Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Pepsi Ratios
Pepsi Performance Assessment
Ratio Analysis
Based on the financial ratios shown in the table in Appendix A, a general assessment of Pepsi's strength and performance over the past several years and in its current position can be made. As a measure of liquidity, the current ratio shows that Pepsi definitely appears to be struggling, though it has made significant improvements since 2009. Current assets are still slightly lower than current liabilities, however, and were only higher by a very slim margin in 2010; a current ratio that is more strongly and consistently above 1 would mean that the company has reached a stable and desirable level of liquidity. Asset management as demonstrated by the receivables turnover rate is quite strong for the company, though, indicating that its collection policies and procedures are more than adequate to meet the company's operational needs. Only slightly more than a tenth of the company's sales remain receivable (i.e. uncollected), giving it plenty of operational capital and meaning its assets are efficiently turned into revenue despite the lack of liquidity evidenced.
Despite the fact that Pepsi appears to be struggling with liquidity, the company's debt ratio continues to climb, suggesting that the company is attempting to borrow its way out of its problems. This is an ineffective strategy over the long-term, and a reduction in the company's debt ratio would be...
The return on assets has also been dropping in a disappointing fashion, and though the high P/E ratio suggests investors remain confident in Pepsi's ability to continue generating profits, overall the company needs to make some significant changes to retain its strength and industry position.
Pepsi's Bond Rating
Given the liquidity and debt issues that are apparent from a cursory analysis of Pepsi's credit ratings, it is not too surprising that the company does not receive a perfect bond rating. A comparison of the company's ratios to industry averages shows Pepsi lacking in most regards, and its Double-A-minus (AA-) bond rating reflects this (Morningstar, 2012). This bond rating is still quite respectable and is the same as Pepsi's chief rival, Coca-Cola's, but it reflects the debt management issues that loom within the company as its debt ratio continues to rise above that of the industry average, and as its liquidity remains below this average and below what would be desirable (Morningstar, 2012; Morningstar, 2012a).
All told, it is actually somewhat surprising that Pepsi manages to have a bond rating as high as it does, especially when compared to industry leader Coca-Cola (with a much higher current ration, profit margin, etc.) and the industry averages for many ratios (Morningstar, 2012; Morningstar, 2012a). This is…
References
Kennon, J. (2012). Three types of investor risk. Accessed 30 March 2012. http://beginnersinvest.about.com/cs/valueinvesting1/a/080103a.htm
Morningstar. (2012). PepsiCo: Bond Rating. Accessed 30 March 2012. quicktake.morningstar.com/stocknet/bonds.aspx?symbol=pep
Morningstar. (2012a). Coca-Cola: Bond Rating. Accessed 30 March 2012. quicktake.morningstar.com/stocknet/bonds.aspx?symbol=ko
Pepsi. (2011). 2010 Annual Report. Accessed 30 March 2012. http://www.pepsico.com/Download/PepsiCo_Annual_Report_2010_Full_Annual_Report.pdf
Pepsi. (2012). 2011 Annual Report. Accessed 30 March 2012. http://www.pepsico.com/annual11/downloads/PEP_AR11_2011_Annual_Report.pdf
Financial Ratios: PepsiCo Financial ratios are great tools when it comes to the evaluation of the performance of a business entity. In that regard therefore, ratios are used by various stakeholder groups including but not limited to investors, suppliers, creditors, and even regulatory bodies. This text concerns itself with ratio analysis with my entity of choice being a publicly traded beverage company. For purposes of this discussion, I will concern myself
INVESTMENT PROJECT (OVERVIEW): As part, analyze performance potential industry BEVERAGE INVESTMENT PROJECT (DETAILS): Assignment: You analyze beverage industry companies coca cola,(KO) monster (MNST) . Assess industry performance years assess expected future performance, , years. Investment project The modern day business environment is continually challenged by emergent threats from both within and outside its immediate environment. In other words, the micro and macro environments of economic agents raise both opportunities and threats, to
32, and Pepsi's ratio is .29. These are close, but suggest that Pepsi is actually able to generate more revenue for every dollar of property and equipment it owns. This makes sense given the operational differences at these companies; as noted above, Coca Cola does not actually own or operate all of the production elements for its products, thus it makes sense that is has much lower property values than its
Coca-Cola Macro-Economic Analysis Coca-Cola is an extremely effective organization. Nevertheless it has a number of difficulties surfacing at this time. The Coca-Cola Company offers around four hundred various consumer drinks and merchandise. The majority are not known as well as seldom observed with regards to accessible purchase. Furthermore, an additional problem the organization ought to deal with may be the health problems associated with soft drinks since it really is recognized that
Pepisco PepsiCo Case Analysis PepsiCo is the world's large snack and beverage company. PepsiCo enjoyed the envious position of market leader of the convenience food industry with 21% market share and its next competitor Kraft Foods had only 11% market share. PepsiCo manufactures, markets and sells sweet and salty snacks, carbonated and noncarbonated beverages and products produced from oats and other grains. PepsiCo had a ten-year record of increased net revenue and
products or service of your chosen organization, and two (2) key factors in the organization's external environment that can affect its success. Provide explanation to support the rationale. De Beers is the world's famous diamond company, established in 1888, with proficiency in exploration, mining and marketing of diamonds. More than 20,000 employees make contribution to the communities in which we work. De Beers carries out profitable business which helps the