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This is the financial report on the PepsiCo, Inc. In the following report we analyse the financial position of the company and its financial reporting standards. We elaborate on how clear, comprehensive, and helpful the financial statements are for its us

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Introduction

PEPSICO, Inc. ANALYTICAL REVIEW OF FINANCIAL POSITION, MARKET SIZE AND STOCK PERFORMANCE MADE BY: Alexander Pazniak, Mikolai Lukashuk and Taras Tymtsias TABLE OF CONTENTS 1. Executive Summary......................................................................................3 2. Chapter I - Introduction.................................................................................4 a. Objective..........................................................................................4 b. History............................................................................................5 c. How we collected the information............................................................6 3. Chapter II - Main competitor..............................................................................7 a. The Coca-Cola Company......................................................................7 b. Coca Cola and Pepsi - big rivalry.............................................................8 4. Chapter III - The data and its analysis...............................................................10 a. Used types of analysis........................................................................10 b. Horizontal analysis............................................................................11 c. Vertical analysis...............................................................................14 d. Ratio analysis...................................................................................16 5. Chapter IV - Conclusions.............................................................................17 Appendix 1 - PepsiCo, Inc., Financial Statements............................19 Appendix 2 - The Coca-Cola Company, Financial Statements..............21 Appendix 3 - The bibliography...................................................23 Executive Summary This is the financial report on the PepsiCo, Inc. In the following report we analyse the financial position of the company and its financial reporting standards. We elaborate on how clear, comprehensive, and helpful the financial statements are for its users and investors. We also tackle the critical appraisal of accounting policies used by the company and its market size and influence. In the report we reveal a detailed analysis of the company's financial performance and its history and future value. In conclusion we verify that the company financial reporting procedures and accounting standards are in accordance with the generally accepted accounting principles (GAAP). Chapter I - Introduction a. Objective Our objective is to present an analytical review of the financial position and reporting of PepsiCo, Inc. PepsiCo is a world leader in convenient snacks, foods, and beverages, with revenues of more than $35 billion and over 168,000 employees. PepsiCo owns some of the world's most popular brands, including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lay's, Doritos, Tropicana, Gatorade, and Quaker. Brands are available worldwide through a variety of go-to-market systems, including direct store delivery (DSD), broker-warehouse, and food service and vending. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001. PepsiCo (symbol: PEP) ...read more.

Middle

The study of percentage change in comparative statements is called horizontal analysis. Computing percentage change in comparative statements requires two steps: * Compute the money amount of the change from the earlier (base) period to the later period. * Divide the money amount of change by the base period amount and this relationship in percentage. We used 2006 and 2004 years to show and analyse the changes in two financial statements of PepsiCo, Inc.: income statement and balance sheet. 7PepsiCo, Inc. Income Statement Years Ended December 31, 2006 and 2004, in millions of dollars (Horizontal analysis) 2006 2004 Increase (Decrease) Amount Percent Net Sales $35,137 $29,261 $5,876 20% Cost of goods sold 15,762 12,674 3,088 24.3 Gross profit 19,375 16,587 2,788 16.8 Selling, general and administrative expenses 12,774 11,031 1,743 15.8 Amortization of intangible assets 162 147 15 10.2 Operating Profit 6,439 5,259 1,180 22.4 Bottle equity income 616 380 236 62.1 Interest expense 239 167 72 43.1 Interest income 173 74 99 133 Income from Continuing Operations before income Taxes 6,989 5,546 1,443 26 Provision from Continuing Operations 1,347 1,372 (25) (1.8) Net income 5,642 4,212 1,430 33.9 The comparative income statement reveals that net sales increased by 20 percent during two years, but the cost of goods sold grew by more. As a result, gross profit rose only by 16.8 percent. Note that provision form continuing operations actually decreased, and so the company significantly increased net income during 2005-2006 years. Our analysis shows that 2006 was much better year than 2004. But we see that the growth in income resulted more from boosting sales revenue than from decreasing in expenses. 8PepsiCo, Inc. Balance Sheet Years Ended December 31, 2006 and 2004, in millions of dollars (Horizontal analysis) 2006 2004 Increase (Decrease) Amount Percent Cash and cash equivalents $1,651 $1,280 371 30% Short-term investments 1,171 2,165 (994) (46) Accounts and notes receivable, net 3,725 2,999 726 24 Inventories 1,926 1,541 385 25 Prepaid expenses and other current assets 657 654 3 0.5 Total ...read more.

Conclusion

general and administrative expenses 9,431 8,739 7,890 Other operating charges 185 85 480 OPERATING INCOME 6,308 6,085 5,698 Interest income 193 235 157 Interest expense 220 240 196 Equity income - net 102 680 621 Other income (loss) - net 195 (93) (82) Gains on issuances of stock by equity method investees - 23 24 INCOME BEFORE INCOME TAXES 6,578 6,690 5,222 Income taxes 1,498 1,818 1,375 NET INCOME $ 5,080 $ 4,872 $ 4,847 BASIC NET INCOME PER SHARE $ 2.16 $ 2.04 $ 2.00 DILUTED NET INCOME PER SHAR $ 2.16 $ 2.04 $ 2.00 AVERAGE SHARES OUTSTANDING 2,348 2,392 2,426 Effect of dilutive securities 2 1 3 AVERAGE SHARES OUTSTANDING ASSUMING DILUTION 2,350 2,393 2,429 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET Year Ended December 2006 2005 2004 (In millions except par value) ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,440 $ 4,701 $ 6,707 Marketable securities 150 66 61 Trade accounts receivable 2,704 2,281 2,171 Inventories 1,641 1,424 1,420 Prepaid expenses and other assets 1,506 1,778 1,735 Total Current Assets 8,441 10,250 12,094 INVESTMENTS Equity method investments: Coca-Cola Enterprises Inc. 1,312 1,731 1,569 Coca-Cola Hellenic Bottling Company S.A. 1,251 1,039 1,067 Coca-Cola FEMSA, S.A.B. de C.V. 835 982 792 Coca-Cola Amatil Limited 817 748 736 Other, principally bottling companies 2,095 2,062 1,733 Cost method investments, principally bottling companies 473 360 355 TOTAL INVESTMENT 6,783 6,922 6,252 OTHER ASSETS 2,701 2,648 3,054 PROPERTY, PLANT AND EQUIPMENT 6,903 5,786 6,091 TRADEMARKS WITH INDEFINITE LIVES 2,045 1,946 2,037 GOODWILL 1,403 1,047 1,097 OTHER INTANGIBLE ASSETS 1,687 828 702 TOTAL ASSETS $29,963 $29,427 $31,327 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 5,622 $ 5,290 $ 4,751 Loans and notes payable 3,268 4,546 6,021 Current maturities of long-term debt 33 28 1,490 Accrued income taxes 567 797 667 TOTAL CURRENT LIABILITIES 8,890 9,836 10,971 LONG-TERM DEBT 1,314 1,154 1,157 OTHER LIABILITIES 2,231 1,730 2,814 DEFERRED INCOME TAXES 608 352 450 TOTAL LIABILITIES 13,043 13,072 15,392 6 SHAREOWNERS' EQUITY Common stock, $0. ...read more.

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