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