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A recent annual report for PepsiCo contained the following information for the period (dollars in millions): Net income .......... $5,642

Question:

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

Net income .......... $5,642

Depreciation and amortization .. 1,406

Increase in accounts receivable .... 330

Increase in inventory ........ 186

Increase in prepaid expense ...... 37

Increase in accounts payable ..... 223

Decrease in taxes payable ..... 295

Decrease in other current liabilities . 339

Cash dividends paid ...... 1,854

Treasury stock purchased .... 3,000


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 Pepsi’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...

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Financial Accounting

Financial Accounting

ISBN: 978-0073526881

6th Edition

Authors: Libby, Short

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Question Posted: July 27, 2012 02:27:12
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