The following information is available for PepsiCo, Inc. (in U.S. $ millions): 2015 2014 2013 Cost of goods sold $28,384 $30,884 $31,243 Inventories 2,720 3,143 3,409 Current assets 23,031 20,663 22,203 Current liabilities 17,578 18,092 17,839 In the notes to its financial statements, PepsiCo disclosed that it uses the FIFO and average cost formulas to determine the cost of the majority of its inventory. The industry averages for the inventory turnover, days in inventory, and current ratios are as follows: 2015 2014 Inventory turnover 8.7 times 9.1 times Days in inventory 42 days 40 days Current ratio 1.3:1 1.1:1 Instructions Calculate PepsiCo's inventory turnover, days in inventory, and current ratios for 2015 and 2014. Comment on the company's liquidity over the two years, and in comparison with the industry. What might be the reason that PepsiCo uses more than one cost formula to determine the cost of its inventory?
The following information is available for PepsiCo, Inc. (in U.S. $ millions): 2015 2014 2013 Cost of goods sold $28,384 $30,884 $31,243 Inventories 2,720 3,143 3,409 Current assets 23,031 20,663 22,203 Current liabilities 17,578 18,092 17,839 In the notes to its financial statements, PepsiCo disclosed that it uses the FIFO and average cost formulas to determine the cost of the majority of its inventory. The industry averages for the inventory turnover, days in inventory, and current ratios are as follows: 2015 2014 Inventory turnover 8.7 times 9.1 times Days in inventory 42 days 40 days Current ratio 1.3:1 1.1:1 Instructions Calculate PepsiCo's inventory turnover, days in inventory, and current ratios for 2015 and 2014. Comment on the company's liquidity over the two years, and in comparison with the industry. What might be the reason that PepsiCo uses more than one cost formula to determine the cost of its inventory?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The following information is available for PepsiCo, Inc. (in U.S. $ millions):
|
|
2015 |
2014 |
2013 |
|
Cost of goods sold |
$28,384 |
$30,884 |
$31,243 |
|
Inventories |
2,720 |
3,143 |
3,409 |
|
Current assets |
23,031 |
20,663 |
22,203 |
|
Current liabilities |
17,578 |
18,092 |
17,839 |
In the notes to its financial statements, PepsiCo disclosed that it uses the FIFO and average cost formulas to determine the cost of the majority of its inventory.
The industry averages for the inventory turnover, days in inventory, and current ratios are as follows:
|
|
2015 |
2014 |
|
Inventory turnover |
8.7 times |
9.1 times |
|
Days in inventory |
42 days |
40 days |
|
|
1.3:1 |
1.1:1 |
Instructions
- Calculate PepsiCo's inventory turnover, days in inventory, and current ratios for 2015 and 2014. Comment on the company's liquidity over the two years, and in comparison with the industry.
- What might be the reason that PepsiCo uses more than one cost formula to determine the cost of its inventory?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education