Pepsico Evaluation Paper

1348 WordsDec 26, 20106 Pages
Running head: COMPANY EVALUATION PAPER – PEPSICO Company Evaluation Paper – PepsiCo University of Phoenix Company Evaluation Paper – PepsiCo. This paper provides calculated ratios of liquidity, activity, debt and profitability of Pepsi Co for the fiscal years 2007-2008. This information was obtained from the financial statements. Liquidity The current ratio is considered to be the most simplified liquidity test. It essentially signifies a company 's capacity to satisfy its short-term liabilities utilizing its short-term assets. A current ratio which is larger than or equal to one shows that current assets should have the ability to satisfy its short-term obligations. A current ratio that is less than one may entail…show more content…
Their total inventory for 2008 was 2522 and 2290 in 2007. Inventory is moving in and out of their warehouse at a consistent basis at a high ratio. This reflects effective management of the company’s inventory. Debt Debt ratio indicates how much debt is used to finance a firm’s assets. To see the profitability a firm has to compare the difference between debt-to-equity mixes. The company should evaluate how do they finance their assets, do they use debt? There two types of debt, short-term and long-term debt, realizing the remaining percentage must be financed by equity. The amount of debt a firm uses depends on its proven income record and the availability of assets that can be used as collateral for the loan — and how much risk management is willing to assume. When a company borrows money to finance business there is a certain requirement that the company pay

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