pepsi marketing

TABLE OF CONTENTS1. EXECUTIVE SUMMARY 2. LITERATURE REVIEW 3. ABOUT THE COMPANY a. Company profile b. Mission & Vision c. Company Leadership d. Company Brands e. Milestones f. Company Profile in India 5-6 7-12 13-29 14 18 19 20 24 26

4. WORKING CAPITAL MANAGEMENT a. Introduction b. Working Capital Analysis c. Nature & importance of working capital d. The importance of Good Working Capital e. Working Capital Cycle1

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Working Capital Management

5. ANALYSIS OF WORKING CAPITAL MANAGE 6. MENT a. Schedule of changes In working Capital Management b. Percentage change in working capital c. Assessment of working Capital Management

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7. OBJECTIVE OF THE STUDY 8. RESEACH METHODOLOGY 9. ANALYSIS OF THE STUDY a. Analysis of various components b. Inventory c. Sundry Debtors d. Cash & Bank Balance e. Current Liability f. Provision Analysis 10.WORKING CAPITAL RATIO a. Receivable Ratio b. Payable Ratio2

44 45-46 47-65 48-56 48 50 52 54 56 57-65 58 59

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Working Capital Management c. Inventory Ratio d. Current Ratio e. Quick Ratio f. Working capital Ratio 11.PROFIT & LOSS ACCOUNT 12.INCOME STATEMENT ANALYSIS 13.MAJOR FINDINGS 14.CONCLUSION 15.RECOMMENDATION 16.BIBLIOGRAPHY & REFRENCES 17.ANNEXTURE 61 62 64 64 66 67 69 70 73 76 78

Executive Summary

The project on Working Capital Management has been a very good experience. Every manufacturing company faces the problem of Working Capital Management in their day to day processes. An organizations cost can be reduced and the profit can be increased only if it is able to manage its Working Capital efficiently. At the same time the company can provide customer satisfaction and hence can improve their overall productivity and profitability.

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Working Capital Management This project is a sincere effort to study and analyze the Working Capital Management of PEPSICO Bottling group. The project was focused on making a financial overview of the company by conducting a Working Capital analysis of PEPSICO Bottling group for the years 2006 to 2008 and Ratios & various components of working capital & for the year 2008 in a cma(cash monitoring arrangement) format emphasizing on Working Capital.

The internship is a bridge between the institute and the organization. This made me to be involved in a project that helped me to employ my theoretical knowledge about the myriad and fascinating facets of finance. And in the process I could contribute substantially to the organization. The experience that I gathered over the past two months has certainly provided the orientation, which I believe will help me in shouldering any responsibility in future.

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The research done by Pass C.L., Pike R.H., An overview of working capital management and corporate financing,(1984) describes that over the past 40 years major theoretical developments have occurred in the areas of longer-term investment and financial decision making. Many of these new concepts and the related techniques are now being employed successfully in industrial practice. By contrast, far less attention has been paid to the area of short-term finance, in particular that of working capital management. Such neglect might be acceptable were working capital considerations of relatively little importance to the firm, but effective working capital management has a crucial role to play in enhancing the profitability and growth of the firm. Indeed, experience shows that inadequate planning and control of working capital is one of the more common causes of business failure.

The research done by Herrfeldt B., How to Understand Working Capital Management describes thatCash is king--so say the money managers who share the responsibility of running this country's businesses. And with banks demanding more from their prospective borrowers, greater emphasis has been placed on those accountable for so-called working capital management. Working capital management refers to the management of current or short-term assets and short-term liabilities. In essence, the purpose of that function is to make certain that the company has enough assets to operate its business. Here are things you should know about working capital management.

The research done by, Samiloglu F. and Demirgunes K., The Effect of Working Capital Management on Firm Profitability: Evidence from Turkey (2008) describes that the effect of working capital management on firm profitability. In accordance with this aim, to consider statistically significant relationships between firm profitability and the components of cash conversion cycle at length, a sample consisting of Istanbul Stock Exchange (ISE) listed manufacturing firms for the period of 1998-2007 has been analysed under a multiple regression model. Empirical findings of the study show that accounts receivables period, inventory period and leverage affect firm profitability negatively; while growth (in sales) affects firm profitability positively.6

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The research done by, Appuhami, Ranjith B A, The Impact of Firms' Capital Expenditure on Working Capital Management: An Empirical Study across Industries in Thailand , International Management Review,(2008), The purpose of this research is to investigate the impact of firms' capital expenditure on their working capital management. The author used the data colleted from listed companies in the Thailand Stock Exchange. The study used Shulman and Cox's (1985) Net Liquidity Balance and Working Capital Requirement as a proxy for working capital measurement and developed multiple regression models. The empirical research found that firms' capital expenditure has a significant impact on working capital management. The study also found that the firms' operating cash flow, which was recognized as a control variable, has a significant relationship with working capital management.

The research done by, Hardcastle J., Working Capital Management,(2007) describes that Working capital, sometimes called gross working capital, simply refers to the firm's total current assets (the short-term ones), cash, marketable securities, accounts receivable, and inventory. While long-term financial analysis primarily concerns strategic planning, working capital management deals with day-to-day operations. By making sure that production lines do not stop due to lack of raw materials, that inventories do not build up because production continues unchanged when sales dip, that customers pay on time and that enough cash is on hand to make payments when they are due. Obviously without good working capital management, no firm can be efficient and profitable.

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Working Capital ManagementThe research done by, Thachappilly G., Working Capital Management Manages Flow of Funds,(2009) describes that Working capital is the cash needed to carry on operations during the cash conversion cycle, i.e. the days from paying for raw materials to collecting cash from customers. Raw materials and operating supplies must be bought and stored to ensure uninterrupted production. Wages, salaries, utility charges and other incidentals must be paid for converting the materials into finished products. Customers must be allowed a credit period that is standard in the business. Only at the end of this cycle does cash flow in again.

The research done by, Beneda, Nancy; Zhang, Yilei, Working Capital Management, Growth and Performance of New Public Companies, Credit & Financial Management Review, (2008) examining impact of working capital management on the operating performance and growth of new public companies. The study also sheds light on the relationship of working capital with debt level, firm risk, and industry. Using a sample of initial public offerings (IPO's), the study finds a significant positive association between higher levels of accounts receivable and operating performance. The study further finds that maintaining control (i.e. lower amounts) over levels of cash and securities, inventory, fixed assets, and accounts.

The research done by, Dubey R., Working Capital Management-an Effective Tool for Organisational Success (2008) describes that The working capital in a firm generally arises out of four basic factors like sales volume,technological changes,seasonal , cyclical changes and policies of the firm.The strenghth of the firm is dependent on the working capital as discussed earlier but this working capital is inteslf dependent on the level of sales volume of the firm.The firm requires current assets to support and maintain operational or functional activities.By current assets we mean the assets which can be converted readily into cash say within a year such as receivables,inventories and liquid cash.If the level of sales is stable and towards growth the level of cash,receivables and stock will also be on the high.

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Working Capital ManagementThe research done by, McClure B., Working Capital Works describes that Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow health is essential to making investment decisions. A good way to judge a company's cash flow prospects is to look at its working capital management (WCM). Cash is king, especially at a time when fund raising is harder than ever. Letting it slip away is an oversight that investors should not forgive. Analyzing a company's working capital can provide excellent insight into how well a company handles its cash, and whether it is likely to have any on hand to fund growth and contribute to shareholder value.

The research done by, Gass D., How To Improve Working Capital Management (2006) "Cash is the lifeblood of business" is an often repeated maxim amongst financial managers. Working capital management refers to the management of current or shortterm assets and short-term liabilities. Components of short-term assets include inventories, loans and advances, debtors, investments and cash and bank balances. Shortterm liabilities include creditors, trade advances, borrowings and provisions. The major emphasis is, however, on short-term assets, since short-term liabilities arise in the context of short-term assets. It is important that companies minimize risk by prudent working capital management. The research done by, Maynard E. Rafuse, Working capital management: an urgent need to refocus Management Decision, (1996) Argues that attempts to improve working capital by delaying payment to creditors is counter-productive to individuals and to the economy as a whole. Claims that altering debtor and creditor levels for individual tiers within a value system will rarely produce any net benefit.Proposes that stock reduction generates systemwide financial improvements and other important benefits.Urges those organizations seeking concentrated working capital reduction strategies to focus on stock management strategies based on lean supply-chain techniques.

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The research done by, Thomas M. Krueger, An Analysis of Working Capital Management Results Across Industries American Journal of Business, (2005) found distinct levels of WCM measures for different industries, which tend to be stable over time. Many factors help to explain this discovery. The improving economy during the period of the study may have resulted in improved turnover in some industries, while slowing turnover may have been a signal of troubles ahead. Our results should be interpreted cautiously. Our study takes places over a short time frame during a generally improving market. In addition, the survey suffers from survivorship bias only the top firms within each industry are ranked each year and the composition of those firms within the industry can change annually.

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PepsiCo is a world leader in convenient foods and beverages, with 2008 revenues of more than $ 13796 Million and 168,000 employees. The company consists of Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America. PepsiCo brands are available in nearly 200 countries and territories and generate sales at the retail level of about $92 billion. Some of PepsiCo's brand names are more than 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001. PEPSI is a soft drink produced and manufactured by PepsiCo. It is sold in many places such as retail stores, restaurants, schools, cinemas and from vending machines. The drink was first made in the 1890s by pharmacist Caleb Bradham in New Bern, North Carolina. The brand was trademarked on June 16, 1903. There have been many Pepsi variants produced over the years since 1898. In October 2008, Pepsi announced that it would be redesigning its logo and re-branding many of its products by early 2009. In 2009, Pepsi, Diet Pepsi and Pepsi Max began using all lower-case fonts for name brands, and Diet Pepsi Max was re-branded as Pepsi Max. The brand's blue and red globe trademark became a series of "smiles," with the central white band arcing at different angles depending on the product. As of July 2009, the 2003 Pepsi logo is still the current logo for Pepsi Wild Cherry and Pepsi ONE. Countries such as Australia and India continue to use the old design on all packaging. Diet Pepsi Wild Cherry, Pepsi throwback, Diet Pepsi Lime, and Diet Pepsi Vanilla received the redesign.

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ORIGINIt was first introduced in North Carolina in 1898 by Caleb Bradham, who made it at his pharmacy which sold the drink. Known back then as "Brad's Drink", it was later named Pepsi Cola possibly due the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore into a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. In 1929, automobile race pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads as "A bully drink...refreshing, invigorating, a fine bracer before a race. In 1931, the Pepsi-Cola Company went bankrupt during the Great Depression- in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went bankrupt again. Pepsi's assets were then purchased by Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula.

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RiseDuring the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was slashed to five cents, sales increased substantially. With a radio advertising campaign featuring the jingle "Pepsi-Cola hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too / Pepsi-Cola is the drink for you," arranged in such a way that the jingle never ends. Pepsi encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard of six ounces per bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at a time of economic crisis, the campaign succeeded in boosting Pepsi's status. In 1936 500,000,000 bottles of Pepsi were consumed. From 1936 to 1938, Pepsi-Cola's profits doubled. Pepsi's success under Guth came while the Loft Candy business was faltering. Since he had initially used Loft's finances and facilities to establish the new Pepsi success, the nearbankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a loss for Guth.

HistoryHeadquartered in Purchase, New York, with Research and Development Headquarters in Valhalla, The Pepsi Cola Company began in 1898 by a Pharmacist and Industrialist Caleb Bradham, but it only became known as PepsiCo when it merged with Frito Lay in 1965. Until 1997, it also owned KFC, Pizza Hut, and Taco Bell, but these fastfood restaurants were spun off into Tricon Global Restaurants, now Yum! Brands, Inc. PepsiCo purchased Tropicana in 1998, and Quaker Oats in 2001. In December 2005, PepsiCo surpassed Coca-Cola Company in market value for the first time in 112 years since both companies began to compete.

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COMPANY PROFILE

PepsiCo, Incorporated

Type Public (NYSE: PEP) Founded 1965 Headquarters Key peoplePurchase, New York, USA Indra Nooyi, Chairman, President & CEO

Industry Food and beverage Products PepsiTropicana Products Gatorade Lay's Doritos Frappuccino (for Starbucks) Mountain Dew

Revenue Operating income Net income

$13796 Million USD (2008) $1149 Million USD (2008) $162 Million USD (2008)

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MISSION & VISION

At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but the right thing to do for our business.

MISSIONOur mission is to be the worlds premier consumer products focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employee, our business partners and the communities which we operate. And in everything we do, we strive for honestly, fairness and integrity.

VISIONPepsiCo responsibility is to continually improve all aspects of the world in which we operate environment, social, economic creating a better tomorrow than today. Our vision is put in to action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

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COMPANY LEADERSHIPWe are a company full of strong, talented individuals starting at the top of our organization. Get to know the inspiring people helping lead PepsiCo on its 'Performance with Purpose' journey. "Together we are all building on the platform of human, environmental and talent sustainability while continuing to deliver great results." INDRA K. NOOYi Chairman and CEO

Massimo F. d'Amore John C. Compton Indra K. Nooyi Chairman and CEO CEO PepsiCo CEO PepsiCo Americas Beverages Americas Foods

Michael D. White CEO PepsiCo Intl. & Vice Chairman, PepsiCo

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PepsiCo owns five different billion-dollar brands. These are Pepsi, Tropicana, Frito-Lay, Quaker, and Gatorade.

The company owns many other brands as well.

U

Pepsi, including

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Pepsi-Cola, Caffeine-Free Pepsi, Diet Pepsi/Pepsi Light, Caffeine-Free Diet Pepsi,

Caffeine-Free Pepsi Light, Wild Cherry Pepsi, Pepsi Lime, Pepsi Max, Pepsi Twist and Pepsi ONE. Other U.S. carbonated soft drinks including Frawg, Mountain Dew, Mug Root Beer, Sierra Mist and Tropicana Twister Soda

7 Up (international distribution) Other U.S. beverages including Aquafina (Flavour Splash, Alive, and Twist/Burst), Dole, Gatorade, Mountain Dew AMP, Propel Fitness Water, SoBe, Quaker Milk Chillers, Ben & Jerry's MilkShakes, and Tropicana

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Beverages marketed outside the U.S .: Alvalle, Concordia, Copella, Evervess,U

Fiesta, Frui'Vita, Fruko, Kas, Loza, Manzanita Sol, Mirinda, Paso de los Toros, Radical Fruit, San Carlos, Shani, Teem, Triple Kola, and Yedigun

U.S Frito-Lay brands: Baken-ets, Barcel, Bocabits, Cheese Tris, Cheetos,Chester's, Chizitos, Churrumais, Cracker Jack, Crujitos, Doritos, Fandangos, Fritos, Funyuns, Gamesa, Go Snacks, James' Grandma's Cookies, Hamka's, Lay's, Miss Vickie's, Munchies, Munchos, Nik Naks, Oberto Meat Snacks, Quavers, Rold Gold, Ruffles,20

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Working Capital ManagementRustler's Meat Sticks, Sabritas, Sabritones, Santitas, Smartfood, The Smith's Snackfood Company, Sonric's, Stacy's Pita Chips, Sun Chips, Tor-tees, Tostitos, Walkers, and Wotsits

U.S Quaker Oats brands: Aunt Jemima, Cap'n Crunch, Coqueiro, Crisp'ums,Cruesli, FrescAvena, King Vitaman, Life, Oatso Simple,Quake, Quisp, Rice-A-Roni, and Spudz

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2008 Milestones

PepsiCo Foundation announces two major new grants to WaterPartners and Safe Water Network programs to provide access to safe water and sanitation in developing countries PepsiCo Again Named to the Dow Jones Sustainability Index PepsiCo Agrees to Buy Bulgaria's Leading Nuts and Seeds Company PepsiCo Announces Initiatives With the Earth Institute and H2O Africa to Drive Sustainable Water Practices

Forbes Names PepsiCo Among Its Best Big Companies PepsiCo India Commissions First Remote Wind Turbine to Generate Renewable, Clean Energy

CRO Names PepsiCo to Top 25 100 Best Corporate Citizens 2008 PepsiCo to Buy Russian Juice Leader, Lebedyansky Employees Lead Effort to Make Chicago Plaza First LEED-Certified PepsiCo Headquarters

Gatorade Launches Gatorade Tiger with Comprehensive Integrated Marketing Campaign

PepsiCo Honored with 2008 Energy Star Partner of the Year Award UK Vitamin Water Brand- V Water Acquired by PepsiCo

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Quaker Plant in Cedar Rapids Closes and Reopens Facility Due to Flooding to Protect Employees

PepsiCo Foodservice and Naked Juice Expand Starbucks Presence Gatorade Sports Science Institute Gathers World's Leading Researchers on Protein Nutrition

PepsiCo International's China Foods Wins "China's Top Leaders 2008" Award Wall Street Journal Article Recognizes PepsiCo for Leadership in Employment of People with Different Abilities

PepsiCo and Frito-Lay Join SmartWay in Commitment to Reduce Greenhouse Gas Emissions

PepsiCo Beats Coke in Race to Launch New Natural Sweetener (Stevia) PepsiCo France Recognized as "Great Place To Work" by Institute Survey PepsiCo Commits to Reducing Acryalmide Levels in Potato Chip Products and Restructured Potato Snacks in California

Subway Names PepsiCo "Vendor of the Year" for Sustainability Leadership Tazo Tea Joins Pepsi Lipton Partnership

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PEPSICO IN INDIAPepsiCo entered India in 1988 and has grown to become one of the countrys leading food and beverage companies. One of the largest multinational investors in the country, PepsiCo has established a business which aims to serve the long term dynamic needs of India. PepsiCo India and its partners have invested more than U.S.$1 billion since the company was established in the country. PepsiCo provides direct and indirect employment to 150,000 people including suppliers and distributors. PepsiCo nourishes consumers with a range of products from treats to healthy eats, that deliver joy as well as nutrition and always, good taste. PepsiCo Indias expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks - Gatorade, Tropicana100% fruit juices, and juice based drinks Tropicana Nectars, Tropicana Twister and Slice. Local brands Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range of brands. PepsiCos foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito Lay products are free of trans-fat and MSG. It manufactures Lays Potato Chips; Cheetos extruded snacks, Uncle Chips and traditional snacks under the Kurkure and Lehar brands. The companys high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack options enhance the healthful choices available to consumers. Frito Lays core products, Lays, Kurkure, Uncle Chips and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary nutritional labelling on their packets. The group has built an expansive beverage and foods business. To support its operations, PepsiCo has 43 bottling plants in India, of which 15 are company owned and 28 are franchisee owned. In addition to this, PepsiCos Frito Lay foods division has 3 state-of-theart plants. PepsiCos business is based on its sustainability vision of making tomorrow better than today. PepsiCos commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers.

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Working Capital ManagementPepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994. Others claim that firstly Pepsi was banned from import in India, in 1970, for having refused to release the list of its ingredients and in 1993, the ban was lifted, with Pepsi arriving on the market shortly afterwards. These controversies are a reminder of "India's sometimes acrimonious relationship with huge multinational companies." Indeed, some argue that PepsiCo and The Coca-Cola Company have "been major targets in part because they are well-known foreign companies that draw plenty of attention." In 2003, the Centre for Science and Environment (CSE), a non-governmental organization in New Delhi, said aerated waters produced by soft drinks manufacturers in India, including multinational giants PepsiCo and The Coca-Cola Company, contained toxins, including lindane, DDT, malathion and chlorpyrifos pesticides that can contribute to cancer, a breakdown of the immune system and cause birth defects. Tested products included Coke, Pepsi, 7 Up, Mirinda, Fanta, Thums Up, Limca, and Sprite. CSE found that the Indianproduced Pepsi's soft drink products had 36 times the level of pesticide residues permitted under European Union regulations; Coca Cola's 30 times. CSE said it had tested the same products in the US and found no such residues. However, this was the European standard for water, not for other drinks. No law bans the presence of pesticides in drinks in India. The Coca-Cola Company and PepsiCo angrily denied allegations that their products manufactured in India contained toxin levels far above the norms permitted in the developed world. But an Indian parliamentary committee, in 2004, backed up CSE's findings and a government-appointed committee, is now trying to develop the world's first pesticides standards for soft drinks. Coke and PepsiCo opposed the move, arguing that lab tests aren't reliable enough to detect minute traces of pesticides in complex drinks. On December 7, 2004, India's Supreme Court ruled that both PepsiCo and competitor The Coca-Cola Company must label all cans and bottles of the respective soft drinks with a consumer warning after tests showed unacceptable levels of residual pesticides. Both companies continue to maintain that their products meet all international safety standards without yet implementing the Supreme Court ruling . As of 2005, The Coca-Cola Company and PepsiCo together hold 95% market share of soft-drink sales in India. PepsiCo

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Working Capital Managementhas also been accused by the puthussery panchayat in the Palakkad district in Kerala, India, of practicing "water piracy" due to its role in exploitation of ground water resources resulting in scarcity of drinking water for the panchayat's residents, who have been pressuring the government to close down the PepsiCo unit in the village. In 2006, the CSE again found that soda drinks, including both Pepsi and Coca-Cola, had high levels of pesticides in their drinks. Both PepsiCo and The Coca-Cola Company maintain that their drinks are safe for consumption and have published news paper advertisements that say pesticide levels in their products are less than those in other foods such as tea, fruit and dairy products. In the Indian state of Kerala, sale and production of Pepsi-Cola, along with other soft drinks, was banned by the state government in 2006, but this was reversed by the Kerala high court merely a month later. Five other Indian states have announced partial bans on the drinks in schools, colleges and hospitals.

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COMPANY PROFILE IN INDIACOMPANY NAME: ADDRESS: KEY PEOPLE:Pepsi Co India Holdings Private Limited

COUNTRY/TERRITORY: India3B;DLF Corporate parks Block; Qutub Enclave; Gurgaon, Haryana, India Sanjeev Chadha, CEO of PepsiCo India.

PRODUCTS/SERVICES WE Mango, Guava, Papaya, Banana OFFER: BUSINESS TYPE: INDUSTRY FOCUS: NO. OF EMPLOYEES:Manufacturer Food Processing

GEOGRAPHIC MARKETS: Middle EastAbove 1000 People

ANNUAL SALES RANGE Above US$100 Million (USD): YEAR ESTABLISHED:Gained entry to India in 1988T T

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INTRODUCTIONA managerial accounting strategy focusing on maintaining efficient levels of both Components of working capital, current assets and current liabilities, in respect to each other are referred to as working capital management. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses. Implementing an effective working capital management system is an excellent way for many companies to improve their earnings. The two main aspects of working capital management are ratio analysis and management of individual components of working capital. Ratio analysis will lead management to identify areas of focus such as inventory management, cash management, accounts receivable and payable management. The study objectives in working capital management particular to this study are: To examine the impact of accounts receivables days, inventories days, accounts payable Days and cash conversion cycle on return on total assets To analyze the trend in working capital needs of firms and to examine the causes for any significant differences between the industries.

Working Capital ComponentsThe term working capital refers to the amount of capital which is readily available to an Organization. It is a measure of both a company's efficiency and its short-term financial health. That is, working capital is the difference between resources in cash or readily convertible into cash (Current Assets) and organizational commitments for which cash will soon be required (Current Liabilities). Current Assets are resources which are in cash or will soon be converted into cash in the ordinary course of business. Current Liabilities are commitments which will soon require cash settlement in the ordinary course of business.

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The working capital is calculated as: WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIES

CURRENT ASSETSCash in hand/at bank Bills Receivable Sundry Debtors Short term Loans Inventory/ Stock Temporary Investment Prepaid Expenses Accrued Income

CURRENT LIABILITYBills Payable Sundry Creditors Outstanding Expenses Accrued Expenses Bank overdraft

Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable, inventory). If a company's current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. A declining working capital ratio over a longer time period could also be a red flag that warrants further analysis. Working capital also gives investors an idea of the company's underlying operational efficiency. Money that is tied up in inventory or money that customers still owe to the company cannot be used to pay off any of the company's obligations. So, even if accompany is not operating in the most efficient manner (slow collection), it will show up as an increase in the working capital. This can be seen by comparing the working capital from one period to another; slow collection may signal an underlying problem in the company's operations.

Working Capital Analysis

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Working Capital ManagementThe major components of gross working capital include stocks (raw materials, work-inprogress and finished goods), debtors, cash and bank balances. The composition of working capital depends on a multiple of factors, such as operating level, level of operational efficiency, inventory policies, book debt policies, technology used and nature of the industry. While inter- industry variation is expected to be high, the degree of variation is expected to be low for firms within the industry.

Nature and Importance of Working CapitalThe working capital meets the short-term financial requirements of a business enterprise. It is a trading capital, not retained in the business in a particular form for longer than a year. The money invested in it changes form and substance during the normal course of business operations. If it becomes weak, the business can hardly prosper and survive. The success of a firm depends ultimately, on its ability to generate cash receipts in excess of disbursements. On the one hand, working capital is always significant. This is especially true from the lenders or creditors Perspective, where the main concern is defensiveness: can the company meet its short-term obligations, such as paying vendor bills? But from the perspective of equity valuation and the company's growth prospects, working capital is more critical to some businesses than to others. At the risk of oversimplifying, we could say that the models of these businesses are asset or capital intensive rather than service or people intensive.

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The Importance of Good Working Capital ManagementWorking capital constitutes part of the Crowns investment in a department. Associated with this is an opportunity cost to the Crown. (Money invested in one area may cost opportunities for investment in other areas.) If a department is operating with more working capital than is necessary, this over-investment represents an unnecessary cost to the Crown. From a departments point of view, excess working capital means operating inefficiencies. In addition, unnecessary working capital increases the amount of the capital charges.

The Management of Working CapitalThe amounts invested in working capital are often high in proportion to the total assets employed and so it is vital that these amounts are used in an efficient and effective way. A firm can be very profitable, but if this is not translated into cash from operations within the same operating cycle, the firm would need to borrow to support its continued working capital needs. Thus, the twin objectives of profitability and liquidity must be synchronized and one should not impinge on the other for long. Investments in current assets are inevitable to ensure delivery of goods or services to the ultimate customers and a proper management of same should give the desired impact on either profitability or liquidity. If resources are blocked at different stages of the supply chain, this will prolong the cash operating cycle. Although this might increase profitability (due to increase sales), it may also adversely affect the profitability if the costs tied up in working capital exceed the benefits of holding more inventory and/or granting more trade credit to customers. Another component of working capital is accounts payable, but it is different in the sense that it does not consumer sources; instead it is often used as a short term source of finance. Thus it helps firms to reduce its cash operating cycle, but it has an implicit cost where discount is offered for early settlement of invoices.

Approaches to Working Capital ManagementRAJU KUMAR SINGH32


The objective of working capital management is to maintain the optimum balance of each of the working capital components. This includes making sure that funds are held as cash in bank deposits for as long as and in the largest amounts possible, thereby maximizing the interest earned. However, such cash may more appropriately be invested in other assets or in reducing other liabilities.

Working capital management takes place on two levels:Ratio analysis can be used to monitor overall trends in working capital and to identify areas requiring closer management. The individual components of working capital can be effectively managed by using various techniques and strategies. When considering these techniques and strategies, departments need to recognize that each department has a unique mix of working capital components. The emphasis that needs to be placed on each component varies according to department. For example, some departments have significant inventory levels; others have little if any inventory. Furthermore, working capital management is not an end in itself. It is an integral part of the departments overall management. The needs of efficient working capital management must be considered in relation to other aspects of the departments financial and non-financial performance.

Working Capital CycleRAJU KUMAR SINGH33

Working Capital ManagementWorking capital cycle, also known as the asset conversion cycle, operating cycle, cash conversion cycle or just cash cycle, is used in the financial analysis of a business. The higher the number, the longer a firm's money is tied up in business operations and unavailable for other activities such as investing. The cash conversion cycle is the number of days between paying for raw materials and receiving cash from selling goods made from that raw material.

Cash Conversion Cycle = Average Stockholding Period (in days) + Average Receivables. Processing Period (in days) - Average Payables Processing Period (in days) with. Average Stockholding Period (in days) = Closing Stock / Average Daily Purchases. Average Receivables Processing Period (in days) = Accounts Receivable / Average Daily Credit Sales. Average Payable Processing Period (in days) = Accounts Payable / Average Daily Credit Purchases.

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A short cash conversion cycle indicates good working capital management. Conversely, a long cash conversion cycle suggests that capital is tied up while the business waits for customers to pay. The longer the production process, the more cash the firm must keep tied up in inventories. Similarly, the longer it takes customers to pay their bills, the higher the value of accounts receivable. On the other hand, if a firm can delay paying for its own materials, it may reduce the amount of cash it needs. In other words, accounts payable reduce net working capital.

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SCHEDULE OF CHANGES IN WORKING CAPITALWORKING CAPITAL FOR 2006 TO 2008 2006A CURRENT ASSET $ MILLION Cash & Equilvalnts Accounts Receivable Inventory Other current Asset Total Current asset B CURRENT LIABILITY Accounts Payable Short term debt Accrued Liability Total current liability

2007

2008

629 1332 533 255 2749

647 1520 577 342 3086

966 1371 528 276 3141

1677 374 0 2051

1968 247 0 2215

1675 1408 0 3083

NET WORKING CAPITAL(AB)

698

871

58

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Working Capital Management CHART ANALYSIS

1000 800 600 400 200 0 2006 2007 2008 58 691 871

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PERCENTAGE CHANGE IN CURRENT ASSET & CURRENT LIABILITY FROM 2006 TO 2008

ACURRENT ASSET Cash & Equilvalants Accounts Receivable Inventory Other current Asset Total Current asset B CURRENT LIABILITY Accounts Receivable Short term debt Accrued Liability Total current liability

2006

2007

2008

5.3 11.2 4.5 2.1 23.1

4.9 11.6 4.4 2.6 23.5

7.4 10.6 4.1 2.1 24.2

14.1 3.1 0 17.2

15 1.9 0 0 16.9

12.9 10.8

23.7

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CHART ANALYSIS

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ASSESMENT OF WORKING CAPITAL REQUIREMENT(MAXIMUM PERMISSIBLE BANK FINANCE)

20061 Total Current Assets 2 current Liabilities (Other than Bank Borrowings) 3 working capital gap(1-2) 4 Min. stipulated Net working capital( 25% of Total C.A) 5 Actual/ projected Net W.C. 6 item 3 minus item 4 7 item 3 minus item 5 8 Max. Permissible Bank Finance (item 6 or 7, Whichever is less)

2007 3086 647 2439 771.5 871 1667.5 1568 1568

2008 3141 966 2175 785.25 58 1389.75 2117 1389.75

2749 629 2120 687.25 698 1432.75 1422 1422

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ANALYSISWorking capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses. In 2006 the company have Rs.691mill$. Its shows good financial position of the company. In 2007 it increases to 871 mill $. In this year company have take less short term debt from previous year. This year company uses his own funds. Its shows the efficient working capital management by Pepsi. In 2008 the company have only 58 mill $ working capital because in this year company have takes much more short term loans for its expansion and pay for his day to day expenses. Its shows the company have not utilise efficiently the fixed assets. In this year world economy faces downturns. Recession has also affected on Pepsi. This year. For this company has take $1408 mill. Short term loans. Its increases the current liability of the company. Company pay its quickly in his payable time. Its shows the good liquidity position of the company in 2008. This year company have more cash & bank balance in hand from the previous year. Its 50% more than from the previous year. This year company have $1675 mill. Accounts payable it is less from the previous year. It is good for the company.

Objective of the studyRAJU KUMAR SINGH41


To observe the systems, process, interactions in the organization. To study and analyze the working capital management of PepsiCo. To study that how they use working capital to solve day to day problems. To study about their Operating Cycle, cash conversion cycle, processing period.

Research MethodologyRAJU KUMAR SINGH42


Research in common parlance refers to search for knowledgeThe term research refers to the systematic method consisting of enunciating the problem , formulating a hypothesis collecting the data , analyzing the facts and reaching the certain conclusions either in the form of solution towards the concern problem or in certain generalization for some theoretical formulation . Research Methodology is a way to systematically solve the research problem .It may be understood as a science of studying how research is done scientifically. For completing the project work, data inputs were collected from the following sources:

Primary Data: Collected data through discussion with the Finance manager in Pepsi. Collected data during working in Pepsi.

Secondary Data: Collected data from personnel manual of Pepsi. Collected data from different magazines, journals, News papers and Internet.

For this project Ive used the secondary data in the form of Annual report 2006, Annual report 2007, and Annual report 2008.

TOOLSRAJU KUMAR SINGH43


Ive used analysis tools that are mention below Ratio Analysis Charts & Graphs

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ANALYSIS OF VARIOUS COMPONENTS OF WORKING CAPITAL INVENTORY ANALYSISInventory is total amount of goods and materials content in a store of factory at any given time. Inventory means stock of three things :1. Raw materials 2. Semi finished goods. 3. Finished goods.

Position of inventory in PepsiCo

Rs. IN MILL.$

Inventories Raw Material & Supply Finished goods Total

2006 175 358 533

2007 195 382 577

2008 185 343 528

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CHART ANALYSIS

INTERPRETATIONBy analyzing the 3 years data we see that the inventories are increased in year 2007 by 577. We are looking approximate same pattern in inventories. We can see that inventories are grown by 4.1% and 4.1% in 06 and 07 respectively from previous year. By this growth we can say that the company is growing very smoothly in soft drink sector. A company uses inventory when they have demand in market and Pepsi is having a great demand in beverages sector. From other point of view we can say that the liquidity of firm is blocked in inventories but to stock is very good due to uncertainty of availability of raw material in time.

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Working Capital Management SUNDRY DEBTORS ANALYSISDebtors or an account receivable is an important component of working capital and fall under current assets. Debtors will arise only when credit sales are made.

POSITION OF SUNDRY DEBTORS IN PEPSI CO RS. IN MILL $ 2006 2007Debtors Net Trade accounts receivable Allowances for doubtful accounts Accounts receivable Other receivable

2008

1026 52 198 56 1332

1319 54 188 67 1628

1208 71 154 80 1513

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INTERPRETATIONIn the table and figure we see that there is rise in the debtors in PepsiCo Limited in the successive years. A simple logic is that debtors increase only when sales increase and if sales increases it is good sign for growth. We can say that it is a good sign as well as negative also. Company policy of debtors is very good but a risk of bad debts is always present in high debtors. When sales is increasing with a great speed the profit also increases. If company decreases the Debtors they can use the money in many investment plans.

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CASH AND BANK BALANCE ANALYSISCash is called the most liquid asset and vital current assets. It is an important component of working capital. In a narrow sense, cash includes notes, bank draft, cheque etc while in a broader sense it includes near cash assets such as marketable securities and time deposits with bank.

POSITION OF CASH & BANK BALANCE IN PEPSICO

RS.IN MILL. $ 2006 CASH in hand& 629 BANKBALANCE & EQUILANTS 2007 647 2008 966

CHART ANALYSIS

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Working Capital Management INTERPRETATIONIf we analyze the above table and chart we find that it follows a increasing trend. In the year 2006 it had maintained a 629 mill $ amount of cash and bank balance which has increase in the year 2007 up to 647 mill $ but there is huge increase between the year 2007 and 2008. Although companys cash is increasing this is very good sign for company. Holding more cash is not good it means company not using the cash for better projects. The analysis shows that the fix deposits of company are rapidly increase in last year as 49% respectively from previous year. Company is utilizing the fixed cash for exploding the projects that is good for growth.

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Working Capital Management POSITION OF CURRENT LIABILITIES IN PEPSICO IN MILL. $CURRENT LIABILITIES Accounts payable and Other Current Liabilities Short term liabilities Current Maturities Total

1677 374 0 2051

1968 240 7 2215

1675 103 1305 3083

CHART ANALYSIS

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Working Capital Management INTERPRETATIONwe analyze the above table then we can see that it follow an uneven trend. The important component of current liabilities is sundry creditors and other liabilities. In 06-07 it increased by 17% and in 07-08 it increased by 16.9%. In 07-08 it was increased because of growth in short term debt by 39%.This is liability for company so this should be less. When company have minimum liabilities it creates a better goodwill in market. High current liabilities indicate that company is using credit facility.

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Working Capital Management PROVISION ANALYSIS

2006Deferred taxes Proposed Dividend Income tax

2007 42 113 177 332

2008 47 135 112 294

61 90 159 310 CHART ANALYSIS

INTERPRETATIONFrom the above table we can see that provision shows an approximate same trend and the huge amount is being kept in these provisions. Though the profits of the company are increased income tax is also increased which is good that company is creating goodwill in market by paying income tax in time. Other provisions are also for the benefit of employees and public. This is good sign for Company growth.

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Working Capital Management POSITION OF RECEIVABLE RATIO IN PEPSI CO

DEBTORS RECEIVABLE RATIO = ___________ SALES * 365

YEARS RECEIVABLE RATIO

2006 10.1

2007 9.5

2008 9.5

CHART ANALYSIS

10.2 10 9.8 9.6 9.4 9.2

10.1

9.5

9.5

2006

2007

2008

INTERPRETATIONGenerally a low debtors turnover ratio implies that it considered congenial for the business as it implies better cash flow. The ratio indicates the time at which the debts are collected on an average during the year. Needless to say that a high Debtors Turnover Ratio implies a shorter collection period which indicates prompt payment made by the customer.

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Working Capital ManagementNow if we analyze the three year data we can say that it holds a good position while receiving its money from its debtors. The ratios are same in last two year, which implies that recovery position is good and company should maintain these positions.

POSITION OF PAYABLE RATIO IN PEPSI CO

CREDITORS PAYABLE RATIO = _______________ COST OF SALES *365

YEARS PAYABLE RATIO (IN DAYS)

2006 87.4

2007 90.3

2008 87.6

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INTERPRETATIONActually this ratio reveals the ability of the firm to avail the credit facility from the suppliers throughout the year. Generally a low creditors turnover ratio implies favourable since the firm enjoys lengthy credit period. Now if we analyze the three years data we find that in these year the ratio was approximately same high which means that its position of creditors is good, but in the 2007 it increases to 90 days. In next year it is seen that it has followed a decreasing trend which is very good sign for the company. So we can say it enjoys a very good credit facility from the from the suppliers.

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POSITION OF INVENTORY RATIO IN PEPSI CO

Average stock INVENTORY TURNOVER RATIO. = ______________ Cost of goods sold * 365

YEARS I.T.R. RATIO

2006 13.7

2007 13.3

2008 13.7

CHART ANALYSIS

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Working Capital Management INTERPRETATIONThis ratio tells the story by which stock is converted into sales. A high stock turnover ratio reveals the liquidity of the inventory i.e., how many times on an average, inventory is turned over or sold during the year. If a firm maintains a minimum stock level in order to maximize sales by quick rotation of inventory and the holding cost of inventory will be minimum. A low stock turnover ratio reveals undesirable accumulation of obsolete stock. By analyzing the three year data it seen that it follows an approximately same trend. We see that from the year 2006 to 2008 it is more or less double which has been rectified in the year 2008. But it is needless to say that ratio the company maintains is very high and the company is required to take measures to lower down this ratio as it affects the working capital cycle of company and the flow of cash in the company.

POSITION OF CURRENT RATIO IN PEPSI CO

TOTAL CURRENT ASSET CURRENT RATIO = ________________________ TOTAL CURRENT LIABILITY YEARS CURRENT RATIO 2006 1.34 2007 2008 1.39 1.02

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CHART ANALYSIS

INTERPRETATIONThis ratio reflects the financial stability of the enterprise. The standard of the normal ratio is 2:1 but in most of companies standard is taken according to Tandon Committee which is taken as 1.33:1. Now if we analyze the three years data it can be predicted that it holds a stable position all throughout period but it is seen that it holds a low position than the standard one and the company is required to improve its position.

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Working Capital Management POSITION OF QUICK RATIO IN PEPSI CO

TOTAL LIQUID ASSET QUICK RATIO = ________________________ TOTAL CURRENT LIABILITY

YEARS QUICK RATIO

2006 1.08

2007 1.13

2008 0.84

CHART ANALYSIS

INTERPRETATION It is the ratio between quick liquid assets and quick liabilities. The normal value for suchratio is taken to be 1:1. It is used as an assessment tool for testing the liquidity position of the firm. It indicates the relationship between strictly liquid assets whose realizable value is almost certain on one hand and strictly liquid liabilities on the other hand. Liquid assets comprise all current assets minus stock.

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Working Capital ManagementBy analyzing the three years data it can be said that its position was good in the year 2006 and 2007 but its decrease in the next year. But it is to be said that it is higher than the standard in the year 2006 & 2007. Its shows the higher liquidity position of the company.

WORKING CAPITAL TURNOVER RATIO

COST OF SALE WORKING CAPITAL RATIO = __________________ NET WORKING CAPITAL

YEARS

2006 9.88

2007 8.46

2008 130.79

Working capital ratio

CHART ANALYSIS

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INTERPRETATIONThis ratio indicates whether the investments in current assets or net current assets (i.e., working capital) have been properly utilized. In order words it shows the relationship between sales and working capital. Higher the ratio lower is the investment in working capital and higher is the profitability. But too high ratio indicates over trading. This ratio is an important indicator about the working capital position. Now if we analyze the three years data, we find that it follows an increasing trend which means that its investment in working capital is lower and the company is utilizing more of its profit. But we find that in2008 the ratio was increasing up to 130. In this year company takes much more short term loans for its short time requirement which is not a good sign for the company and the company is required to look into these matters closely.

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PROFITABILITY ANALYSIS

Particulars

RS.IN MILL. $

2006Net Sale Cost of goods sold Operating Profit before Interest Operating Profit after Interest Profit/Loss before Tax Profit/Loss after Tax Dividend Payout/Drawing

2007 13591 7370 6221 1071 709 532 0.53

2008 13,796 7586 6210 649 274 162 0.65

12730 6900 5830 5830 681 522 0.41

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INCOME STATEMENT OF PEPSICO 2004 TO 2008

2004Sales Operating Income Income Tax Net Income

2005 11,885 1,023 247 466

2006 12,730 1,017 159 522

2007 13,591 1,071 177 532

2008 13,796 649 112 162

TTM 13,404 617 -9 223

10,906 976 232 457

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Working Capital Management INTERPRETATIONAnalyzing the last five year data we say that sales have increasing trend. Its shows the growth of the company. The profits are increasing year by year but in 2008 the profits are very low from previous year. In this year company takes huge amount of short term loans in this way they give more interest on this. This is the main reason the company profits are very low. Now in 2009 the profits of the company is 223 mill $ its shows amazing growth rate of the company In two quarters of 2009 company sales are equal to last year. This year company cover all the loses of previous year.

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FINDINGSPepsi bottling group has once again, demonstrated the power of our operating capabilities and unique assets in 2008. Comparable diluted earnings per share growth of 3% to $2.27 Worldwide revenue growth of 2% Comparable operating income growth of 2% Returned $624 million in cash to shareholder This year company takes $1400mill short term loans because of macro economics downturns in economy. In 2008 company gives .65$ dividend to his share holder. This year company have 2% growth in EPS this is very low from the previous year because company has paid many interest on short term loans.

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Pepsi bottling group has once again, demonstrated the power of our operating capabilities and unique assets in 2008. While facing unprecedented macroeconomics challenges throughout the world, PBG showed flexibility and discipline to advance our business priorities and become a stronger, more focused organisation. The overall performance of PepsiCo is getting on a good track. The total turnover of the company has registered a growth of 205 Million where as the operating profits for the year were lower by 422 million mainly on the accounts of increase in the volume or sales, higher realization and effective cost control measures taken by the company. The profit before tax is 709 million at against 681 millions in the previous year. The cash earning of the company improved substantially to 1437 million as against 1228 million in the last financial year. With the increase in capacity on account of expansion projects being undertaken by the company, it is expected that the company would be in a position to maintain the growth in future years. Company has parked its surplus fund in the various debt schemes of mutual fund. There is an Investment in non controlled affiliates of 619 million in current year. Company is cash rich but as there are expansion and diversification plans under the pipeline, company is not utilizing these funds. For meeting the working capital needs and capacity expansion needs it has borrowed from banks.

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During the year company has embarked upon expansion projects which would effectively enhance the capacity of the company. With the capacitive power plants already in operation and expansion projects under implementation, it is expected that the beverages division of the company will do well in the foreseeable future.

They achieved these results by adapting quickly to the economic environment and by focusing on several business drivers to grow our top line, improve cost and productivity, and strengthen our people and culture.

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Measures to Improve Working Capital Management at PEPSICO: The essence of effective working capital management is proper cash flow forecasting. This should take into account the impact of unforeseen events, market cycles, loss of a prime customer and actions by competitors. So the effect of unforeseen demands of working capital should be factored by company. This was one of its reasons for the variation of its revised working capital projection from the earlier projection. It pays to have contingency plans to tide over unexpected events. While marketleaders can manage uncertainty better, even other companies must have riskmanagement procedures. These must be based on objective and realistic view of the role of working capital. Addressing the issue of working capital on a corporate-wide basis has certain advantages. Cash generated at one location can well be utilized at another. For this to happen, information access, efficient banking channels, good linkages between production and billing, internal systems to move cash and good treasury practices should be in place. An innovative approach, combining operational and financial skills and an allencompassing view of the companys operations will help in identifying and implementing strategies that generate short-term cash. This can be achieved by having the right set of executives who are responsible for setting targets and performance levels. They could be then held accountable for delivering, encouraged to be enterprising and to act as change agents. Effective dispute management procedures in relation to customers will go along way in freeing up cash otherwise locked in due to disputes. It will also improve customer service and free up time for legitimate activities like sales, order entry and cash collection. Overall, efficiency will increase due to reduced operating costs.

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Working capital management is an important yardstick to measure a company operational and financial efficiency. This aspect must form part of the strategic and operational thinking. Efforts should constantly be made to improve the working capital position. This will yield greater efficiencies and improve customer satisfaction.

Inventories should be managed on a line-by-line basis using the 80/20 rule.

Placing the responsibility for collecting the debt upon the centre that made the sale. i.e., cold rolled, hot rolled, galvanized etc.

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www.pepsico.com www.yahoofinance.com http://www.rediff.com/money/2003/aug/21pepsi.htm http://www.stjohns.edu/media/3/80dc682a41f44209b5da9de5f8ac8bec.pdf http://quicktake.morningstar.com/stocknet/cashflow10.aspx? Country=USA&Symbol=PBG http://quicktake.morningstar.com/stocknet/EfficiencyRatios10.aspx? Country=USA&Symbol=PBG http://www.sirpepsi.com/pepsi11.htm

REFRENCEShashi k. Gupta (2008) Financial Management, kalyani Publications

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BALANCE SHEET OF PEPSI COPERIOD ENDING

27-Dec-08

29-Dec-07

30-Dec-06

Assets Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets 2,064,000 213,000 4,683,000 2,522,000 1,324,000 910,000 1,571,000 4,389,000 2,290,000 991,000 1,651,000 1,171,000 3,725,000 1,926,000 657,000

Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges

10,806,000 3,998,000 11,663,000 5,124,000 1,860,000 2,324,000 219,000

10,151,000 4,475,000 11,228,000 5,169,000 2,044,000 1,356,000 205,000

9,130,000 3,839,000 9,687,000 4,594,000 1,849,000 599,000 232,000

Total Assets

35,994,000

34,628,000

29,930,000

Liabilities Current Liabilities Accounts Payable Short/Current Long Term Debt 6,494,000 369,000 6,209,000 5,271,000 274,000

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Working Capital ManagementOther Current Liabilities 1,924,000 1,544,000 1,315,000

Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill

8,787,000 7,858,000 7,017,000 226,000 -

7,753,000 4,203,000 4,792,000 646,000 -

6,860,000 2,550,000 4,624,000 528,000 -

Total Liabilities

23,888,000

17,394,000

14,483,000

Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity (97,000) 30,000 30,638,000 (14,122,000) 351,000 (4,694,000) 41,000 30,000 28,184,000 (10,519,000) 450,000 (952,000) (79,000) 30,000 24,837,000 (7,758,000) 584,000 (2,246,000)

Total Stockholder Equity

12,203,000

17,234,000

15,447,000

Net Tangible Assets

$5,219,000

$10,021,000

$9,004,000

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INCOME STATEMENT OF PEPSI CO

PERIOD ENDING

27-Dec-08 13,796,000 7,586,000

29-Dec-07 13,591,000 7,370,000

30-Dec-06 12,730,000 6,810,000

Total Revenue Cost of Revenue

Gross Profit

6,210,000

6,221,000

5,920,000

Operating Expenses Research Development Selling General and Administrative Non Recurring Others Total Operating Expenses 5,149,000 412,000 5,150,000 4,903,000 -

Operating Income or Loss

649,000

1,071,000

1,017,000

Income from Continuing Operations Total Other Income/Expenses Net (25,000) Earnings Before Interest And Taxes 564,000 Interest Expense 290,000 Income Before Tax 274,000 Income Tax Expense 112,000 Minority Interest (60,000) Net Income From Continuing Ops 162,000

6,000 983,000 274,000 709,000 177,000 (94,000) 532,000

(11,000) 947,000 266,000 681,000 159,000 (59,000) 522,000

Non-recurring Events Discontinued Operations Extraordinary Items Effect Of Accounting Changes Other Items

-

-

-

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Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares

162,000 $162,000

532,000 $532,000

522,000 $522,000

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