Excerpts from the June 30, 1994, balance sheet of The Quaker Oats Company (now part of PepsiCo

Question:

Excerpts from the June 30, 1994, of The Quaker Oats Company (now part of PepsiCo Inc.) follow (dollars in millions): 1992 1994 1993 Current assets: Cash and short-term investments $ 140.4 $ 61.0 $ 95.2 478.9 575.3 Receivables 509.4 Inven

1992 1994 1993 Current assets: Cash and short-term investments $ 140.4 $ 61.0 $ 95.2 478.9 575.3 Receivables 509.4 Inven

REQUIRED:
a. The notes to the company€™s 1992 financial statements state that €œunder the most restrictive terms of the various loan agreements . . . minimum working capital of $150 million must be maintained.€ Compute how close The Quaker Oats Company came to this restriction at the end of 1992, and discuss what has happened since that time.
b. In Quaker Oats€™ 1994 annual report, it states, €œUnder the most restrictive terms of the Revolving Credit Agreements, the company must maintain total shareholders€™ equity greater than $300 million.€ Comment on possible explanations for the changing restrictions.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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