Looking at the chart BELOW, ANSWER THE FOLLWOING QUESTIONS. Questions to be addr
ID: 2477781 • Letter: L
Question
Looking at the chart BELOW, ANSWER THE FOLLWOING QUESTIONS.
Questions to be addressed by this analysis are basic questions such as:
• What is the financial health of this company?
• Would you work for this company?
• Would you lend money to this company?
• Would you invest in this company? etc.
• Students should show support for all the answers.
Selected Quarterly Financial Data
Selected financial data for 2015 and 2014 is summarized as follows and highlights certain items that impacted our quarterly results (in millions except per share amounts, unaudited):
2015
2014
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Net revenue
$
12,217
$
15,923
$
16,331
$
18,585
$
12,623
$
16,894
$
17,218
$
19,948
Gross profit
$
6,775
$
8,756
$
8,936
$
10,205
$
6,876
$
9,116
$
9,223
$
10,584
Mark-to-market net losses/(gains) (a)
$
1
$
(39
)
$
28
$
(1
)
$
(34
)
$
(31
)
$
33
$
100
Restructuring and impairment charges (b)
$
36
$
25
$
52
$
117
$
98
$
92
$
68
$
160
Pension-related settlement (benefits)/charge (c), (d)
—
—
$
(37
)
$
(30
)
—
—
—
$
141
Charge related to the transaction with Tingyi (e)
—
—
$
73
—
—
—
—
—
Venezuela impairment charges (f)
—
—
$
1,359
—
—
—
—
—
Venezuela remeasurement
charge (g)
—
—
—
—
—
—
—
$
105
Tax benefit (h)
—
—
—
$
(230
)
—
—
—
—
MQD impairment (i)
$
65
—
—
$
11
—
—
—
—
Gain on beverage refranchising (j)
$
(39
)
—
—
—
—
—
—
—
Other productivity initiatives (k)
—
—
$
44
$
46
—
—
—
$
67
Gain on sale of agricultural assets (l)
—
—
—
—
$
(31
)
—
—
—
Net income attributable to PepsiCo
$
1,221
$
1,980
$
533
$
1,718
$
1,216
$
1,978
$
2,008
$
1,311
Net income attributable to PepsiCo per common share
Basic
$
0.82
$
1.34
$
0.36
$
1.18
$
0.80
$
1.30
$
1.33
$
0.87
Diluted
$
0.81
$
1.33
$
0.36
$
1.17
$
0.79
$
1.29
$
1.32
$
0.87
Cash dividends declared per common share
$
0.655
$
0.7025
$
0.7025
$
0.7025
$
0.5675
$
0.655
$
0.655
$
0.655
Stock price per share (m)
High
$
100.76
$
98.44
$
100.61
$
103.44
$
83.99
$
88.72
$
93.51
$
100.70
Low
$
92.24
$
92.72
$
76.48
$
90.43
$
77.01
$
81.53
$
86.71
$
89.82
2015
2014
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Net revenue
$
12,217
$
15,923
$
16,331
$
18,585
$
12,623
$
16,894
$
17,218
$
19,948
Gross profit
$
6,775
$
8,756
$
8,936
$
10,205
$
6,876
$
9,116
$
9,223
$
10,584
Mark-to-market net losses/(gains) (a)
$
1
$
(39
)
$
28
$
(1
)
$
(34
)
$
(31
)
$
33
$
100
Restructuring and impairment charges (b)
$
36
$
25
$
52
$
117
$
98
$
92
$
68
$
160
Pension-related settlement (benefits)/charge (c), (d)
—
—
$
(37
)
$
(30
)
—
—
—
$
141
Charge related to the transaction with Tingyi (e)
—
—
$
73
—
—
—
—
—
Venezuela impairment charges (f)
—
—
$
1,359
—
—
—
—
—
Venezuela remeasurement
charge (g)
—
—
—
—
—
—
—
$
105
Tax benefit (h)
—
—
—
$
(230
)
—
—
—
—
MQD impairment (i)
$
65
—
—
$
11
—
—
—
—
Gain on beverage refranchising (j)
$
(39
)
—
—
—
—
—
—
—
Other productivity initiatives (k)
—
—
$
44
$
46
—
—
—
$
67
Gain on sale of agricultural assets (l)
—
—
—
—
$
(31
)
—
—
—
Net income attributable to PepsiCo
$
1,221
$
1,980
$
533
$
1,718
$
1,216
$
1,978
$
2,008
$
1,311
Net income attributable to PepsiCo per common share
Basic
$
0.82
$
1.34
$
0.36
$
1.18
$
0.80
$
1.30
$
1.33
$
0.87
Diluted
$
0.81
$
1.33
$
0.36
$
1.17
$
0.79
$
1.29
$
1.32
$
0.87
Cash dividends declared per common share
$
0.655
$
0.7025
$
0.7025
$
0.7025
$
0.5675
$
0.655
$
0.655
$
0.655
Stock price per share (m)
High
$
100.76
$
98.44
$
100.61
$
103.44
$
83.99
$
88.72
$
93.51
$
100.70
Low
$
92.24
$
92.72
$
76.48
$
90.43
$
77.01
$
81.53
$
86.71
$
89.82
Explanation / Answer
• Financial health of this company 2015 2014 Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Net revenue 12,217 15,923 16,331 18,585 12,623 16,894 17,218 19,948 Gross profit 6,775 8,756 8,936 10,205 6,876 9,116 9,223 10,584 GP% of Net Revenue 55.46 54.99 54.72 54.91 54.47 53.96 53.57 53.06 Net Net income attributable to PepsiCo 1221 1980 533 1718 1216 1978 2008 1311 N/P % to Net Revenue 9.99 12.43 3.26 9.24 9.63 11.71 11.66 6.57 • Financial health of this company is good as G/p% & N/P % are maintained with slight variations. G/P is more or less even through-out.2nd quarter registers a hike in N/P. Pension-related settlement (benefits)/charge (c), (d) -37 -30 141 Working for this company is recommendable as there are not much financial hassles. Settlements are almost proper. • Lending money to this company Restructuring and impairment charges 36 25 52 117 98 92 68 160 Charge related to the transaction with Tingyi 73 Venezuela impairment charges — 1359 Venezuela remeasurement 105 Tax benefit -230 MQD impairment 65 11 Gain on beverage refranchising -39 Other productivity initiatives 44 46 67 Gain on sale of agricultural assets -31 Total of other charges 62 25 1528 -56 67 92 68 332 % to Net Revenue 0.51 0.16 9.36 -0.30 0.53 0.54 0.39 1.66 Other charges as compared to net revenue are almost negligible as % age- but for 3rd quarter of 2015 due to Venezuela impairment charges. Interest payments have a certain amount of guarantee there is N/P Hence lending money is proper. But other details such as asset backing,regularity of interest & principal repayments need to be satisfied with. • About investing in this company EPS Basic 0.82 1.34 0.36 1.18 0.8 1.3 1.33 0.87 Diluted 0.81 1.33 0.36 1.17 0.79 1.29 1.32 0.87 EPS is maintained through-out- cash dividends are maintained at same levels- Also the market price of the stock both at the highest & low levels are stable. Stability of earnings is an important criteria for a potential investor. Hence investing in this stock is highly recommendable
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