PepsiCo Inc. is a leading company in the beverage, snack food, and restaurant businesses. Note 9 to
Question:
PepsiCo Inc. is a leading company in the beverage, snack food, and restaurant businesses. Note 9 to the company's financial statement included the following:}
At the end of the current year, we have reclassified \(\$ 1.3\) billion of short-term debt to longterm based on our intent and ability to refinance on a long-term basis.
As a result of this reclassification, PepsiCo's total current liabilities changed to \(\$ 8.8\) billion. Its total current assets were \(\$ 10.8\) billion. What was the current ratio before the reclassification? What is the current ratio after the reclassification? Do you think the reclassification was appropriate? Why do you think management made the reclassification? As a financial analyst, would you use the current ratio before the reclassification or after the reclassification to evaluate PepsiCo's liquidity?
Step by Step Answer:
Financial Accounting
ISBN: 9780070001497
4th Canadian Edition
Authors: Patricia A. Libby, Daniel Short, George Kanaan, Maureen Libby Gowing, Robert Libby