A recent annual report for PepsiCo contained the following information for the period (dollars in millions): Net income ............ $5,142 Depreciation and amortization ..... 1,543 Increase in accounts receivable .... 549 Increase in inventory ........ 345 Increase in prepaid expense ........ 68 Increase in accounts payable ..... 718 Decrease in taxes payable ....... 180 Increase in other current liabilities ...

Chapter 13, Exercises #14

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A recent annual report for PepsiCo contained the following information for the period (dollars in millions):

Net income ............ $5,142

Depreciation and amortization ..... 1,543

Increase in accounts receivable .... 549

Increase in inventory ........ 345

Increase in prepaid expense ........ 68

Increase in accounts payable ..... 718

Decrease in taxes payable ....... 180

Increase in other current liabilities ... 738

Cash dividends paid ........ 2,541

Treasury stock purchased ....... 4,720

Required:

1. Compute cash flows from operating activities for PepsiCo using the indirect method.

2. Compute the quality of income ratio.

3. What were the major reasons that PepsiCo’s quality of income ratio did not equal 1.0?


Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Related Book For answer-question

Financial Accounting

7th Edition

Authors: LibbyShort

ISBN: 978-0078111020