PepsiCo, Inc., the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years: Current Year (in millions) Previous Year (in millions) Cash and cash equivalents $8,721 $10,610 Short-term investments, at cost 272 8,900 Accounts and notes receivable, net 7,142 7,024 Inventories 3,128 2,947 Prepaid expenses and other current assets 2,630 1,546 Accounts payable 18,112 15,017 Other short-term liabilities 4,026 5,485 a. Determine the (1) current ratio and (2) quick ratio for both years. Round answers to one decimal place. Current Year Previous Year 1. Current ratio fill in the blank 1 fill in the blank 2 2. Quick ratio fill in the blank 3 fill in the blank 4
PepsiCo, Inc., the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years:
| Current Year (in millions) |
Previous Year (in millions) |
|||
| Cash and cash equivalents | $8,721 | $10,610 | ||
| Short-term investments, at cost | 272 | 8,900 | ||
| Accounts and notes receivable, net | 7,142 | 7,024 | ||
| Inventories | 3,128 | 2,947 | ||
| Prepaid expenses and other current assets | 2,630 | 1,546 | ||
| Accounts payable | 18,112 | 15,017 | ||
| Other short-term liabilities | 4,026 | 5,485 |
a. Determine the (1)
| Current Year | Previous Year | |
| 1. Current ratio | fill in the blank 1 | fill in the blank 2 |
| 2. Quick ratio | fill in the blank 3 | fill in the blank 4 |
b. The liquidity of PepsiCo has
over this time period. The current ratio has
and the quick ratio has
.
1) Current ratio = current assets ÷ current liabilities
Current ratio for current year
Current assets for current year = (8721+272+7142+3128+2630) = $ 21893
Current liabilities =(18112+4026) = $ 22138
Current ratio= 21893÷22138 = 0.988 =1
Current ratio for previous year =
Current assets=(10610+8900+7024+2947+1546) = $ 31027
Current liabilities = (15017+5485) =$ 20502
Current ratio = 31027÷20502 = 1.5
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