Financial Statement Analysis ♦ 707
708 ♦ Chapter 14
1. Refer to PepsiCo’s Financial Statements. Management felt that the following items were important
enough to single out early in the annual report. Since these items are so important, perform
horizontal analysis on the following for 2001 and 2000:
Net Sales
Net Income
Net income per common share (basic)
Net cash provided by operating activities
Long-term debt
2. Refer to PepsiCo’s Financial Statements. Perform vertical analysis for the Income Statement for
2001.
ANS:
Financial Statement Analysis ♦ 709
3. Refer to PepsiCo’s Financial Statements. Perform vertical analysis for the Balance Sheet for 2001.
710 ♦ Chapter 14
Starbucks Financial Statements
Financial Statement Analysis ♦ 711
4. Refer to Starbucks Financial Statements. Compute the rate earned on total assets for Starbucks
Coffee for 2001.
5. Refer to Starbucks Financial Statements. Compute the rate earned on stockholders’ equity for
Starbucks Coffee for 2001. Hint: net income can be found in the Retained Earnings section of the
Consolidated Statements of Shareholders’ Equity.)
712 ♦ Chapter 14
6. Refer to Starbucks Financial Statements. Compute the accounts receivable turnover for Starbucks
Coffee for 2001 if net credit sales are $2, 648,980.
7. Refer to Starbucks Financial Statements. Compute the number of days’ sales in receivables
Starbucks Coffee for 2001 if net credit sales are $2,648,980.
8. Refer to Starbucks Financial Statements. Compute the inventory turnover for Starbucks Coffee for
2001 if the cost of goods sold is $1,112,785.
9. Refer to Starbucks Financial Statements. Compute the number of days’ sales in inventory for
Starbucks Coffee for 2001 if the cost of goods sold is $1,112,785.
10. Refer to Starbucks Financial Statements. Compute the current ratio for Starbucks Coffee for 2001.
Financial Statement Analysis ♦ 713
11. Refer to Starbucks Financial Statements. Compute the quick ratio for Starbucks Coffee for 2001
12. Refer to Starbucks Financial Statements. Compute the ratio of liabilities to stockholders’ equity for
Starbucks Coffee for 2001.
13. What is the total of the Quick Assets for Starbucks Coffee?
714 ♦ Chapter 14
CASE
PepsiCo’s Financial Statements
Answer the following question(s) using these selected portions of PepsiCo’s financial statements.
Financial Statement Analysis ♦ 715
716 ♦ Chapter 14
Financial Statement Analysis ♦ 717
718 ♦ Chapter 14
Financial Statement Analysis ♦ 719
720 ♦ Chapter 14
Financial Statement Analysis ♦ 721
722 ♦ Chapter 14
Financial Statement Analysis ♦ 723
1. Refer to PepsiCo’s Financial Statements. Find at least two examples of horizontal analysis, and
report the accounts, numerical and percentage amounts, as well as the direction of change.
2. Refer to PepsiCo’s Financial Statements. Often profitability measures are reported in these two
sections of the annual report. Provide at least one example of a profitability measure, and describe
the direction reported.
3. Refer to PepsiCo’s Financial Statements. What is the total dollar amount of sales for PepsiCo?
4. Refer to PepsiCo’s Financial Statements. Earnings per share are required to be reported. What is
the basic earnings per share for PepsiCo for 2000 and 2001?
5. Refer to PepsiCo’s Financial Statements. What does CEO Reinemund say about the debt situation
on the balance sheet? How does this statement compare to the amounts reported in the Financial
Highlights?