PepsiCo. Inc Financial Analysis

Ratio Analysis 

The current ratios, which are the current assets are divided by the current liabilities, therefore, it shows that the company had a current ratio of 1.16. These demonstrate that the company had a wide margin in respect to the short-term assets that could sort short-term liabilities. In addition, the acid ratio, which is 1.02, showed that the company is less from the risk in terms of short-term liabilities in that the ratios exhibited stable inventory level.

Concerning inventories, the company held inventories on an average of 44.2, which is not detrimental to the company in that it shows that the company could control inventory efficiently as compared to competitors. Days sell uncollected shows an average of 28 days, which exhibits diversified and shorter shelf life for Pepsi products.

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The company debt and equity ratios were less than one (0.77) to show that Pepsi had a lower average in respect to total debt to equity ratio. The company uses less debt financing as compared to equity financing.

In undertaking analysis of the profit margin ratio, the company showed a low-profit margin of 10 percent. It implied that there was a high cost of sale in PepsiCo in respect to the percentage of good that were sold. 

The return on assets ratio of the company is low to show  that it does not manage to generate good money on its assets hence depend on financing.

Income Statement

Based on Income Statement, PepsiCo’s sales revenue increase thus, it showed the company activities were carried out well because the cost of sales was reduced. The faster growth of sales revenue than the cost of sales increases the company’s gross profit by 1.29% and increase the company growth rate by 100%. The company operating profit decreases from 49.59% to 48.88%. There was a decrease in the company’s selling, general, and administrative expenses from 32.02% to 30.48%. From year 2012 to 2013, PepsiCo maintained its selling; general and administrative expenses growth rate was below sales growth rate, which protect its operating profit margin. PepsiCo also posted increase net profit of 0.49% in year 2013, while operating income rose to 1.20%. 

Balance Sheet

The Balance Sheets showed that, PepsiCo’s total liabilities growth rate increases from 51.13 to 52 .02, whereas total liabilities and shareholder’ equity growth rate, was 100%. This also showed that the company has elevated long-term solvency risk.


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