The balance sheets of PepsiCo, Inc., for four years reported these figures:

The notes to PepsiCo's \(19 \mathrm{X} 4\) financial statements report that during 19X3, the company reclassified \(\$ 3,450\) million of current liabilities as long-term. And during 19X4, PepsiCo reclassified a further \(\$ 3,500\) million as long-term.
\section*{Required}
1. Compute PepsiCo's current ratio at the end of each year. Describe the trend that you observe.
2. Assume that PepsiCo had not reclassified current liabilities as long-term but instead had paid the current liabilities in due course. Recompute the current ratios for 19X3 and 19X4. Why do you think PepsiCo reclassified the liabilities as long-term? What could the company do to justify the reclassification?

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Total current assets.. Noncurrent assets. Total current liabilities... Noncurrent liabilities.. Stockholders' equity..... 19X4 $ 4,842.3 16,108.9 $20,951.2 $ 4,324.4 Millions 19X3 19X2 $ 4,566.1 $ 4,081.4 14,209.0 $18,775.1 13,062.0 $17,143.4 $ 4,770.5 19X1 $ 3,550.8 11,575.9 $15,126.7 $ 3,691.8 7,543.8 $ 3,722.1 11,271.1 9,507.6 7,468.7 5,355.7 5,545.4 4,904.2 3,891.1 $20,951.2 $18,775.1 $17,143.4 $15,126.7