Current Position Analysis
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:
| Current Year (in millions) |
Previous Year (in millions) |
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| Cash and cash equivalents | $6,297 | $4,067 | |||||||||||
| Short-term investments, at cost | 322 | 358 | |||||||||||
| Accounts and notes receivable, net | 7,041 | 6,912 | |||||||||||
| Inventories | 3,581 | 3,827 | |||||||||||
| Prepaid expenses and other current assets | 1,479 | 2,277 | |||||||||||
| Short-term obligations | 4,815 | 6,205 | |||||||||||
| Accounts payable 12,274 11,949
a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.
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- The solvency of PepsiCo has ________slightly over this time period. The current ratio has _______
and the quick ratio has _______. PEPSICO appears to have_____
resources to meet its short term obligations, and these resources have remained______ during this time period.
(1) Current Ratio = Current Assets / Current Liabelity
Current ratio
CY
PY
Current Assets
17241
15164
Current Liabelity
6294
8482
Current ratio
2.739
1.788
(2)
Quick Ratio
Quick Ratio= Quick Assets / Current Liability
= Current Assets – Inventory / Current Liability
=
Quick ratio
CY
PY
Current Asset – Inventory
13660
11337
Current Liability
6294
8482
Quick ratio
2.170
1.337
(B)
The Solvency of PepsiCo has increased some over this time period. Both the current and quick ratios have increased. The current ratio increased from 1.78 to 2.73, and the quick ratio increased from 1.33 to 2.17 PepsiCo is appears to have Ample resources to meet its short term obligations, and these resources have remained _enough_ during this time period.
