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Financial Analysis of Pepsi Cola Company FIN 534/Strayer University - Term Paper Example

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Financial Analysis of Pepsi Cola Company FIN 534/Strayer University

48% of PepsiCo business is made up of Global Snacks like the Lay, Doritos, Cheetos, Tostitos, Sun Chips. and Global Nutrition products like the Quaker Oats, Tropicana Fruit Drinks, and Gatorade. The Global Beverages made up 52% of the entire business. 69% of the current PepsiCo Inc. are owned by Institutions like the Bank of New York Mellon Corp. which had been in business since 1784 and currently ranks Top 11 of all American Banks. Another owner of PepsiCo Inc. is Bank of America, the richest bank in the USA in terms of total assets. Still another bank that forms part of the ownership is Northern Trust Corporation which ranks # 23 in the USA. A more complete list of the major institutional stockholders is shown in Figure 16. PepsiCo Inc. is also partly owned by Mutual fund Holders. They are shown in Figure 17. The 1.56 billion total outstanding shares with an average volume being traded reaching only about 5.65 million in the stock market. Less than 1% of the shares are held by insiders. To be more exact about these details, the main source was included in Figure 18. It would be important to know all these initial background in order to comprehend generalizations about PepsiCo Inc. that may be said to be as follows: (1) The company has been well entrenched in the business world for over a century. It survived the Great Depressions in 1920-21, 1929-1933, the years of Economic Panic in 1893-1897, 1907 – 1908, 1910-1911, and separate years of recession in 1899-1900, 1902-1904, 1907-1908, 1913-1914, 1918-1919, 1923-1924, 1926-1927, 1937-1938, 1945, 1948-1949, 1953-1954, 1957-1958, 1960-1961, 1969-1970, 1973-1975, 1981-1982, 1990-1991, 2001. 2007-2008. In other words, PepsiCo will most probably survive future recessions and even depressions. (2) In performing a financial analysis of PepsiCo Inc., the more important question to ask will be whether or not any investment in the stocks of PepsiCo will earn a more desirable income compared to competitors in the industry and other industries, both for the immediate term (one year) and in the next five years at least. II. Purpose & Objectives The following financial analysis seeks to analyze the current financial strengths and weaknesses of PepsiCo Inc. compared to the competitors and businesses in other industries. Trend analysis and ratio analysis will be performed. Horizontal analysis, otherwise known as trend analysis, will be done by inspecting the percentages of Sales, Income, Returns-On-Investments (ROI), growth per year, and actual dividends paid. A base year will be selected. It is but logical for any investor to look for investment opportunities similar to PepsiCo’s stability over the long-term and decide to invest on a preferred alternative which is that one with higher returns yearly or higher growth in stock value. For the vertical analysis, the latest year’s Balance Sheets and Income Statements will be analyzed in terms of percentages to find out how well PepsiCo maintained its Assets, Liabilities, Equity, Revenue, Expense, and Income accounts compared to the industry standards. Then all these ratios will be interpreted accordingly. On top of the horizontal and vertical analyses, key indicators of financial performance in the stock market will be analyzed. These would consist of the Price-Earning Ratio (P/E), the P/E Trailing Twelve Months (ttm), the Price-Earning to Growth Ratio (PEG), ...Show more

Summary

PepsiCo Inc. Financial Analysis I. Company Profile It was originally known for Pepsi Cola Beverage and was founded by Caleb Bradham way back in 1890. Under the leadership of Donald M. Kendall, this corporation initially merged with Herman W. Lay who led Frito Company in 1961…
Author : rosendo55
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