Financial
Management Pepsico and Coca-Cola 2009 Annual Reports
BUS
500
Abstract
In this paper I will
use the information obtained from the PepsiCo and Coca-Cola 2009 annual reports
to determine financial information about these companies. I will answer
questions about the companies assets and liabilities, profits, and if they can
satisfy stockholders.
What conclusions can you make about each company’s
ability to pay current liabilities?
A company’s liabilities
are their legal debts and obligations. Liabilities can come up during the
company’s business operations and are settled over time. They are settled
through by transferring money, goods or services. A list of a company’s
liabilities can be found on the balance sheet for the company. Included in the
liabilities are loans, accounts payable, mortgages, deferred revenues, and
accrued expenses. A company’s ability to pay its liabilities can be determined
by analyzing the amount of assets as opposed to the amount of liabilities. To
do this you will need to find the current ratio for the company. The current
ratio is used to determine if a company’s short-term or current assets are
available to pay off its short-term or current liabilities.
The liabilities of
PepsiCo can be found on the company’s Consolidated Balance Sheet. PepsiCo’s
total current liabilities equal 8.765 million dollars. Its total liabilities
equal 22.406 million dollars. Its total current assets equal 12.571 million
dollars and its total assets equal 39.848 million dollars. To determine if
PepsiCo is capable of paying its current liabilities you will need to find the
current ratio. To do this you divide the current assets by the current
liabilities. PepsiCo current ratio is 1.4. While the current ratio is a good
number to go by, you also need to look at the types of assets to determine if
they can be converted into cash to pay the current liabilities. When looking at
PepsiCo’s current assets you will see that the majority of it is consists of
cash and cash equivalents and accounts and notes receivable. These assets can
be turned into cash quickly to pay the current liabilities. Therefore PepsiCo
is capable of paying its current liabilities.............
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