Segment (Division) Evaluation

In this assignment you will analyze the performance of PepsiCo's divisions. SFAS 131 requires publicly traded companies to disclose division information in the notes to the financial statements.

Section IV

Add one textbox for EACH of the following: [Define; Compare; How to improve]

1. ROI:

What does ROI tell management?

Which segments have the best and worst ROI or are they roughly the same (how do they compare)?

How could a segment of this company improve its ROI? Give me an example of a specific action that could be taken to improve ROI.

2. Sales Margin:

What does Sales Margin tell management?

Which segments have the best and worst or are they roughly the same (how do they compare)?

How could a segment of this company improve its sales margin? Give me an example of a specific action that could be taken to improve sales margin.

3. Capital Turnover:

What does Capital Turnover tell management?

Which divisions have the best and worst? How do they compare?

How could a segment of this company improve its capital turnover? Give me an example of a specific action that could be taken to improve capital turnover.

4. Residual Income:

What does Residual Income tell management?

Do any of the segments fall short of managements expectations? How can you tell?

5. Allocation decision:

If you were upper management (CEO of the whole corporation), and had excess funds to allocate among divisions, which division would you allocate those funds to and why?

Division FLNA QFNA NAB Latin America ESSA AMENA ROI $0.76 $0.73 $0.08 $0.16 $0.08 $0.18 Sales Margin $0.31 $0.26 $0.11 $0.14 $0.12 $0.20 Capital Turnove $2.49 $2.83 $0.71 $1.14 $0.66 $0.92 Residual Income / / $5,193.50 $565.50 $2,988.50 $436.25 2018 PEPSI COMPANY ROI OF BUSINESS SEGMENTS $0.80 $0.76 $0.73 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.16 $0.18 $0.08 $0.08 $0.10 $0.00 FLNA QFNA NAB Latin America ESSA AMENA