Current position analysis Obj. 3 PepsiCo, Inc. (PEP), the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years:

Current year

(in millions)

Previous year

(in millions)

Cash and cash equivalents $ 9,158 $ 9,096 Short-term investments, at cost 6,967 2,913 Accounts and notes receivable, net 6,694 6,437 Inventories 2,723 2,720 Prepaid expenses and other current assets 1,547 1,865 Short-term obligations 6,892 4,071 Accounts payable 14,243 13,507

a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.

b. What conclusions can you draw from these data about PepsiCo’s liquidity?

AppendixLO1