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

Analysis of financial reporting principles and problem-solving in corporate accounting.

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    Running head: FINANCIAL REPORTING PROBLEM, PART I 1 Financial Reporting Problem, Part I ACC/290 University of Phoenix Based on the financial data provided for PepsiCo in the years 2008, 2009, and 2010, analyze the company’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's financial 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 the provided data. Word Count Requirement: 500 - 600 words.

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    FINANCIAL REPORTING PROBLEM, PART I 2 Financial Reporting Problem, Part I The company’s annual report is important because it gives the shareholders a clear picture and understanding about how the company is doing financially. The annual reports provide thorough information on very significant section of the accounts, such as the balance sheet, the income statement, and the cash flow statement. The information presented in the annual report would also be essential to potential investor, employee, and any other people that may 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 2010 its most recent annual report shows an increase to the previous annual reporting 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 an understanding of the financial condition of the company, whether or not there have been improvement from the previous years. The current assets are the first thing on the balance sheet under the asset column. A company lists all of the possessions that it may convert into cash in a short period, that normally takes place with a year or less. Because these assets can easily turn into cash the company refers to them as “liquid” assets. Cash and cash equivalents are the most liquid assets found within the asset portion of a company’s balance sheet. PepsiCo’s cash and cash equivalents for the year end December 25, 2010 are $17,569,000 whereas; in 2009 the company had $12,571,000 in cash and cash equivalents (PepsiCo, n.d.). PepsiCo had a $4,998,000 increase in cash and cash equivalents. This includes short - term investments, accounts and notes receivable, inventories and prepaid expenses, and other current assets. This represents the company’s liquidity. The

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