CASE ANALYSIS

Submitted by:
Endaya, Janine C.
Gatela, Cherlyn May T.
Lucos, Ivan Gerard C.
Maghirang, Luis Fernando M.
Viaa, Ver Adrian D.
Submitted to:
Mr. Alvin Tan

B A LA N C E SH EET A N A LYSIS
A. In 2002 to 2004, Cash and Cash equivalents increased due to the significant amount of collections of
accounts receivable, making your ARTO higher in the periods of 2002-2004. However, in 2005 it decreased due
to purchase of property, plant and equipment and inventory.
B. There is an unstable movement in the account of bottles and cases in 2002 to 2004. However, it increased in
2005 because of investments using cash, accounts and notes payable.
C. From 2002 to 2004, notes payable and accounts payable decreased in 2004 due to payments to creditors.
While notes payable and accounts payable increased in 2005 because of certaininvestments.

D. Long term debt continuously decreased from 2001to 2005. This implies that Long term debt, that was used to
fund a Portion of Non-Current Assets, (i.e. Property, Plant and Equipment) was settled by Cash and Cash
Equivalents.
E. In the 5 year period of the company, Pepsi-Colas total equity continuously increased because of the
transferring of funds from Common stock and Paid-in capital to its Retained earnings thereby neutralizing its
deficit which in turn, increasing your total equity.

IN C O M E STATEM EN T
F. Based on the income statement, during the year 2001 to 2002, it shows
Ncompany
A LYSI
S a net loss. But during the span of 2003 to
thatA
the
is experiencing
2005 they had improved and became profitable which resulted to a net
(gain) income.
G. There was a substantial increase on EBT in the year 2002 to 2003
because of the sudden loss in Foreign exchange and a decrease in
restructuring charges.
H. In the year 2004, they had the lowest percentage of COGS in portion of
sales which effected to an increase in the percentage of gross profit in
portion of sales.
I. During 2003 to 2004, the company encountered a significant increase in
their operating expense which caused their EBIT to have a reduction in the
rate of increase from 2003 to 2004 compared to the earlier years.

C A SH FLO W A N A LYSIS
J. In operating activities, Pepsi went from a net income of 884,393 in 2004 to
773,444 in 2005. Despite this decrease, it was still able to generate the highest
amount of cash in operating activities compared to the previous years due to the
high level of accounts payable which was used to purchase assets. Pepsi uses this
generated cash in the day-to-day operations of the company.
K. In investing activities, one of the development strategies of Pepsi Co is
investment in PP&E, Bottles and Cases and other assets in 2005. It can be seen
that the company purchased more PP&E each year because of the continuous
increase in the said investment which reflected capital expansion and growth thus,
decreasing cash in 2005 compared to 2001.
L. In financing activities, Pepsi Co. is highly operational during 2001 in external
activities because they used different means to acquire debt to raise cash and
finance their activities. While in the year 2004, cash received from financing
activities shows negative values which conveys that they are paying their
obligations. Specifically, notes payable and long term debt.

R ATIO A N A LYSIS
M. The Current and Quick ratio indicates that they are most liquid in the year 2005, because the
Current Assets is at its highest in that year, but it can barely support Its maturing Current
Liabilities in the whole five year period. In the years 2001-2005, Pepsi-Cola experienced a
negative working capital because of its lacking Current Assets against its greater Current
Liabilities that pertains to an increase in the Accounts Payable that accounts to the largest chunk
in the Companys Total Current Liabilities.

N. The Activity or Asset Management ratios of the Company have a relatively stable trend,
excluding the fact that the Companys Working Capital Turnover has a continuously increasing
negative value since its Short term debt is higher than its Current Assets, meaning that the
company is incapable in utilizing its working capital to generate revenue.
O. The Activity or Asset Management ratios of the Company have a relatively stable trend,
excluding the fact that the Companys Working Capital Turnover has a continuously increasing
negative value since its Short term debt is higher than its Current Assets, meaning that the
company is incapable in utilizing its working capital to generate revenue.
P. The overall profitability ratio shows similar results in terms of trends. The company is most profitable
in 2004 because it shows that in that year, there is a significant decrease in the COGS which affected
all the profit margins. And based on the ROA, they also had the highest return on asset because of
increase in net income coexistent with the decrease in total asset. Similarly, they also had the highest
return on equity in the same year because their retained earnings suddenly increased on that year.