E9.8. Analysis of an Income Statement: Pepsico, Inc. (Easy) Pepsico, Inc. reported the following income statement for 1999 (in millions of dollars): Net sales Operating expenses Restructuring charge Operating profit Gain on asset sales Interest expense Interest income 20,367 (17,484) (65) 2,818 1,083 (363) 118 3,656 Provision for income taxes Net income 1,605 2,050

a. Reformulate this statement to distinguish operating items from financing items and operating income from sales from other operating income. Identify operating income after tax. The firm's statutory tax rate is 36.1 percent.

b. Calculate the effective tax rate on operating income from sales. Real World Connection Exercise E4.12 deals with Pepsico, as do Minicases M5.2 and M6.2.