Pepsi co Inc. Financial analysis paper

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  • Final project: Financial Company Analysis
    • One page description of the corporation: its products or services, major markets.
    • Overall trend assessment of the company’s balance sheet, income statement, and statement of cash flows for the last three years.
    • Selected ratio and trend analysis. Ratios must include liquidity, asset management, solvency, profitability, and market value ratios. A three-year ratio analysis is the minimum expectation.
    • Analysis of the company’s stock price and EPS trends for the last three years. Analysis must include comparison to key market competitors.
    • Evaluation of the firm’s Beta in relation to a specified market index (eg. S&P 500, Nasdaq 100, Dow 30).
    • Assessment of the firm’s capital structure including any significant changes in the firm’s capital structure over the last three to five years.
    • Calculate the WACC (weighted average cost of capital) based on the most recent balance sheet data.
    • Assessment of the firm’s cash flow and determination of the firm’s free cash flow over the last three years.
    • Closing summary of the firm’s financial health in relation to the overall economy and within its industry.


The course project will require students to complete a thorough financial analysis of an assigned publicly traded corporation. The project deliverable will be a in a structured Word document that includes embedded Excel spreadsheets.


I'm giving also all ratios which you can use.(excel file)

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Overview of the Company Profile PepsiCo Inc. is an American company which was incorporated in 1919 at Delaware and then again in 1986 at North Carolina with dealerships in 200 countries. It is well known for its engagement in the food and beverage business globally with its enjoyable portfolios being the Pepsi-Cola, Tropicana, and Quaker (Freund, 2011). The company has six major of which includes AMENA (Asia, Middle East, and North Africa operations), ESSA (Europe Sub-Saharan Africa operations), FLNA (Frito-Lay North America operations), Latin America Operations in all their Products, NAB (North America Beverages) as well as QFNA (Quaker Foods North America). The risk factors that the corporation faces include uncertainty in changes of consumer preference, fluctuations in demand, food laws and regulations, tax laws are changing inevitably as well as competition from peers (Datamonitor (Firm), 2007). 2013-12 2014-12 2015-12 TTM 66.415 66.683 63.056 61.869 53 53,7 55 55,7 Operating Income USD Mil 9.705 9.581 8.353 9.644 Operating Margin % 14,6 14,4 13,2 15,6 Net Income USD Mil 6.740 6.513 5.452 6.646 Earnings Per Share USD 4,32 4,27 3,67 4,56 Dividends USD 2,24 2,53 2,76 2,91 Payout Ratio % * 51,9 54,1 80,6 63,8 Shares Mil 1.560 1.527 1.485 1.458 Book Value Per Share * USD 14,55 15,48 9,27 8,76 Operating Cash Flow USD Mil 9.688 10.506 10.580 10.400 Cap Spending USD Mil -2.795 -2.859 -2.758 -2.861 Free Cash Flow USD Mil 6.893 7.647 7.822 7.539 Free Cash Flow Per Share * USD 4,62 4,48 5,21 — Working Capital USD Mil Price Earnings ratio 4.364 2.571 5.453 Revenue USD Mil Gross Margin % Fiscal year is January-December. All values USD millions. Net Income before Extraordinaries Depreciation, Depletion & Amortization Depreciation and Depletion Amortization of Intangible Assets Deferred Taxes & Investment Tax Credit Deferred Taxes Investment Tax Credit Other Funds Funds from Operations Extraordinaries Changes in Working Capital Receivables Accounts Payable Other Assets/Liabilities Net Operating Cash Flow Capital Expenditures 2011 2012 2014 2015 6,46 6,21 6,79 6,56 5,5 2,74 2,69 2,66 2,63 2,42 2,6 0,133 2,57 0,119 2,55 0,11 2,53 0,092 2,34 0,075 0,495 0,321 -1,06 -0,019 0,078 0,495 0,321 -1,06 -0,019 0,078 - 0,782 10,48 - Capital Expenditures (Fixed Assets) 2013 -0,979 8,25 - 0,687 9,08 - 0,452 9,62 - 1,88 9,87 - -1,53 -0,666 0,52 -0,715 8,94 -3,34 0,234 -0,25 0,548 -0,111 8,48 -2,71 0,609 -0,088 1,01 -0,4 9,69 -2,8 0,89 -0,343 1,16 -0,189 10,51 -2,86 0,707 -0,461 1,69 -0,335 10,58 -2,76 -3,34 -2,71 -2,8 -2,86 -2,76 Capital Expenditures (Other Assets) - - - - - Net Assets from Acquisitions - - - - - Sale of Fixed Assets & Businesses Purchase/Sale of Investments Purchase of Investments Sale/Maturity of Investments Other Uses Other Sources Net Investing Cash Flow Cash Dividends Paid - Total Common Dividends Preferred Dividends 0,084 -2,35 -3,19 0,846 -0,016 - Change in Capital Stock Repurchase of Common & Preferred Stk. Sale of Common & Preferred Stock Proceeds from Stock Options - 0,109 0,082 -0,112 0,194 -0,021 0,012 -3,01 -3,31 -3,31 -5,62 -3,16 -3,16 - 0,095 -398 -0,459 0,061 - 0,115 -2,18 -6,39 4,21 -0,01 - -2,63 -3,43 -3,43 - 0,086 -324 -4,51 4,19 -0,573 - -4,94 -3,73 -3,73 - -3,57 -4,04 -4,04 - -1,55 -2,1 -1,89 -4,27 -4,5 -2,5 -3,23 -3,01 -5,02 -5,01 0,945 1,12 1,12 0,755 0,504 - - - - Other Proceeds from Sale of Stock Issuance/Reduction of Debt, Net Change in Current Debt Change in Long-Term Debt Issuance of Long-Term Debt Reduction in Long-Term Debt Other Funds Other Uses Other Sources Net Financing Cash Flow Exchange Rate Effect Miscellaneous Funds Net Change in Cash Free Cash Flow 0,945 0,936 303 0,633 3 -2,37 -1,36 -1,43 0,07 -5,14 -0,067 - 1,12 2,09 -1,46 3,55 6 -2,45 0,014 -0,11 0,124 -3,31 0,062 - -1,88 5,61 1,12 1,47 1,17 0,301 4,2 -3,89 0,064 -0,053 0,117 -3,79 -0,196 - 2,23 5,77 0,755 -0,331 -2 1,67 3,86 -2,19 0,064 -0,05 0,114 -8,26 -0,546 - 3,08 6,89 0,504 4,63 0,025 4,61 8,7 -4,1 0,081 -0,052 0,133 -3,83 -0,221 - -3,24 7,65 2,96 7,82 Key Cash Flow Metrics Amount in USD billion 15 10 5 0 2011 2012 2013 2015 -5 -10 year Net Operating Cash Flow Net Investing Cash Flow Free Cash Flow 9 Amount in USD billions 2014 8 7 6 5 4 Net Financing Cash Flow Amount in USD billions 4 3 2 1 0 2011 2012 2013 year 2014 2015 Fiscal year is January-December. All values USD billions. Sales/Revenue Cost of Goods Sold (COGS) incl. D&A COGS excluding D&A Depreciation & Amortization Expense Depreciation Amortization of Intangibles Gross Income SG&A Expense Research & Development Other SG&A Other Operating Expense Unusual Expense EBIT after Unusual Expense Non Operating Income/Expense Non-Operating Interest Income Equity in Affiliates (Pretax) Interest Expense Gross Interest Expense Interest Capitalized Pretax Income Income Tax Income Tax - Current Domestic Income Tax - Current Foreign Income Tax - Deferred Domestic Income Tax - Deferred Foreign Income Tax Credits Equity in Affiliates Other After Tax Income (Expense) Consolidated Net Income Minority Interest Expense Net Income 2011 2012 66,5 31,74 29 2,74 2,6 0,133 34,77 24,41 0,525 23,89 - 65,49 31,34 28,65 2,69 2,57 0,119 34,15 24,62 0,552 24,07 - 0,638 9,72 -0,005 0,057 - - - 6,46 0,019 6,44 - - 6,21 0,036 6,18 63,05 28,53 26,11 2,42 2,34 0,075 34,53 24,36 0,754 23,6 - 0,576 9,58 -0,249 0,085 - 0,809 0,816 0,007 8,89 2,1 1,22 0,807 0,07 0,011 - 2015 66,68 30,99 28,37 2,63 2,53 0,092 35,69 25,54 0,718 24,82 0,343 9,65 -0,045 0,097 0,858 0,863 0,005 8,3 2,09 1,06 0,94 0,181 -0,095 - 2014 66,42 31,18 28,52 2,66 2,55 0,11 35,23 25,24 0,665 24,58 0,376 9,16 -0,088 0,091 0,938 0,948 0,01 8,83 2,37 0,735 0,882 0,843 -0,088 - 2013 1,91 8,26 -0,097 0,059 - 0,655 0,664 0,009 8,76 2,2 1,57 0,851 -0,166 -0,06 - 6,79 0,047 6,74 0,779 0,787 0,008 7,44 1,94 1,21 0,773 -0,008 -0,032 - 6,56 0,045 6,51 5,5 0,049 5,45 Extraordinaries & Discontinued Operations - - - - - Extra Items & Gain/Loss Sale Of Assets Cumulative Effect - Accounting Chg Discontinued Operations Net Income After Extraordinaries Preferred Dividends Net Income Available to Common EPS (Basic) Basic Shares Outstanding EPS (Diluted) Diluted Shares Outstanding EBITDA - - - - - 6,44 0,007 6,44 4,08 1,58 4,03 1,6 13,1 6,18 0,007 6,17 3,96 1,56 3,92 1,58 12,22 6,74 0,008 6,73 4,37 1,54 4,32 1,56 12,65 6,51 0,01 6,5 4,31 1,51 4,27 1,53 12,78 5,45 0,006 5,45 3,71 1,47 3,67 1,49 12,59 Amount in USD billion Key Income Statement Metrics 80 70 60 50 40 30 20 10 0 2011 2012 2013 2014 year Sales/Revenue Non-Operating Interest Income Net Income 2015 Assets Fiscal year is January-December. All 2011 2012 2013 2014 2015 values USD millions. Cash & Short Term Investments 4,43 6,62 9,68 8,73 12,01 Cash Only 4,07 6,3 9,38 6,13 9,1 Short-Term Investments 0,358 0,322 0,303 2,59 2,91 Total Accounts Receivable 6,91 7,04 6,95 6,65 6,44 Accounts Receivables, Net 6,04 6,22 6,18 5,82 5,5 Accounts Receivables, Gross 6,19 6,37 6,32 5,95 5,63 Bad Debt/Doubtful Accounts -0,157 -0,157 -0,145 -0,137 -0,13 Other Receivables 0,876 0,826 0,776 0,834 0,94 Inventories 3,83 3,58 3,41 3,14 2,72 Finished Goods 1,74 1,53 1,51 1,38 1,25 Work in Progress 0,207 0,173 0,168 0,173 0,161 Raw Materials 1,88 1,88 1,73 1,59 1,31 Progress Payments & Other Other Current Assets 2,11 1,39 2,09 2,1 1,83 Miscellaneous Current Assets 2,11 1,39 2,09 2,1 1,83 Total Current Assets 17,28 18,63 22,14 20,62 22,99 Net Property, Plant & Equipment 19,7 19,14 18,58 17,24 16,32 Property, Plant & Equipment - Gross Buildings Land & Improvements 35,14 36,16 36,96 36,3 35,75 7,57 1,95 7,79 1,89 7,83 1,88 8,11 1,29 8,06 1,18 Computer Software and Equipment - - - - - Other Property, Plant & Equipment - - - - - Accumulated Depreciation Total Investments and Advances Other Long-Term Investments Long-Term Note Receivable Intangible Assets Net Goodwill Net Other Intangibles Other Assets Tangible Other Assets Total Assets 15,44 1,57 0,089 0,159 33,25 16,8 16,45 0,936 0,522 72,88 17,03 2,35 0,718 0,136 33,5 16,97 16,53 0,887 0,542 74,64 18,39 2,62 0,782 0,105 32,65 16,61 16,04 1,39 0,419 77,48 0,093 29,05 14,97 14,09 0,809 0,447 70,51 0,14 27,26 14,18 13,08 0,65 0,391 69,67 ST Debt & Current Portion LT Debt 6,21 4,82 5,31 5,08 4,07 Short Term Debt 3,66 1,91 3,08 0,98 0,962 Current Portion of Long Term Debt 2,55 2,9 2,22 4,1 3,11 4,08 0,192 4,45 0,371 - 4,87 Accounts Payable Income Tax Payable 19,06 2,69 19,43 2,31 - 5,13 - 5,55 - Other Current Liabilities Dividends Payable Accrued Payroll Miscellaneous Current Liabilities Total Current Liabilities Long-Term Debt Long-Term Debt excl. Capitalized Leases Non-Convertible Debt Convertible Debt Capitalized Lease Obligations Provision for Risks & Charges Deferred Taxes Deferred Taxes - Credit Deferred Taxes - Debit Other Liabilities Other Liabilities (excl. Deferred Income) Deferred Income Total Liabilities Non-Equity Reserves Preferred Stock (Carrying Value) Redeemable Preferred Stock Non-Redeemable Preferred Stock Common Equity (Total) Common Stock Par/Carry Value Retained Earnings ESOP Debt Guarantee Cumulative Translation Adjustment/Unrealized For. Exch. Gain Unrealized Gain/Loss Marketable Securities Revaluation Reserves Treasury Stock Total Shareholders' Equity Accumulated Minority Interest Total Equity Liabilities & Shareholders' Equity 7,67 0,813 1,77 5,09 18,15 20,57 7,45 0,838 1,71 4,91 17,09 23,54 7,66 0,877 1,79 4,99 17,84 24,33 7,89 1,01 1,75 5,13 18,09 23,82 7,96 1,04 1,76 5,16 17,58 29,21 20,57 23,54 24,33 23,82 29,21 20,57 23,54 24,33 23,82 29,21 - 5,31 5 5 - 4,82 5,06 5,06 - 2,35 5,99 5,99 - 3,11 5,3 5,3 - 3,24 4,96 4,96 - 2,96 1,73 2,58 2,64 2,65 2,96 1,73 2,58 2,64 2,65 - 51,98 - 52,24 -0,116 -0,116 - - - 53,09 - -0,123 -0,123 20,7 0,031 40,32 - - - 52,96 - -0,13 -0,13 22,42 0,026 43,16 - -0,14 -0,14 - 24,41 0,025 46,42 - 57,64 -0,145 -0,145 - 17,58 0,025 49,09 - 12,07 0,024 50,47 - -2,69 -1,95 -3,25 -8,26 -11,08 0,062 0,08 0,109 0,087 0,088 - -17,88 20,59 0,311 20,9 72,88 -19,46 22,29 0,105 22,4 74,64 -21 24,28 0,11 24,39 77,48 -24,99 17,44 0,11 17,55 70,51 -29,19 11,92 0,107 12,03 69,67 Amount in USD billions Key Balance Sheet Metrics 100 80 60 40 20 0 2011 2012 2013 2014 2015 years Total Assets Total Liabilities Total Equity 2011 2012 2013 2014 2015 1,4 18,63 17,09 1,090111 3,58 0,880632 6,3 0,368637 74,64 22,29 0,701367 9,16 0,858 10,67599 17,03 30,52448 65,49 7,04 9,302557 8,48 7,722877 22,14 17,84 1,241031 3,41 1,049888 9,38 0,525785 77,48 24,28 0,686629 9,65 0,809 11,92831 18,39 34,66007 66,42 6,95 9,556835 9,69 6,854489 20,62 18,09 1,139856 3,14 0,96628 6,13 0,338861 70,51 17,44 0,752659 9,58 0,655 14,62595 19,06 43,72519 66,68 6,65 10,02707 10,51 6,344434 22,99 17,58 1,307736 2,72 1,153015 9,1 0,517634 69,67 11,92 0,828908 8,26 0,779 10,60334 19,43 35,54557 63,05 6,44 9,790373 10,58 5,959357 Total Assets Turnover 0,912459 6,44 0,096842 0,088364 20,9 0,308134 4,32 1,58 0,365741 14,55 1,58 0,108591 0,106964 13,1 0,008165 20,57 0,984211 0,877412 6,18 0,094366 0,082797 22,4 0,275893 4,27 1,56 0,36534 15,48 1,56 0,100775 0,105671 12,22 0,008647 23,54 1,050893 0,857253 6,74 0,101475 0,08699 24,39 0,276343 3,67 1,54 0,419619 9,27 1,54 0,166127 0,113105 12,65 0,008941 24,33 0,99754 0,945681 6,51 0,09763 0,092327 17,55 0,37094 4,56 1,51 0,33114 8,76 1,51 0,172374 0,108268 12,78 0,008472 23,82 1,357265 0,904981 5,45 0,086439 0,078226 12,03 0,453034 4,23 1,47 0,347518 8,76 1,47 0,167808 0,098947 12,59 0,007859 29,21 2,428096 Net Income Profit Margin Return on Assets Total Equity Return on Equity Earnings Per Share USD Price per share Price–Earnings Ratio Book Value Per Share * USD Price per share Market-to-book Ratio Enterprise Value EBITDA EBITDA Ratio Non-Convertible Debt Total debt to equity ratio Cash Coverage Ratio 50 1,2 1 Ratio 17,28 18,15 0,952066 3,83 0,741047 4,07 0,224242 72,88 20,59 0,717481 9,72 0,938 10,36247 15,44 26,82303 66,5 6,91 9,623734 8,94 7,438479 0,8 0,6 0,4 0,2 0 1,4 1,2 1 ratio Total Current Assets Total Current Liabilities Current ratio Inventories Quick Ratio Cash Only Cash Ratio Total Assets Total Shareholders' Equity Total Debt Ratio EBIT after Unusual Expense Interest Expense Times Interest Earned Ratio Accumulated Depreciation Cash Coverage Ratio Sales/Revenue Total Accounts Receivable Receivables Turnover Net Operating Cash Flow NWC Turnover 0,8 0,6 0,4 0,2 0 USD Fiscal year is January-December. All values USD millions. 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 10,2 10 9,8 Ratio Ratio 50 45 40 35 30 25 20 15 10 5 0 9,4 9,2 9 2011 2012 2013 2014 2015 8,8 Year Return on Assets 0,095 0,09 0,085 Ratio Ratio 9,6 0,08 0,075 0,07 2011 2012 2013 Year 2014 2015 0,5 0,45 0,4 0,35 0,3 0,25 0,2 0,15 0,1 0,05 0 Current ratio Cash Ratio 0,6 0,5 ratio 0,4 0,3 0,2 0,1 0 2011 2012 2013 2014 2015 2011 2012 2013 year Quick Ratio Total Debt Rati 0,9 0,8 0,7 Ratio 0,6 0,5 0,4 0,3 0,2 0,1 0 2011 2012 2013 2014 2015 2011 2012 2013 year Earnings Per Share USD Times Interest Ear 16 14 12 Ratio 10 8 6 4 2 0 2011 2012 2013 2014 2015 2011 2012 year NWC Turnover Receivables Turnover 9 Receivables Turnover 9 10,2 8 10 7 6 ratio 9,8 9,6 5 4 3 9,4 2 9,2 1 9 0 2011 8,8 1 2 3 4 5 2012 2013 Year 6 Year Price–Earnings Ratio Return on Equity 0,45 0,4 0,35 Ratio 0,3 0,25 0,2 0,15 0,1 0,05 0 2011 2011 2012 2013 Year 2014 2015 2012 2013 Year Profit Margin Cash Ratio 0,105 0,1 Ratio 0,095 0,09 0,085 0,08 0,075 2013 2014 2011 2015 2012 2014 Year year Total Debt Ratio EBITDA Ratio Ratio 2013 2013 2014 2015 0,0092 0,009 0,0088 0,0086 0,0084 0,0082 0,008 0,0078 0,0076 0,0074 0,0072 2011 Year 2012 2013 Year Times Interest Earned Ratio 2013 2014 2015 Year NWC Turnover Total Assets Turnover 0,96 2014 0,96 0,94 0,92 Ratio 0,9 0,88 0,86 0,84 0,82 0,8 2013 2014 2015 2011 2012 Year Market-to-book Ratio Ratio Year 2014 year Earnings Ratio 2013 2013 2014 2015 0,2 0,18 0,16 0,14 0,12 0,1 0,08 0,06 0,04 0,02 0 2011 2012 2013 Year 2014 2015 2014 2015 2015 2015 using DGM Cost of debt (before tax) = Corporate Bond rate of company’s bond rating. Pepsico 2.75% = 2.75% Current cost of Debt as of February 17th 2014 = 2.75% Current tax rate In 2013 PepsiCo’s tax rate was = 23.66% 2013 PepsiCo averaged tax rate of 23.66% Cost of Debt (After Tax) = (Cost of Debt Before Tax) (1 – Tax Rate) The effective rate that a company pays on its current debt after tax. .0275 x (1 – .2366) = Cost of debt after tax The cost of debt after tax for PepsiCo is 2.10% Cost of Equity or R Equity = Risk Free Rate + Beta Equity (Average Market Return – Risk Free Rate) Risk Free Rate = U.S. 10-year bond = 2.74% (Bloomberg) Average Market Return 1950 – 2014 = 7% Beta = (Google Finance) PepsiCo’s Beta = 0.37 Risk Free Rate + Beta Equity (Average Market Return – Risk Free Rate) 2.74 + 0.37 (7- 2.74) 2.74 + 0.37 x 4.26 2.74 + 1.58 = 4.31% Weighted Average Cost of Capital or WACC Tax Rate = 23.66% Cost of Debt (before tax) or R debt = 2.75% Cost of Equity or R equity = 4.31% Debt (Total Liabilities) for 2013 TTM or D = $53.069 billion th Stock Price = $78.09 (Feb. 17 , 2014) Outstanding Shares = 1.55 billion Equity = Stock price x Outstanding Shares or E = $121.04 billion Debt + Equity or D+E = $174.109 billion WACC = R = (1 – Tax Rate) x R debt (D/D+E) + R equity (E/D+E) (1 – Tax Rate) x R debt (D/D+E) + R equity (E/D+E) (1 – .2366) x .0275 x ($53.069 /$174.109) + .0431 ($121.04 /$174.109) .7634x .0275 x .3048 + .0431 x .6972 .0064 + .03 0,0364 using the Security Market Line Approach WACC=re = rf + β × (rm - rf) rf = Risk-free rate=4% β = Predicted equity beta=0.49 (rm - rf) = Market risk premium=7% WACC=0.04*0.49*0.07*100=0.1372 Industry Peers PEP Mornings tar Rating PepsiCo Inc Coca-Cola Co (USD) Monster Beverage Corp (USD) Coca-Cola European Partners PLC (USD,EUR) Dr Pepper Snapple Group Inc (USD) Coca-Cola Femsa SAB de CV (USD,MXN) Coca-Cola Femsa SAB de CV (USD,MXN) Arca Continental SAB de CV (USD,MXN) Coca-Cola HBC AG (USD,EUR) Coca-Cola HBC AG (USD,EUR) Coca-Cola Amatil Ltd (USD,AUD) Coca-Cola Amatil Ltd (USD,AUD) Embotelladora Andina SA (USD,CLP) Embotelladora Andina SA (USD,CLP) Uni-President China Holdings Ltd (USD,CNY) ITO EN Ltd (USD,JPY) Coca-Cola West Co Ltd (USD,JPY) Coca Cola Icecek AS (USD,TRY) Coca-Cola East Japan Co Ltd (USD,JPY) National Beverage Corp (USD) Vitasoy International Holdings Ltd (USD,HKD) Britvic PLC (USD,GBP) Britvic PLC (USD,GBP) Cott Corp (USD) Fevertree Drinks PLC (USD,GBP) Coca-Cola Bottling Co Consolidated (USD) Industry Average Market Cap Net Income Mil 145.870 177.952 24.015 16.749 15.222 13.992 13.308 8.381 7.450 7.443 5.337 5.299 3.574 3.380 3.293 3.213 3.110 2.416 2.390 2.250 2.105 1.906 1.790 1.656 1.544 1.539 7.828 Mil 6.646 7.214 678 699 867 9.898 9.898 8.757 295 295 407 407 84.348 84.348 923 9.802 6.250 335 12.311 73 530 106 106 -4 17 35 3.454 P/S 2,4 4,3 8,7 0,9 2,4 1,7 1,7 1,8 1,1 1,1 1,4 1,4 1,3 1,3 1 0,8 0,7 1,1 0,5 3,1 3 1,1 1,1 0,5 16,5 0,6 2,9 P/B 11,6 6,8 7,1 2,4 7,2 2,5 2,4 2,7 2,7 2,7 3,3 3,3 2,9 2,8 1,9 2,8 1,3 2 1,1 9,6 7,4 7 6,5 1,7 17,2 6,2 6,9 Dividend P/E 22,3 25 37,8 16,3 18 28,7 27,3 19,3 23,3 23,3 17,3 17,2 28,4 26,9 24,5 51,4 54,3 23,7 21,2 31 30,9 14,1 13,2 — 71 43,5 23,7 Yield% 2,9 3,3 — 3,1 2,5 2,8 2,8 2,1 2,1 — 6,4 4,8 2,9 2,8 0,8 1 1,4 0,4 1,6 — 1,9 4,5 4,8 2 0,4 0,6 2,9 5-Yr Rev Med Oper. Interest CAGR% Margin% Coverage 1,7 14,4 8,7 4,8 21,8 12,2 15,9 26,8 — 4,9 12,3 6,7 2,2 18,2 11,1 8 15 3,3 8 15 3,3 23,1 16,4 19,6 -1,3 5,6 6,2 -1,3 5,6 6,2 1,9 10,8 5,8 1,9 10,8 5,8 16,1 10,7 3,3 16,1 10,7 3,3 11,9 4 26,6 5,8 4,3 14,8 3,2 3,5 37,6 19,6 10,5 2,2 23,6 1,9 19,6 3,3 11,1 457,7 10,8 10,7 149,2 2,7 9,7 7,2 2,7 9,7 7,2 10,3 4,2 1 — 23,3 58 8,8 4,9 — 9,6 -2726,2 -306 D/E 2,3 1,2 — 0,9 1,4 0,6 0,6 0,4 0,6 0,6 0,8 0,8 0,9 0,9 0,1 0,4 0,2 0,7 0,1 — 0,1 2,1 2,1 2,1 0,1 3,5 1,4 Running head: COMPANY NAME 1 MBA 7200 Financial Analysis Paper: Company Name Student name Date Wilmington University COMPANY NAME 2 Outline for paper Notes: • • no abstract is needed for this paper double spacing is required. The outline is presented in single space for presentation purposes. Important point: in the appendices you present financial data and your ratio analysis calculations. Within the narrative sections, you are to analyze the data and describe what the data is indicating. What do the numbers mean? What are the trends and how, based on the analysis, is the firm performing for its owners (stockholders) and within its industry. Use the data to prepare financial analysis. Simply regurgitating the financial numbers in your narrative is not analysis and is not sufficient to receive a passing grade for this project. Outline of paper 1. Page 2: Description of corporation, major products, industries, markets served, and any significant developments over the past three years. a. Prepare a concise summary of your company using declarative sentences. The purpose of this section is to provide the reader with basic information on the company. Distilling your company down to one page of essential information should not be easy. Eliminate any extraneous “fluff” and avoid providing any interpretations or analysis. Numerical analysis is not part of this section. It is the only part of the paper that numerical analysis should not be included. This is a factual section. Assume the reader is a business professional. 2. Page 3: Overall descriptive analysis of the financials for the last three years a. In this section you can now present key financial highlights of your company. At a minimum you should discuss sales and net income performance and any significant financial factors related to your company over the last three years. Use concise $ figures. For example, use $7.8m or $7.8b instead of $7,800,000 or writing $7.8 million. There is more key financial information than one can easily fit into one page so you must determine what is most important for the reader to understand the financial picture of the corporation as of the most recent financials. b. If your firm has two or more published quarterly statements since the last annual report, be sure to prepare your analysis using the most recent quarterly data. COMPANY NAME 3 3. Pages 4-6: Descriptive analysis of the firms financials and ratio analysis a. In this section the writer now gets into the financial details of the firm. The narrative in this section is based on the financials of the firm (Appendix A) and the ratio analysis (Appendix B). b. What are the trends in your ratio analysis? What are the trends for the company as a whole and in comparison to key competitors and industry as a whole? c. Ratios to include are Debt/Equity, ROI, ROE, ROA, current, and asset turnover. Cash coverage ratio is suggested to help prepare the cash flow analysis section. Note: P/E ratio and EPS are to be analyzed in the stock price section. Include this as a separate analysis in Appendix C, not in Appendix B. 4. Page 7: evaluation of firm’s stock price history, earnings, and dividend policy for the last three years a. A year to year comparison of a firm’s stock price does not provide enough data to sufficiently analyze trends and changes in the firm’s stock price and subsequently P/E ratio and EPS. b. Prepare a 3-year quarterly analysis of the firm’s stock price and P/E ratio. Present this data in Appendix C. c. Use a similar format as your ratio analysis presented in Appendix B. d. Most stock charts that you find online will show the stock price at any given date. You will need to compare the stock price to quarterly earnings to determine the quarterly P/E needed for this section. 5. Page 8: Capital structure analysis and WACC a. Analyze the firm’s ratio of debt to equity financing including trends in each. b. Using the examples on the cost of capital, calculate your firm’s current WACC. c. Include any additional supporting financial analysis for this section in Appendix C. 6. Page 9: Analysis of the firm’s cash flows for the last year (minimum) or up to three years. a. In this section use the firm’s accounting statement of cash flows to calculate the financial cash flow from assets or free cash flow for the firm. b. Use the information in chapter 2 on cash flow to guide your analysis. c. Calculations presented in Appendix C. d. A 1-year analysis for this section is sufficient. 7. Page 10: Descriptive summary a. In this section use the analysis in all of the previous sections to write a 1-page summary of your company with respect to its financial health and performance. COMPANY NAME 4 b. A brief mention of performance specific to its industry and the current economy is to be included. c. Predicted future performance is to be informed by the past analysis. d. This is not meant to be a “buy, sell, or hold” decision analysis. e. While your opinion as a ‘business analyst’ is necessary, it should be validated and supported by the financial analysis. In other words, use the numbers to tell the financial story. 8. Page 11: Reference page (use a second page if needed and number accordingly) 9. Pages 12 and up: Appendices of supporting financial data and analysis Heading structure: In the body of your paper, between the cover page and the reference page, the following is the correct APA style format for headings. You should not need more than 2 levels for this paper. Level Format 1 Centered, Boldface, Uppercase and Lowercase Heading 2 Flush Left, Boldface, Uppercase and Lowercase Heading COMPANY NAME 5 References Correct APA references required. Use this site to ensure you are using correct APA format: Purdue OWL (Online Writing Lab) http://owl.english.purdue.edu/owl/resource/560/01/ COMPANY NAME 6 Appendix A In Appendix A, you should include either spreadsheets of selected company financials from income statement, balance sheet, and statement of cash flows. In this format, you distill the income statement down to key accounts such as sales, cost of goods sold, gross margin, operating expenses, depreciation expenses, IBIT, interest expense, taxes, net income, earnings and dividends per share. In this format be sure to include any and all account values needed to calculate any and all of your selected financial ratios. OR Full financial statements inserted from pdfs or spreadsheets for the last three years. Depending on formatting, this may take multiple pages. However, be cautious of ‘cutting and pasting’ pages upon pages of financial statements. Regardless of your approach, the information in this appendix should be consistent in format with the rest of this report. Haphazard ‘cutting and pasting’ will reduce the overall professional appearance report scores. COMPANY NAME 7 Appendix B Using the financial data in Appendix A, prepare a financial statement ratio analysis spreadsheet. The minimum is a three year analysis but a four or five year analysis is preferred and provides a more accurate trend analysis. Below is a sample format that you may use. You may find other formats in your search that you may use. Regardless, be sure your format is concise, easy to understand, and includes the % change in each ratio year to year. In the 4 year analysis below, the % change column for 2009 will use 2008 data to calculate. At a minimum, choose three ratios for each of the five categories including the indicated ratios in section #3 above. You may choose more, or have unequal numbers of ratios between the categories depending upon what you feel is important to analyze and communicate. Sample ratio analysis template: Year 2015 Liquidity Ratio #1 Ratio #2 Ratio #3 Ratio #1 Asset Untilization/ Ratio #2 Turnover Ratio #3 Ratio #1 Profitability Ratio #2 Ratio #3 Market Value Ratio #1 Ratio #2 Ratio #3 Financial Leverage / Solvency Ratio #1 Ratio #2 Ratio #3 % change Year 2014 % change Year 2013 % change Year 2012 % change COMPANY NAME 8 Appendix C In this appendix include any additional financial data and calculations that are needed to support your analysis but cannot fit into the page limit restrictions. Include your stock P/E and EPS analysis in this section.
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Running Head: PEPSICO INC. FINANCIAL STATEMENTS ANALYSIS

PepsiCo Inc. Financial Statements Analysis
Name
Institution
Date

1

PEPSICO FINANCIAL STATEMENTS ANALYSIS

2

Overview of the Company Profile
PepsiCo Inc. is one of the American companies which was incorporated in 1919 in
Delaware and then again in 1986 at North Carolina with dealerships in 200 countries. It is well
known for its engagement in the food and beverage business globally with its enjoyable portfolios
being the Pepsi-Cola, Tropicana, and Quaker (Freund, 2011). The company has six major markets
of which includes AMENA (Asia, Middle East, and North Africa operations), ESSA (Europe SubSaharan Africa operations), FLNA (Frito-Lay North America operations), Latin America
Operations in all their Products, NAB (North America Beverages) as well as QFNA (Quaker Foods
North America). The risk factors that the corporation faces include uncertainty in changes in
consumer preference, fluctuations in demand, food laws and regulations, tax laws are changing
inevitably as well as competition from peers (Datamonitor (Firm), 2007).
Over the past few years, PepsiCo has had some development in their product portfolio. The
change in product portfolio has been initiated by the need to capitalize on the current customers’
interest towards health and wellness (Garcia, 2016). Health and wellness is a current trend in the
market that every business ought to take advantage of in order to meet every consumer demand
(Garcia, 2016). As a result, the Corporation has introduced a nutrition product category that
consists of healthy products such as diet beverages, unsweetened tea, water and snacks with low
levels of calories and sodium (Garcia, 2016). The introduction of this product category is expected
to help the company meets its current and potential different customers’ demands (Garcia, 2016).
By meeting its customer's demand, the company's performance will increase, and as a result, the
corporation will be able to be competitive in the market.

PEPSICO FINANCIAL STATEMENTS ANALYSIS

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Overall Analysis of the Financials
Analysis of a company financials is an important tool in assessing the company's financial
strength and ultimately its performance. It gives a snapshot of the company's operations, capital
base, and performance (Gibson, 2013).
From the analysis shown in Appendix A, it is evident that the company's 2015 performance
have declined compared to the previous two years as indicated by the drop in revenues and
ultimately net income. Like any other form, the main goal of any PepsiCo is profit maximization
and hence a key measure of the company performance. PepsiCo revenues dropped from $ 66,683m
in the year 2014 to $ 63,056m in 2015. This is an average decrease of 5.75 in revenues. However,
in 2014, there was a slight increase in revenue from $ 66,415 in 2013 to $ 66,685 in 2014. Despite
the increase in revenues in the year 2014, the net income declined over the three years indicating
a drop in performance. The company’s net income reduced from $ 6,740m in 2013 to $ 6,513m in
2014 and to $ 5,452m in 2015.
The impact of the decline in revenues and net income can be seen in the company’s
earnings per share which have also declined over the three years. Financial statement users see
declining EPS as an indication of current and future drop in performance. As a result, the
company's share becomes less attractive in the market. The unattractiveness of the company’s
shares in the market explains the significant drop in the corporation’s book value per share in 2015.
The company’s book value per share in 2014 was $ 15.48. This figure dropped to $ 9.27 in 2015
showing a percentage decrease of 40.11%. This percentage is relatively high and do not reflect
well on the corporation’s performance.

PEPSICO FINANCIAL STATEMENTS ANALYSIS

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Descriptive Analysis of the Financials and Ratios
The in-depth analysis of the corporation's financials and ratios are...


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I was having a hard time with this subject, and this was a great help.

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