This week’s Discussion topic comes from BYP11-2 page 547 of your textbook. PepsiCo, Inc. and Coca-Cola Co. Inc. financial statements are in Appendix A and B of your textbook. Use the financials to answer the following questions.

(a) At December 26, 2009, what was PepsiCo’s largest current liability account? What were its total current liabilities? At December 31, 2009, what was Coca-Cola’s largest current liability account? What were its total current liabilities?
(b) Based on information contained in those financial statements, compute the following 2009 values for each company.
      (1) Working capital.
      (2) Current ratio.
(c) What conclusions concerning the relative liquidity of these companies can be drawn from these data?

BYP11-2 page 547

Go to the book’s companion website, www.wiley.com/college/weygandt, to see the completion of this problem.

BROADENING YOUR PERSPECTIVE

Financial Reporting and Analysis

Financial Reporting Problem: PepsiCo, Inc.

BYP11-1

The financial statements of PepsiCo, Inc. and the notes to consolidated financial statements appear in Appendix A.

Instructions

Refer to PepsiCo’s financial statements and answer the following questions about current and contingent liabilities and payroll costs.

• (a) What were PepsiCo’s total current liabilities at December 26, 2009? What was the increase/decrease in PepsiCo’s total current liabilities from the prior year?
• (b) In PepsiCo’s Note 2 (“Our Significant Accounting Policies”), the company explains the nature of its contingencies. Under what conditions does PepsiCo recognize (record and report) liabilities for contingencies?
• (c) What were the components of total current liabilities on December 26, 2009?

Comparative Analysis Problem: PepsiCo, Inc. vs. The Coca-Cola Company

BYP11-2

PepsiCo, Inc.’s financial statements are presented in Appendix A. Financial statements of The Coca-Cola Company are presented in Appendix B.

Instructions