reported in percentages?See Illustration 15-4 on page 700 of the textbook).;Use the information found on page A30 of Appendix A.;In at least 300 words, comment on the significance of the trend results.;(b) Compute for 2005 and 2004 the (1) profit margin, (2) asset turnover, (3) return on assets, and (4) return on common stockholders? equity. How would you evaluate PepsiCo?s profitability?;Total assets at December 27, 2003, were $25,327, and total stockholders? equity at December 27, 2003, was $11,896.;In at least 200 words identify how would you evaluate PepsiCo?s profitability?;(c);Compute for 2005 and 2004 the (1) debt to total assets and (2) times interest earned ratio.;In at least 200 words identify how would you evaluate PepsiCo?s long-term solvency?;(d);In a minimum of 200 words describe what information outside the annual report may also be useful to your parents in making a decision about PepsiCo, Inc.?;Part II;PepsiCo?s financial statements are presented in Appendix A. The Coca-Cola Company?s financial statements are presented in Appendix B.;(a);Based on the information contained in these financial statements, determine each of the following for each company.;(1) The percentage increase (decrease) in (i) net sales and (ii) net income from 2004 to 2005.;(2) The percentage increase in (i) total assets and (ii) total common stockholders? (shareholders?) equity from 2004 to 2005.;(3) The basic earnings per share and price-earnings ratio for 2005. (For Coca-Cola, use the basic earnings per share.) Coca-Cola?s common stock had a market price of $43.60 at the end of fiscal-year 2005.;(b) Identify, in a minimum of 300 words, what conclusions concerning the two companies can be drawn from these data?;a) PEPSICO, INC.;Trend Analysis of Net Sales and Net Income;For the Five Years Ended 2005;Base Period 2001?(in millions);2005;2004;2003


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