Textbook Problem

a. (1) Current year’s current ratio. 1,3

Current position analysis    Obi. 3

PepsiCo, Inc. (PEP), the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years:

	Current Year (in millions)	Previous Year (in millions)
Cash and cash equivalents	$ 9,158	$ 9,096
Short-term investments, at cost	6,967	2,913
Accounts and notes receivable, net	6,694	6,437
Inventories	2,723	2,720
Prepaid expenses and other current assets	1,547	1,865
Short-term obligations	6,892	4,071
Accounts payable	14,243	13,507

a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.

b. What conclusions can you draw from these data about PepsiCo’s liquidity?