PepsiCo Annual Report Analysis: 2011–2012 Financial Data
This paper analyzes PepsiCo's annual report using 2011 and 2012 financial data. It examines key balance sheet items including property, plant, and equipment; intangible assets and goodwill; depreciation and amortization methods; asset impairment charges; current and long-term liabilities; bonds payable; and capital lease classifications. Drawing directly from PepsiCo's 2012 annual report, the paper presents financial figures in tabular form and explains the accounting treatments behind each category, including straight-line depreciation, deferred tax liabilities, goodwill impairment testing, and the criteria distinguishing capital leases from operating leases.
- Company Overview: PepsiCo background, brands, and paper scope
- Property, Plant, and Equipment: PP&E balances, components, and depreciation figures
- Intangible Assets and Goodwill: Amortizable and non-amortizable intangibles including goodwill
- Depreciation Methods and Income Tax Expense: Straight-line depreciation, deferred taxes, and income tax data
- Impairment, Current Liabilities, and Long-Term Debt: Restructuring charges, current liabilities, and long-term debt structure
- Bonds Payable and Capital Leases: Bond valuation, note payables, and capital lease criteria
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What makes this paper effective
- Integrates data tables directly from the source annual report, giving readers precise figures alongside written explanations — a strong model for financial analysis assignments.
- Consistently moves from definition to application: each section defines an accounting concept (e.g., impairment, contingent liability) and then immediately shows how PepsiCo applies it, making abstract concepts concrete.
- Covers a broad range of balance sheet topics systematically, demonstrating how multiple financial statement elements interconnect within a single company.
Key academic technique demonstrated
The paper demonstrates financial statement analysis by extracting and interpreting line items from a real corporate annual report. Rather than simply reproducing figures, it explains the accounting policies behind them — such as the two-step goodwill impairment test and deferred tax liability recognition — showing how policy choices affect reported values.
Structure breakdown
The paper is organized as a numbered question-and-answer response to a structured assignment. Each section addresses one financial topic (property and equipment, intangibles, goodwill, depreciation, impairment, current liabilities, long-term liabilities, bonds, and capital leases) in a consistent format: a brief definition or policy explanation, supporting data in tabular form, and a short interpretive commentary. This format makes it easy to follow and suitable as a template for similar financial analysis tasks.
Company Overview
Pepsi Beverages Company (PBC) is a global beverage company popularly known as PepsiCo. The company operates in several countries across North America, South America, Europe, Asia, Africa, and the Middle East. Founded in 1898, the company operates with a diverse portfolio that includes some of the world's most widely recognized brands, such as Pepsi, Dr Pepper, Mountain Dew, Aquafina, Lipton, Muscle Milk, and ROCKSTAR.
The objective of this paper is to analyze PepsiCo's annual report. The paper uses 2012 and 2011 financial data for the analysis.
Property, Plant, and Equipment
The value of PepsiCo's property and equipment on the company's balance sheet for 2012 and 2011 were $19.1 billion and $19.69 billion, respectively. Depreciation expenses were $2.48 billion in 2012 and $2.47 billion in 2011. The amount of cash flow relating to depreciation was $2.68 billion in 2012 and $2.73 billion in 2011. Table 1 presents an overview of these figures.
Table 1: PepsiCo Property and Equipment Summary ($Millions)
| Item | 2012 | 2011 |
|---|---|---|
| Property, Plant and Equipment (Net) | $19,136 | $19,698 |
| Depreciation Expenses | $2,489 | $2,476 |
| Goodwill | 16,971 | 16,800 |
| Amounts on the cash flow relating to gains and sales of property and equipment | 95 | 84 |
| Amount of cash flow relating to depreciation | 2,689 | 2,737 |
| Amounts permitted for inclusion in the capitalized cost of property and equipment | 35,140 | 36,162 |
The individual components of property and equipment are as follows:
Table 2: PepsiCo Property and Equipment Components ($Millions)
| Component | 2012 | 2011 |
|---|---|---|
| Land and Improvements | 1,890 | 1,951 |
| Buildings and Improvements | 7,792 | 7,565 |
| Machinery and Equipment (including fleet and software) | 24,743 | 23,798 |
| Construction in Progress | 1,737 | 1,826 |
| Total | 36,162 | 35,140 |
| Accumulated Depreciation | (17,026) | (15,442) |
| Net Property, Plant and Equipment | $19,136 | $19,698 |
| Depreciation Expenses | $2,489 | $2,476 |
The company accounts for nonmonetary disposition and exchange of property and equipment based on the fair value of the property and equipment. By using fair value, the company recognizes any gain or loss immediately.
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