Segment (Division) Evaluation

In this assignment you will analyze the performance of PepsiCo's divisions. SFAS 131 requires publicly traded companies to disclose division information in the notes to the financial statements.

SECTION III

1. Add a new table a few lines below the first table. The second data table should have the following column headings: Division, ROI, Sales Margin, Capital Turnover, and Residual Income.

This is what I got.

Is there anything wrong with my answer? Please share your answers with me that I can make it right.

Section IV

1.Capital Turnover:

What does Capital Turnover tell management?

Which divisions have the best and worst? How do they compare?

How could a segment of this company improve its capital turnover? Give me an example of a specific action that could be taken to improve capital turnover.

2.Residual Income:

What does Residual Income tell management?

Do any of the segments fall short of managements expectations? How can you tell?

3.Allocation decision:

If you were upper management (CEO of the whole corporation), and had excess funds to allocate among divisions, which division would you allocate those funds to and why?

Net Revenue 2017 2016 FLNA $ $ QFNA NAB Latin America ESSA 2018(a) 16,346 2,465 21,072 7,354 11,523 5,901 64,661 15,798 2,503 20,936 7,208 11,050 6,030 63,525 15,549 2,564 21,312 6,820 10,216 6,338 62,799 Operating Profit(b) 2018 2017(c) $ 5,008 $ 4,793 637 640 2,276 2,700 1,049 924 1,364 1,316 1,172 1,073 11,506 11,446 (1,396) (1,170) $ 10,110 $ 10,276 2016(0) 4,612 649 2,947 904 1,061 619 AMENA Total division Corporate unallocated expenses 10,792 (988) $ 9,804 $ 64,661 $ 63,525 $ 62,799 Total Assets Capital Spending 2017 2018 2017 2018 2016 FLNA $ 6,577 $ $ 840 $ 665 $ 801 5,979 804 QFNA 870 53 44 41 NAB 945 904 769 492 481 507 Latin America ESSA (a) AMENA 479 481 439 29,878 6,458 17,410 6,433 67,626 10,022 77,648 28,592 4,976 13,556 5,668 59,575 20,229 79,804 323 308 381 Total division 3,132 150 2,883 86 2,938 102 Corporate (b) $ $ $ 3,282 $ 2,969 $ 3,040 Amortization of Intangible Assets 2017 Depreciation and Other Amortization 2018 2016 2018 2017 2016 FLNA $ 7 $ 7 $ 7 $ 457 $ 449 $ 435 45 47 50 31 37 821 780 809 31 5 5 5 253 245 QFNA NAB Latin America ESSA AMENA Total division 23 22 18 331 329 257 211 321 294 3 3 3 237 69 68 70 2,144 186 2,107 194 2,120 178 Corporate $ 69 $ 68 $ 70 $ 2,330 $ 2,301 $ 2,298 Division FLNA QFNA NAB Latin America ESSA AMENA ROI $0.76 $0.73 $0.08 $0.16 $0.08 $0.18 Sales Margin $0.31 $0.26 $0.11 $0.14 $0.12 $0.20 Capital Turnove $2.49 $2.83 $0.71 $1.14 $0.66 $0.92 Residual Income / / $5,193.50 $565.50 $2,988.50 $436.25 2018 PEPSI COMPANY ROI OF BUSINESS SEGMENTS $0.80 $0.76 $0.73 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.16 $0.18 $0.08 $0.08 $0.10 $0.00 FLNA QFNA NAB Latin America ESSA AMENA Net Revenue 2017 2016 FLNA $ $ QFNA NAB Latin America ESSA 2018(a) 16,346 2,465 21,072 7,354 11,523 5,901 64,661 15,798 2,503 20,936 7,208 11,050 6,030 63,525 15,549 2,564 21,312 6,820 10,216 6,338 62,799 Operating Profit(b) 2018 2017(c) $ 5,008 $ 4,793 637 640 2,276 2,700 1,049 924 1,364 1,316 1,172 1,073 11,506 11,446 (1,396) (1,170) $ 10,110 $ 10,276 2016(0) 4,612 649 2,947 904 1,061 619 AMENA Total division Corporate unallocated expenses 10,792 (988) $ 9,804 $ 64,661 $ 63,525 $ 62,799 Total Assets Capital Spending 2017 2018 2017 2018 2016 FLNA $ 6,577 $ $ 840 $ 665 $ 801 5,979 804 QFNA 870 53 44 41 NAB 945 904 769 492 481 507 Latin America ESSA (a) AMENA 479 481 439 29,878 6,458 17,410 6,433 67,626 10,022 77,648 28,592 4,976 13,556 5,668 59,575 20,229 79,804 323 308 381 Total division 3,132 150 2,883 86 2,938 102 Corporate (b) $ $ $ 3,282 $ 2,969 $ 3,040 Amortization of Intangible Assets 2017 Depreciation and Other Amortization 2018 2016 2018 2017 2016 FLNA $ 7 $ 7 $ 7 $ 457 $ 449 $ 435 45 47 50 31 37 821 780 809 31 5 5 5 253 245 QFNA NAB Latin America ESSA AMENA Total division 23 22 18 331 329 257 211 321 294 3 3 3 237 69 68 70 2,144 186 2,107 194 2,120 178 Corporate $ 69 $ 68 $ 70 $ 2,330 $ 2,301 $ 2,298 Division FLNA QFNA NAB Latin America ESSA AMENA ROI $0.76 $0.73 $0.08 $0.16 $0.08 $0.18 Sales Margin $0.31 $0.26 $0.11 $0.14 $0.12 $0.20 Capital Turnove $2.49 $2.83 $0.71 $1.14 $0.66 $0.92 Residual Income / / $5,193.50 $565.50 $2,988.50 $436.25 2018 PEPSI COMPANY ROI OF BUSINESS SEGMENTS $0.80 $0.76 $0.73 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.16 $0.18 $0.08 $0.08 $0.10 $0.00 FLNA QFNA NAB Latin America ESSA AMENA