Assignment Content Purpose of Assignment This activity helps students recognize the significant role accounting plays in providing financial information to management for decision making through the evaluation of financial statements. This experiential assignment requires students to use ratios to evaluate and analyze a company’s liquidity, solvency, and profitability. Assignment Steps Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC), University Library, Library resources: Company Directories and Financials Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products. Select a publicly traded, U.S. corporation with which you are familiar or one where you currently work or have worked in the past. Research the company on the Internet and download the most current Annual Report with the Income Statement, Statement of Shareholders’ Equity, Balance Sheet, and Statement of Cash Flows. GO DIRECTLY to your company’s website, find the investor section, and locate the most current 10-K or Annual Report. You can download OR provide a working link. DO NOT rely on summary sites- you will not receive credit. Failure to provide me with statements or a link will result in a substantially lower grade, as I will not go looking for your company statements. Develop a maximum 500-word examination of the financial statements and include the following: Determine the net income for the current fiscal year (FY). Is this income up or down from the prior year? Explain the relevance of changes in net income to investors. Determine the ending balance in shareholders’ equity. Why would organizations such as labor unions be interested in this? Determine the total value of assets. Discuss the relevance of the total value of assets to potential creditors and why this is important. Compute the return on assets. Dollar for dollar, what does this mean for the company? Compute the current ratio and the quick ratio. Dollar for dollar, what does this mean for the company? Compute the debt to assets ratio for your company. What does the result mean for the company? Discuss how the financial statements are used in your current role or a position you would like to hold. How might these aid you in managerial decision making? YOUR WRITING SHOULD BE CLEAR, CONCISE AND FACTUAL . PLEASE UTILIZE THE GRAMMAR TOOLS AVAILABLE IN THE LIBRARY. BE SURE TO EDIT AND CUT AREAS OF “FLUFF”. Show your work in Excel®. Complete calculations/computations using Excel®. Include the four financial statements along with your assignment. Format citations and references in APA format. THIS IS NOT A FULL PAPER-JUST ANSWER THE QUESTIONS.

Analysis of the financial statements of PepsiCo inc

Introduction

Analysis of financial statements is undoubtedly one of the most common sources of information for any profit-driven company. In this paper, we shall analyze the financial statements for PepsiCo Inc. for the fiscal year 2017. All figures shall be presented in millions of dollars. The consolidated statement of income shows that the net income attributable to PepsiCo Inc. for the year ended 30/12/2017 is $4,857. This was relatively lower compared to the net income for the previous year 2016, which was $ 6,329. The changes in net income to investors are absolutely necessary for investors since they will be able to know the performance of the company and make a decision on whether they will continue investing or they will withdraw their investments from the company. Since in this case there is a drop in the net income, investors are able to decide which route to take in regard to their investments.

The ending balance in shareholders’ equity for 2017 was 92, a drop from the previous year which was 104. The interest of Labor unions in shareholders’ equity is to steer up proposals which would raise their negotiating leverage over corporate management. With this information, labor unions are able to negotiate proportionate salaries, wages or benefits to the member employees.  If the shareholders’ equity is high, they negotiate higher salaries and benefits. The total assets for the current year, 2017, amount to $79,804. Businesses normally rely on loans or credit to either launch, expand or even operate. Creditors are particularly interested in the credit worthiness of a company which they lend to. They are particularly interested in the ability of the borrower to pay back. The total assets can be auctioned in case the company is insolvent and therefore creditors are interested in assets since they can use them to offset their debts.

Return on investment is calculated as the ratio of net income to total assets and presented as a percentage. Using excel, this ratio gives a return on investment value equal to 6.086%. This means that the investment of the company on total assets yields 6.086% for the year in question. The higher the ROA, the better the profitability of the company and the lower the ROA the less the profitability of the company.

Current ratio is obtained by dividing current assets by current liabilities. From the excel sheet, the current ratio is 1.5134 while the quick ratio is 1.294215. These ratios tell us the ability of the company to settle current liabilities using current assets. PepsiCo Inc. is capable of doing that.

Debt-Asset ratio is computed by taking the ratio of total debt and total assets. From excel, this value is 68.03%. This result means that the company is able to settle upto 68.03% of its debts.

Financial statements are very vital in any managerial position. They help in making investment decisions and controlling the operations of a company.

References

https://www.pepsico.com/investors/annual-reports-and-proxy-information