2. Using the financial data for the three years for PepsiCo, Inc., discuss the company's

a. Ability to pay current liabilities;

b. Ability to sell inventory and collect receivables;

c. Ability to pay long-term debt; and

d. Profitability.

Acid-test ratio (CA-inventory-prepaid)/CL Current ratio Debt ratio Earnings per share Inventory turnover Net income ($ in millions) Rate of return on assets Receivables turnover Return on assets Operating income percentage Revenues ($ in millions) Times interest earned ratio Working capital ($ in millions) Pepsi-Co, Inc. Selected Financial Data For years ended December 31 2020 2019 2018 0.77 0.66 0.82 0.98 0.86 0.99 0.85 0.81 0.81 5.14 5.23 8.84 8.47 9.32 9.39 $ 7,120 $ 7,314 $ 12,515 10.97% 13.05% 13.40% 8.67 8.98 9.05 9.34% 10.31% 17.69% 14.32% 15.32% 15.64% $ 70,372 $ 67,161 $ 64,661 9.04 10.96 8.54 (371) (2,816) (245) Dec. 26, 2020 Dec. 28, 2019 Dec. 29, 2018 Consolidated Balance Sheet - USD ($) shares in Millions, $ in Millions ASSETS Cash and cash equivalents Short-term Investments Restricted Cash Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Total current assets Property, Plant and Equipment, net Amortizable Intangible Assets, net Goodwill Other Indefinite-lived Intangible Assets Indefinite-Lived Intangible Assets Investments in Noncontrolled Affiliates Deferred Income Taxes Other Assets Total Assets LIABILITIES AND EQUITY Short-term debt obligations Accounts payable and other current liabilities Total Current Liabiities Long-Term Debt Obligations Deferred Income Taxes Other Liabilities Total Liabilities $ 8,185 1,366 0 8,404 4,172 874 23,001 21,369 1,703 18,757 17,612 36,369 2,792 4,372 3,312 92,918 $ 5,509 229 0 7,822 3,338 747 17,645 19,305 1,433 15,501 14,610 30,111 2,683 4,359 3,011 78,547 $8,721 272 1,997 7,142 3,128 633 21,893 17,589 1,644 14,808 14,181 28,989 2,409 4,364 760 77,648 3,780 19,592 23,372 40,370 4,284 11,340 79,366 2,920 17,541 20,461 29,148 4,091 9,979 63,679 4,026 18,112 22,138 28,295 3,499 9,114 63,046 $ 23 $ 23 PepsiCo Common Shareholders' Equity Common stock, par value 12/30 per share (authorized 3,600 shares, issued, net of repurchased common stock at par value: 1,380 and 1,391 shares, respectively) Additional Paid in Capital, Common Stock Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss), Net of Tax Treasury Stock, Value TOTAL PepsiCo common shareholders' equity Noncontrolling interests Total equity Total liabilities and Equity $ 3,910 63,443 $ (15,476) (38,446) $ 13,454 98 $ 13,552 92,918 $ 3,886 61,946 $ (14,300) (36,769) $ 14,786 82 $ 14,868 78,547 23 3,953 59,947 $ (15,119) (34,286) $ 14,518 84 $ 14,602 77,648 Dec. 29, 2018 Consolidated Statement of Income - USD ($) shares in Millions, $ in Millions 12 Months Ended Dec. 26, 2020 Dec. 28, 2019 Income Statement [Abstract] Net Revenue 70,372 67,161 Cost of sales 31,797 30,132 Gross profit 38,575 37,029 Selling, general and administrative expenses 28,495 26,738 Operating Profit 10,080 10,291 Other pension and retiree medical benefits income/(expense) 117 (44) Net interest expense and other (1,128) (935) Income before income taxes 9,069 9,312 Provision for/(benefit from) income taxes (See Note 5) 1,894 1,959 Net income 7,175 7,353 Less: Net income attributable to noncontrolling interests 55 39 Net Income Attributable to PepsiCo 7,120 7,314 Net Income Attributable to PepsiCo per Common Share Basic 5.14 5.23 Diluted 5.12 5.20 Weighted average common shares outstanding Basic 1,385 1,399 Diluted 1,392 1,407 NOTES: Tax rate= Provision for Income Taxes/Income before taxes 0.2088 0.2104 64,661 29,381 35,280 25,170 10,110 298 (1,219) 9,189 (3,370) 12,559 44 12,515 8.84 8.78 1,415 1,425 0