ACC 318 Module Three Assignment

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Southern New Hampshire University *

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318

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Accounting

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Apr 3, 2024

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ACC 318 Module Three Assignment Template Complete this template by replacing the bracketed text with the relevant information. Operating Activities 1. Identify the method of computing net cash provided by each company's operating activities. The Coca-Cola Company and PepsiCo, inc. utilize the indirect method for computing net cash for operating activities. 2. Calculate the amounts of cash provided by operating activities reported by each company in 2020. The amount of cash for PepsiCo, Inc., provided by operating activities is $10,613,000. The amount of cash for The Coca-Cola Company, provided by operating activities is $9,844,000. 3. Explain the two companies’ trends in net cash provided by operating activities over the period 2018 to 2020. PepsiCo, Inc.: From 2018-2020 the trend in net cash provided by operating activities has increased. In 2018, the net cash was $9,415,000. In 2019, the net cash increased to $9,649,000. For the year 2020, it increased close to a million with $10,613,000. However, in the year 2020, the company didn’t receive net tax related to the TCJ Act or any income regarding net tax benefits related to international reorganizations. My interpretation of this is due to the Covid-19 pandemic. The Coca-Cola Company: From the year 2018-2020, the trend in net cash provided by operating activities is different from PepsiCo, Inc. The company's net cash from operation reached its peak in 2019 with $10,471,000. For the year 2018, the net cash was reported as $7,627,000. Then in 2020, the net cash decreased from $10,471,000 to $9,844,000. Investing Activities 1. Identify the most significant item in the investing activities section reported by each company in 2020. PepsiCo, Inc.: The most significant item in investing activities reported was Acquisitions, net of cash acquired, and investments in noncontrolled affiliates with a total paid out of $6,372,000. The Coca-Cola Company: The most significant item in investing activities reported was proceeds from disposals of investments with a total cash inflow of $13,835,000. Financing Activities 1. Identify the most significant item in the financing activities section reported by each company in 2020. PepsiCo, Inc.: The most significant item in financing activities reported was proceeds from issuances of long-term debt with a total cash inflow of $13,809,000. The Coca-Cola Company: The most significant item in financing activities reported was payments of debt with a total cash outflow of $28,796,000. Depreciation and Amortization

1. Identify what activity would depreciation and amortization be reported on in each company’s statement of cash flow using the indirect method. Depreciation and amortization would be reported under operating activities of the statement of cash flows using the indirect method. 2. Explain why each company reported on depreciation and amortization where they did in their statement of cash flows. Both companies reported depreciation and amortization directly under net income/consolidated net income in the operating activities section of the statement of cash flows. The reason the company reported depreciation and amortization here is because this account is an expense, which takes away from net income but does not take away from both companies' actual cash amount. 3. Identify the amount of depreciation and amortization for each company. PepsiCo. Inc: $2,548,000 The Coca-Cola Company: $1,536,000 Statement of Cash Flows and Ratios 1. Compute the current cash debt coverage for each company. PepsiCo. Inc: current cash debt coverage = 4.47 The Coca-Cola Company: current cash debt coverage = 0.67 2. Compute the cash debt coverage for each company. PepsiCo. Inc : cash debt coverage = 0.13 The Coca-Cola company: current cash debt coverage = 0.14 3. Explain what conclusions can be drawn from the current cash debt coverage ratio and the cash debt coverage ratio. Address the following questions in your response: A. What conclusions can be drawn from the current cash debt coverage ratio? B. What conclusions can be drawn from the cash debt coverage ratio? A. Regarding the current cash debt coverage ratio, PepsiCo. Inc. can cover its current debt 4.47 times over. PepsiCo is in a financially stable condition for current cash to debt. The Coca- Cola company, however, cannot even cover its current debt 1 times over since the ratio is less than 1. Regarding their current financial condition, they have more liabilities than cash inflow. B. In terms of current and long-term liabilities, The Coca-Cola company is in a better financial situation than PepsiCo Inc. However, not by much. The Coca-Cola Company is only higher by one and both companies cannot cover total liabilities with their current cash inflow. References Include any references used to complete this assignment. This section is for the full citation. Sources should be cited using APA style. John Wiley & Sons, Inc. (2022). Intermediate Accounting (18th ed.). Wiley.

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