Problem:
Data from Consolidated Statement of Income (page 60), Consolidated Statement of Cash Flows (page 61) and the Consolidated Balance Sheet (page 62) of the 2009 PepsiCo Annual Report and was used to determine that following ratios for both year 2009 and 2008
Please note that the numbers are in millions:
1. Current Ratio
The Current Ratio is obtained by dividing the Current Assets by the Current Liabilities:
Current Ratio = Current Assets ÷ Current Liabilities
2009 - Current Ratio = 12,571 ÷ 22,406 = 0.56
2008 - Current Ratio = 10,806 ÷ 23,412 = 0.46
2. Debt Ratio
The Debt Ratio is obtained by dividing the Total Debt by the Total Assets:
Debt Ratio = Total Debt ÷ Total Assets
2009 - Debt Ratio = 22,406 ÷ 39,848 = 0.56
2008 - Debt Ratio = 23,412 ÷ 35,994 = 0.65
3. Return on Equity
The Return on Equity is calculated by dividing the Net Income by the Common
Equity.
Return on Equity = Net Income ÷ Common Equity
The Common Equity includes common equity including par, paid-in capital and retained earnings
2009 - Return on Equity = 5,979 ÷ 16,908 = 0.35
2008 - Return on Equity = 5,166 ÷ 12,203 =
4. Days Receivable (Average Collection Period)
Average collection period = Accounts Receivable ÷ Daily Credit Sales*
* Daily Credit Sales = Sales Revenue ÷ 365
2009 - Average collection period = 4,624 ÷ (43,232 ÷ 365) = 39 days
2008 - Average collection period = 4,683 ÷ (43,251÷ 365) = 40 days