PepsiCo, Inc., the parent company of Frito-Lay snack foods and Pepsi beverages, had the following...

Question

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:




 


Dec. 31, 2005


Dec. 25, 2004




 


(in millions)


(in millions)




Cash and cash equivalents


$1,716


$1,280




Short-term investments, at cost


3,166


2,165




Accounts and notes receivable, net


3,261


2,999




Inventories


1,693


1,541




Prepaid expenses and other current assets


618


654




Short-term obligations


2,889


1,054




Accounts payable and other current liabilities


5,971


5,999




Income taxes payable


546


99




a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.
b. What conclusions can you draw from these data?

David · Accepted Answer

Solution-a
(1)
Current ratio (2005) = Current assets/Current liabilities
Current ratio (2005) = $10,454/$9,406
Current ratio (2005) = 1.1
Current ratio (2004) = Current assets/Current liabilities
Current ratio (2004) = $8,639/$7,152
Current ratio (2004) = 1.

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: Dec. 31, 2005 Dec. 25, 2004 (in...

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	Dec. 31, 2005	Dec. 25, 2004
	(in millions)	(in millions)
Cash and cash equivalents	$1,716	$1,280
Short-term investments, at cost	3,166	2,165
Accounts and notes receivable, net	3,261	2,999
Inventories	1,693	1,541
Prepaid expenses and other current assets	618	654
Short-term obligations	2,889	1,054
Accounts payable and other current liabilities	5,971	5,999
Income taxes payable	546	99