ACC/290 Financial Reporting Problem, Part I University of Phoenix

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Running head: FINANCIAL REPORTING PROBLEM, PART I1Financial Reporting Problem, Part IACC/290University of PhoenixBased on the financial data provided for PepsiCo in the years 2008, 2009, and 2010, analyze thecompany’s performance by focusing on the following aspects:1.Total assets and their changes over the period.2.Current assets and current liabilities, and their impact on the company's liquidity.3.Net revenues and net income, with attention to growth trends and profitability.In your analysis, explain the significance of these financial indicators in assessing PepsiCo'sfinancial health and how they can impact decisions made by shareholders, potential investors,and the company’s management. Provide a detailed discussion of each aspect, supported by theprovided data.Word Count Requirement: 500-600 words.

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FINANCIAL REPORTING PROBLEM, PART I2Financial Reporting Problem, Part IThe company’s annual report is important because it gives the shareholders a clearpicture and understanding about how the company is doing financially. The annual reportsprovide thorough information on very significant section of the accounts, such as the balancesheet, the income statement, and the cash flow statement. The information presented in theannual report would also be essential to potential investor, employee, and any other people thatmay have interest in financial aspect of the business.The company’s total assets at the end of 2009 were $39,848,000 (PepsiCo, n.d.).However, in 2010its most recent annual report shows an increase to the previous annualreporting period of $28,305,000 that brings PepsiCo’s total assets to $68,153,000 (PepsiCo, n.d.).This information is important because it demonstrate what the company owns. It gives anunderstanding of the financial condition of the company, whether or not there have beenimprovement from the previous years.The current assets are the first thing on the balance sheet under the asset column. Acompany lists all of the possessions that it may convert into cash in a short period, that normallytakes place with a year or less. Because these assets can easily turn into cash the company refersto them as “liquid” assets. Cash and cash equivalents are the most liquid assets found within theasset portion of a company’s balance sheet. PepsiCo’s cash and cash equivalents for the yearend December 25, 2010 are $17,569,000 whereas; in 2009 the company had $12,571,000 in cashand cash equivalents (PepsiCo, n.d.). PepsiCo had a $4,998,000 increase in cash and cashequivalents. This includes short-term investments, accounts and notes receivable, inventoriesand prepaid expenses, and other current assets. This represents the company’s liquidity. The

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