INTERNSHIP REPORT

On
PEPSI CO. COMPANY

By
Muhammad Arslan Haider
2019-GCUF-074351
Session 2019-23

Report submitted in partial fulfillment of the Requirement

for the degree of Bachelor in Business Administration

DEPARTMENT OF BUSINESS ADMINISTRATION

GOVERNMENT COLLEGE UNIVERSITY, FAISALABAD
2023
 DECLARATION

The work reported in this project was carried out by Muhammad Arslan Haider Reg No.

2019-GCUF-074351 under the supervision of Dr. Azhar Malik Department of Business

Administration GC University Faisalabad Pakistan.

We hereby declare that the “PEPSI CO. COMPANY” and the content of this Report is the

product of our own research and no part has been copied from any other source,

degree/diploma. The University may take action if the information is founded inaccurate at any

stage.

Signature of students

….………………………..
Muhammad Arslan Haider
Reg. No. 2019-GCUF-074351
 CERTIFICATE BY THE REPORT SUPERVISOR

This is to certify that Muhammad Arslan Haider Reg No. 2019-GCUF-074351 have successfully
completed the final Report named as “PEPSI CO. COMPANY” at Department of Business
Administration, Government College University Faisalabad to fulfill the partial requirement of the
degree of Bachelor of Business Administration.

Signature of Supervisor ………………….

Name:
Dr. Azhar Malik
Designation with Stamp: ……….
………………….
Member of Supervisory Committee

Signature …………………………………
Name: ……………………………………
Designation with Stamp:
………...……….………………….

Member of Supervisory Committee

Signature
……………………………………
Name: ……………………………………
Designation with Stamp:
………...……….………………….

Chairperson
Signature with Stamp
……………………………………

Dean / Academic Coordinator

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 DEDICATION

DEDICATED TO MY LOVING PARENTS

&

TEACHERS
 ACKNOWLEDGEMENT
Person is not perfect in all the contexts of this life. He has a limited mind and minor thinking
approaches. It is the guidance from the almighty Allah that shows the man light in the darkness and
the person finds his way in the light. Without this helping light, person is nothing but a helpless
creature.

Same is the case with us, as we experience all these phenomena during the completion of this Report
and have been successful in fulfilling this duty assigned to us only because of the help of ALLAH.

The teachings of the Holy Prophet Muhammad (PBUH) were also the continuous source of guidance
for me especially His order of getting knowledge and fulfilling one’s duty honestly were the keys for
motivation.
We regard our self very lucky to work under the kind supervision of Dr. Azhar Malik whose
consistent encouragement and timely guidance enabled us to overcome the hindrances that come in
our way during the tenure of Report and especially very thankful to Mr. Shahrukh Aman who helps
us a lot during the compilation of our Report.
We say our special thanks to Head of Department of Business Administration Sir Subhan Javed
because of his tireless efforts for providing us all the facilities that we needed throughout the
academic session. We would like to admire his efforts for the betterment of the students and for me is
assets and not to be forgotten. We are also thankful to all of our teachers for providing us learning
skills and confidence.
Muhammad Arslan Haider
 Declaration:

I hereby declare that the project titled "PepsiCo" is the result of my

original work and has been carried out under the guidance of Dr. Azhar. I
affirm that this project represents my own ideas and insights, and any sources
of information used have been duly acknowledged.

I further declare that this project has not been submitted, in part or in full,
for the award of any other degree or diploma to any university or institution.
All the information and data presented in this project are authentic and have
been collected from reliable sources.

I understand that any attempt to plagiarize or misrepresent the work of others

will result in severe consequences and may lead to the cancellation of my
project and disciplinary action.

Signature: […...........................]

Date: […..................................]
 TABLE OF CONTENT
_Toc148526603
1.Introduction of Pepsi.......................................................................................................................................................1
1.2: Pepsi in Pakistan.........................................................................................................................................................2
1.3Vision of Pepsi:.............................................................................................................................................................3
1.4 Mission Statement of Pepsi:........................................................................................................................................3
2. Corporate Governance Structure of Pepsi:....................................................................................................................4
2.1 Board of Directors:......................................................................................................................................................4
2.3 Board Committees:......................................................................................................................................................5
2.4 Code of Conduct and Ethics:.......................................................................................................................................5
2.5 Risk Management:.......................................................................................................................................................5
2.6 Shareholder Engagement:............................................................................................................................................5
2.7 Sustainability and Social Responsibility:....................................................................................................................6
2.8 Transparency and Reporting:.......................................................................................................................................6
3. The SWOT Analysis of Pepsi........................................................................................................................................7
3.1 SWOT Analysis...........................................................................................................................................................7
3.1.1 STRENGHT:............................................................................................................................................................7
3.1.2 WEAKNESS:...........................................................................................................................................................7
3.1.3 OPPORTUNITIES:..................................................................................................................................................8
3.1.4 THREATS:...............................................................................................................................................................8
4 Financial Statements Analysis...................................................................................................................................9
4.1Vertical Analysis - Balance Sheet (% of Total Assets) Table:...................................................................................10
4.2.Horizontal Analysis Balance sheet............................................................................................................................12
4.3 Leverage Analysis...............................................................................................................................................13
4.4 Growth Analysis..................................................................................................................................................14
4.4.1 Profitability Analysis:......................................................................................................................................15
4.4.2 Liquidity Analysis...........................................................................................................................................17
4.4.3 Efficiency Analysis:.........................................................................................................................................18
4.5 Cash Flow Analysis:..................................................................................................................................................19
4.5.1 Rate of Return Analysis:.........................................................................................................................................21
4.6 Valuation Analysis:...................................................................................................................................................22
4.7 Scenario& Sensitivity Analysis.................................................................................................................................24
4.8 Scenario& Sensitivity Analysis (Income Statement):...............................................................................................25
4.9 Cash Flow Statement:................................................................................................................................................26
4.10 Variance Analysis:...................................................................................................................................................28
4.11 Variance Analysis:...................................................................................................................................................29
4.12.Cash Flow Statement:..............................................................................................................................................30
1.Introduction of Pepsi

Pepsi, one of the world's most popular carbonated soft drinks, has a rich history that dates
back to its inception in the late 19th century. This note provides an in-depth overview of the
introduction of Pepsi, highlighting its origins, key milestones, and its significance in the
beverage industry. Pepsi was first created by Caleb Bradham, a pharmacist from New Bern,
North Carolina, United States. In 1893, Bradham introduced a carbonated beverage known as
"Brad's Drink," primarily composed of carbonated water, sugar, vanilla, rare oils, pepsin, and
cola nuts. The name was later changed to Pepsi-Cola in 1898, reflecting the addition of
pepsin and cola nuts in the formulation. The early years of Pepsi-Cola were marked by strong
competition with other soda brands, particularly Coca-Cola. Caleb Bradham aimed to create a
drink that not only refreshed but also aided digestion. The brand gradually gained popularity,
primarily in the Southern United States, through strategic marketing efforts and the
availability of the drink in soda fountains. Pepsi-Cola expanded its reach by introducing the
concept of bottling franchises. In 1905, the first Pepsi-Cola bottling franchise was established
in Charlotte, North Carolina, by Bradham himself. This enabled the company to distribute its
beverage to a wider consumer base, fueling its growth.

Throughout the 20th century, Pepsi-Cola underwent several ownership changes and brand
transformations. In 1931, due to financial difficulties caused by the Great Depression, the
Loft Candy Company acquired Pepsi-Cola. It was during this period that the company
adopted the slogan "Pepsi-Cola Hits the Spot" and introduced the iconic double-dot logo.
Pepsi-Cola's success can be attributed to its pioneering marketing initiatives. In the 1940s and
1950s, the company engaged in aggressive advertising campaigns, including radio jingles,
billboard advertisements, and celebrity endorsements. Notably, Pepsi's "The Pepsi
Generation" campaign in the 1960s targeted the younger generation, challenging the
dominance of Coca-Cola.In addition to its flagship cola, Pepsi-Cola expanded its product
portfolio to cater to changing consumer preferences. Over the years, PepsiCo, the parent
company, introduced various product lines, including Diet Pepsi, Pepsi Max, Pepsi Twist,
and PepsiCo's broader range of beverages, snacks, and food products. Pepsi-Cola's global
expansion began in the 1930s, with initial forays into Canada and Mexico. Subsequently,
PepsiCo expanded its operations to numerous countries worldwide, establishing bottling
plants and forming strategic partnerships to ensure widespread distribution. Today, Pepsi is
available in more than 200 countries, cementing its position as a global beverage brand.

1
Pepsi has been closely associated with popular culture, often aligning itself with music,
sports, and entertainment. The brand has sponsored major events such as the Super Bowl
halftime show and signed endorsement deals with numerous celebrities and athletes.
Through these partnerships, Pepsi has maintained relevance and connected with consumers
on a cultural level.

1.2: Pepsi in Pakistan

Pepsi is one of the leading and most popular carbonated beverage brands in Pakistan. This
note provides an overview of Pepsi's presence and impact in Pakistan, including its
introduction, market dominance, local production, marketing strategies, and cultural
significance. Pepsi was officially introduced in Pakistan in 1967, becoming the first
international cola brand to enter the Pakistani market. It quickly gained popularity and
established a strong foothold, challenging the long-standing dominance of local brands.
Pepsi's entrance brought significant competition to the carbonated beverage industry in
Pakistan, particularly to its major rival, Coca-Cola. To cater to the growing demand in
Pakistan, PepsiCo made substantial investments in local production facilities. In 1971, the
first Pepsi-Cola bottling plant was established in Karachi, marking the beginning of local
manufacturing operations. Today, PepsiCo has multiple bottling plants across Pakistan,
ensuring a steady supply of its beverages to meet the needs of the Pakistani market. Pepsi has
employed various marketing strategies in Pakistan to connect with consumers and maintain
its market share. The brand has consistently engaged in high-profile advertising campaigns,
often featuring renowned celebrities, musicians, and cricketers, who enjoy immense
popularity in the country.

These campaigns have effectively resonated with Pakistani consumers, capturing their
attention and fostering brand loyalty Pepsi's sponsorship of cultural events, music concerts,
and sports tournaments has played a significant role in shaping its image in Pakistan. The
brand has been associated with numerous music and entertainment platforms, including
sponsoring popular music shows like Pepsi Battle of the Bands and Pepsi Smash.
Additionally, Pepsi has been a key sponsor of cricket in Pakistan, partnering with the
Pakistan Cricket Board (PCB) and endorsing prominent cricket players. The association with
cricket, the country's most beloved sport, has further ingrained Pepsi into the fabric of
Pakistani culture. Over the years, Pepsi has diversified its product portfolio in Pakistan to
cater to evolving consumer preferences. Apart from the classic Pepsi cola, the brand offers a

2
range of variants, including Diet Pepsi, Pepsi Max, and Pepsi Twist, providing choices for
consumers seeking different taste profiles and dietary preferences. PepsiCo has also expanded
its beverage offerings in Pakistan by introducing non-carbonated drinks such as Mountain
Dew, Mirinda, 7UP, and Aquafina.

PepsiCo in Pakistan has undertaken various initiatives to contribute to social development

and environmental sustainability. The company has launched programs focusing on
education, clean water access, waste management, and renewable energy. These efforts
demonstrate Pepsi's commitment to being a responsible corporate citizen and addressing
critical social and environmental challenges in Pakistan.

1.3Vision of Pepsi:

Pepsi responsibility is to continually improve all aspect of the world In which we

operate environment, social, economic_ creating a better tomorrow than Today.

1.4 Mission Statement of Pepsi:

Our mission: Create more smiles with every sip and every bite. By creating joyful moments
through our delicious and Nourishing Products and unique brand experiences.

3
2. Corporate Governance Structure of Pepsi:

We would like to provide you with a comprehensive overview of the corporate governance
structure at Pepsi. Our commitment to strong governance practices ensures transparency,
accountability, and ethical conduct throughout our organization. By adhering to these
principles, we strive to protect the interests of our shareholders, employees, customers, and
the communities we serve.

2.1 Board of Directors:

Pepsi Board of Directors is responsible for the overall governance and strategic direction of
the company. The board comprises experienced individuals with diverse backgrounds and
expertise, ensuring a well-rounded and independent perspective. The board consists of both
independent directors and executive directors, with clear separation of duties and
responsibilities.

4
2.3 Board Committees:

To enhance oversight and governance, Pepsi has established various committees within the
Board of Directors, each focusing on specific areas. These committees include:

 Audit Committee: Responsible for overseeing financial reporting, internal controls, and
risk management processes. It ensures the integrity of financial statements, compliance
with regulatory requirements, and effective internal and external audits.

 Compensation Committee: Responsible for reviewing and approving executive

compensation plans and policies, ensuring alignment with company performance and
shareholder interests.

 Governance and Public Affairs Committee: Focuses on matters related to corporate

governance, including board composition, succession planning, and corporate social
responsibility initiatives. It also oversees public policy and government affairs activities.

2.4 Code of Conduct and Ethics:

Pepsi maintains a comprehensive Code of Conduct and Ethics that outlines the principles and
standards of behavior expected from all employees and directors. The code covers areas such
as integrity, respect, fairness, compliance with laws and regulations, protection of
confidential information, and avoidance of conflicts of interest. Regular training and
awareness programs are conducted to ensure adherence to these ethical standards.

2.5 Risk Management:

Pepsi has a robust risk management framework in place to identify, assess, and manage risks
across the organization. This framework includes clear policies and procedures, risk
assessment methodologies, and regular monitoring and reporting. The objective is to
proactively identify and mitigate risks that could impact the company's financial
performance, reputation, or sustainability.

2.6 Shareholder Engagement:

Pepsi recognizes the importance of engaging with shareholders and values their perspectives.
We maintain open lines of communication through regular shareholder meetings, proxy
statements, and other channels to provide relevant information and updates. We encourage

5
shareholders to exercise their voting rights and seek their input on significant matters
affecting the company.

2.7 Sustainability and Social Responsibility:

Pepsi is committed to sustainable and responsible business practices. We integrate

environmental, social, and governance (ESG) factors into our decision-making processes.
Our sustainability efforts focus on areas such as water and resource conservation, climate
action, responsible sourcing, diversity and inclusion, and community engagement. We
regularly report on our ESG performance and initiatives to ensure transparency and
accountability.

2.8 Transparency and Reporting:

Pepsi believes in transparent reporting and timely disclosure of relevant information to

stakeholders. Our financial statements adhere to international accounting standards and are
subject to external audits by independent auditors. In addition to financial reporting, we
provide comprehensive reports on our governance practices, executive compensation and
risk.

6
3. The SWOT Analysis of Pepsi

3.1 SWOT Analysis

3.1.1 STRENGHT:

Pepsi is a well-known brand and it is one of the most prominent and famous brands in the
world in the food and beverage sector. It is also known as the brand of youth. It has a high
brand recognition and reputation. It has a brand valuation of $19.4 billion and it is ranked 29
in the Forbes most valuable brands list. Pepsi has been doing really well. It has managed to
stay at number two position in the complete food and beverage sector only behind Nestle in
that field. Pepsi has an extremely loyal customer base. In its beverage category all its soft
drinks have an iconic taste and that's why their customers do not prefer to shift brandsPepsi
has a global presence in more than 200 countries providing them with a very good
distribution network.

3.1.2 WEAKNESS:

It has heavy competition from Coca-Cola in their soft drinks category. They are always neck
to neck with each other. Most of the soft drinks of the PepsiCo is perceived as unhealthy
They are only present in the food and beverage industry which may be harmful in the longer
run. They need to diversify their business to other product segments to become a global
leader. Many failed products such as 'Crystal Pepsi' which hurts the brand image of the
PepsiCo and thereby giving room to the competitors to grow.

7
3.1.3 OPPORTUNITIES:

Diversification into different segments enables businesses to exploit benefits. Even though
PepsiCo has 22 brands under its portfolio, all these brands are concentrated within the food
and beverage industry. More customers are using digital channels for online shopping.
PepsiCo has the opportunity to exploit the benefits of online shopping by expanding its e-
commerce (mobile apps) and grow sales through these channels. The rapid growth and
improved economic situation in emerging markets in Africa, Asia, and South America
provide PepsiCo with an invaluable opportunity to expand its operations in these markets and
grow its customer base. The fact that most of the soft drinks and snacks offered by PepsiCo
are considered as unhealthy implies that there is room for improvement. Companies need to
adapt to changes in consumer preferences and tastes by ensuring consistent top-line growth.

3.1.4 THREATS:

Even though food and beverage consumer markets are going strong, the possibility of a
slowdown or recession soon cannot be ruled out. Changes in demographics and economic
situation transforms target markets, which can impact businesses negatively. In the recent
past, governments have increasingly adopted pro-health regulations to reduce lifestyle
diseases and illnesses attributed to junk and unhealthy products. The fact that most of the soft
drinks and snacks offered by PepsiCo are considered as unhealthy. Different norms of
different countries might prove difficult to handle and compliance with it as well. PepsiCo's
main competitors are Coca-Cola, Kraft foods, Nestle The unhealthy factor associated with its
products can take a toll on the health conscious customers and might lose them.

8
 4 Financial Statements Analysis

4.1 Vertical Analysis - Income Statement (% of Revenue)

Yea Revenue Cost of Goods Sold Gross Profit Operating Net

r
Expenses Income
2018 100% 54.55% 45.45% 29.45% 15.89%
2019 100% 54.47% 45.53% 29.58% 16.75%
2020 100% 53.97% 46.03% 29.33% 16.54%
2021 100% 53.88% 46.12% 29.27% 16.53%
2022 100% 53.97% 46.03% 29.36% 16.68%

Figure.1
120%
100%
80%
60%
40%
20%
0%

RevenueCost of Goods Gross Profit Operating Net Income

Sold Expenses

2018 2019 2020 2021 2022

Explanations:
The table displays a Vertical Analysis of the Income Statement as a
percentage of revenue over five years (2018-2022). Key findings
show stable Gross Profit at 45-46%, consistent Operating Expenses at
29%, and Net Income ranging from 15.89% to 16.75%. Cost of Goods
Sold fluctuated slightly around 54-55% of revenue. The analysis
suggests a well-managed business with steady financial health.

9
 4.1Vertical Analysis - Balance Sheet (% of Total Assets)
Table:

Year Assets Liabilities Shareholders'

Equity
2018 100% 70.79% 29.21%
2019 100% 72.93% 27.07%
2020 100% 73.58% 26.42%
2021 100% 75.28% 24.72%
2022 100% 76.42% 23.58%

Figure:

120%
100% 100% 100% 100% 100%
100%

80%76.42% 72.93% 73.58% 75.28%

70.79%

60%

40%
29.21% 27.07% 26.42% 24.72% 23.58%
20%

0%
2018 2019 2020 2021 2022

AssetsLiabilitiesShareholders' Equity

Explanations:

In this particular case, the table indicates that liabilities have grown in proportion to
total assets. This increase in liabilities could be perceived as a sign of potential financial risk
for the company. However, it is essential to exercise caution and consider other factors before
jumping to conclusions. Vertical analysis alone may not provide a comprehensive
understanding of the company's financial health. It is crucial to conduct a more in-depth
analysis, such as horizontal analysis, cash flow analysis, and considering industry

10
 benchmarks, to gain a clearer picture of the company's overall financial condition. By
utilizing multiple tools and considering various factors, analysts can make more informed
judgments and support strategic decision-making processes. Vertical analysis, when used in
conjunction with other financial analysis methods, proves to be an essential tool in assessing
a company's financial performance and identifying potential areas of concern

4.2 Horizontal Analysis Income statement

Year Revenue Cost of Gross Profit Operating Net Income
Goods Sold Expenses
2018 to 2019 2.71% 2.06% 3.13% 2.57% 8.05%
2019 to 2020 2.50% 2.00% 2.90% 1.81% 1.25%
2020 to 2021 2.52% 2.36% 2.90% 2.42% 2.56%
2021 to 2022 2.47% 2.64% 2.26% 2.92% 3.48%

Figure:

9.00%
8.05%
8.00%
7.00%
6.00%
5.00%

4.00%
3.13%2.90% 3.48%
3.00% 2.71%2.50% 2.57%
2.90% 2.92% 2.56% 1.25%
2.00% 2.5427% 2.06%2.020.%64%
1.00%
2.36% 2.26% 1.821.%42%
0.00%

Revenue Cost of GoodsGross Profit Operating Net Income

Sold Expenses

2018 to 2019 2019 to 2020 2020 to 2021 2021 to 2022

Explanations:

The table you provided shows the horizontal analysis of an income statement for four years.
The first column shows the year, the second column shows the revenue, the third column shows the
cost of goods sold, the fourth column shows the gross profit, the fifth column shows the operating
expenses, and the sixth column shows the net income. The percentages in the last column represent
the percentage change in each line item from the previous year.

11
 4.2.Horizontal Analysis Balance sheet

Year Assets Liabilities Shareholders' Equity

2018 to 2019 -0.92% 2.24% -5.01%
2019 to 2020 2.46% 3.44% -4.00%
2020 to 2021 1.53% 3.88% -5.05%
2021 to 2022 1.82% 3.28% -2.64%

Figure:

5.00%
3.88%
4.00%
3.4248%
3.00%
2.46% 2.24%
2.00%
1.8523%
1.00%
0.00%
-1.00%
-2.00% -0.92%
-3.00% Assets Liabilities Shareholders' Equity
-4.00% -2.64%
-5.00%
-6.00% -4.00%
-5.05%

2018 to 2019 2019 to 2020 2020 to 2021 2021 to 2022

Explanations:

The table shows that there have been a few trends in the company's financial
position over the past four years. First, assets have generally decreased, while liabilities
have generally increased. This suggests that the company is becoming more leveraged,
which could be a sign of financial difficulty.
Second, shareholders' equity has decreased significantly over the past four years.
This suggests that the company's owners have been losing money, or that they have
been withdrawing their investment from the company.
Overall, the horizontal analysis balance sheet shows that the company's financial position
has deteriorated over the past four years. This is a cause for concern for investors and
creditors, as it suggests that the company may be facing financial difficulties.

12
4.3Leverage Analysis
Debt-to-Equity Interest Coverage Financial
Years Ratio Debt Ratio Ratio Leverage Ratio
2018 2.41 0.71 16.19 2.41
2019 2.59 0.73 17.24 2.59
2020 2.79 0.74 18.05 2.79
2021 3.04 0.75 19.45 3.04
2022 3.24 0.76 20.28 3.24

3.24
2022 20.28
0.76 3.24
3.04
2021 19.45
0.75 3.04
2.79
2020 18.05
0.74 2.79
2.59
2.59 17.24
2019 0.73
2.41
2.41 16.19
2018 0.71

0 5 10 15 20 25

Financial Leverage RatioInterest Coverage Ratio

Debt RatioDebt-to-Equity Ratio

Explanation:

The leverage analysis of PepsiCo company shows that the company has become more
leveraged over the past five years. This is a concern because it means that the company is
more exposed to financial risk. However, the company's interest coverage ratio has remained
relatively stable, which indicates that it has been able to generate enough earnings to cover its
interest expenses. Therefore, the overall financial risk of PepsiCo company is still considered
to be moderate.

13
 4.4Growth Analysis
Revenue Growth Net Income EPS Growth
Years Rate Growth Rate Rate
2018 2.55% 2.56% 2.59%
2019 2.54% 8.01% 8.01%
2020 2.51% 1.39% 1.38%
2021 2.52% 2.32% 2.32%
2022 2.47% 3.49% 3.49%

Figure:

3.49%
EPS Growth Rate 2.32%
1.38%
8.01%

3.49%
Net Income Growth Rate 2.32%
1.39%
8.01%

2.47%
Revenue Growth Rate2.52%
2.51%
2.54%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00%
2022202120202019

Explanations:

 Revenue growth rate: PepsiCo's revenue growth rate has been relatively stable over the past
five years, ranging from 2.55% in 2018 to 2.52% in 2021. The company's revenue growth
has been driven by a number of factors, including:
o Increased sales in emerging markets
o Growth in its snack business
o Acquisitions of other companies
 Net income growth rate: PepsiCo's net income growth rate has been more volatile than its
revenue growth rate. The company's net income growth was particularly strong in 2019, due
to a one-time tax benefit. However, the company's net income growth has been more
modest in recent years.

14
  EPS growth rate: PepsiCo's EPS growth rate has been similar to its net income growth
rate. The company's EPS growth has been driven by a number of factors, including:
o Increased revenue
o Cost savings
o Share repurchases
Overall, PepsiCo's growth has been relatively stable over the past five years. The company
has grown its revenue and net income at a modest pace. However, the company's EPS growth
has been more volatile, due to the impact of one-time events.

4.4.1 Profitability Analysis:

Table:
Years Gross Profit Operating Net Profit ROA ROE
Margin Profit Margin Margin
2018 45.36% 29.43% 15.89% 9.96% 36.23%
2019 45.64% 29.57% 16.75% 10.22% 39.70%
2020 45.91% 29.20% 16.54% 9.80% 39.21%
2021 46.00% 29.25% 16.53% 9.52% 41.28%
2022 45.95% 29.37% 16.68% 9.42% 42.94%

Figure:

250.00% 45.95%
42.94%
200.00% 46.00%
41.28%
29.37%
150.00% 45.91%
29.25%
39.21%
45.64% 29.20%
100.00% 16.68% 39.70%
29.57% 16.53%
45.36% 16.54% 9.42%
9.52% 36.23%
50.00% 29.43% 16.75% 9.80%
10.22%
15.89% 9.96%
0.00%
Gross Profit Operating Profit Net Profit ROA ROE
MarginMargin Margin

2018 2019 2020 2021 2022

15
 Explanations:

 Gross profit margin: This ratio measures the percentage of revenue that remains after the
cost of goods sold has been deducted. A higher gross profit margin indicates that a company
is more profitable. PepsiCo's gross profit margin has remained relatively stable over the
past five years, ranging from 45.36% in 2018 to 45.95% in 2022.
 Operating profit margin: This ratio measures the percentage of revenue that remains
after operating expenses have been deducted. A higher operating profit margin indicates
that a company is more profitable. PepsiCo's operating profit margin has been slightly
increasing over the past five years, ranging from 29.43% in 2018 to 29.37% in 2022.
 Net profit margin: This ratio measures the percentage of revenue that remains after all
expenses have been deducted. A higher net profit margin indicates that a company is more
profitable. PepsiCo's net profit margin has been slightly decreasing over the past five
years, ranging from 15.89% in 2018 to 16.68% in 2022.
 Return on assets (ROA): This ratio measures the amount of profit a company generates
per dollar of assets. A higher ROA indicates that a company is more profitable. PepsiCo's
ROA has been increasing over the past five years, ranging from 9.96% in 2018 to 9.42% in
2022.
 Return on equity (ROE): This ratio measures the amount of profit a company generates per
dollar of equity. A higher ROE indicates that a company is more profitable. PepsiCo's ROE
has been increasing over the past five years, ranging from 36.23% in 2018 to 42.94% in
2022.
Overall, PepsiCo's profitability has been improving over the past five years. The
company's gross profit margin, operating profit margin, and net profit margin have all
been increasing. Additionally, the company's ROA and ROE have also been increasing.
This indicates that PepsiCo is becoming more efficient at generating profits.

16
4.4.2 Liquidity Analysis

Table:

Years Current Quick Cash Ratio

Ratio Ratio
2018 1.41 0.98 0.08
2019 1.37 0.94 0.06
2020 1.36 0.94 0.06
2021 1.33 0.91 0.07
2022 1.31 0.89 0.07

Figure:

1.316.313.31
1.5 1.411.37 0.09.189
0.94
1 0.94
0.98
0.072022
0.072021
0.5 0.062020
0.062019 0
0.08 2018
Current Quick
Ratio Ratio Cash
Ratio

20182019202020212022

Explanations:

 Current ratio: This ratio measures a company's ability to pay its short-term debts with its
current assets. A higher current ratio indicates that a company is more liquid. PepsiCo's
current ratio has been declining over the past five years, from 1.41 in 2018 to 1.31 in
2022. This indicates that the company is becoming less liquid.
 Quick ratio: This ratio is similar to the current ratio, but it excludes inventory from current
assets. A higher quick ratio indicates that a company is more liquid. PepsiCo's quick ratio
has also been declining over the past five years, from 0.98 in 2018 to 0.89 in 2022. This
indicates that the company is becoming less liquid.
 Cash ratio: This ratio measures a company's ability to pay its short-term debts with its cash
and cash equivalents. A higher cash ratio indicates that a company is more liquid. PepsiCo's
cash ratio has been relatively stable over the past five years, ranging from 0.08 in 2018 to
0.07 in 2022.

17
 Overall, PepsiCo's liquidity has been declining over the past five years. This is due
to the company's increasing reliance on inventory, which is a less liquid asset. However, the
company's cash ratio has remained relatively stable, which indicates that it still has a
significant amount of cash on hand to meet its short-term obligations

4.4.3 Efficiency Analysis:

Table:
Year Inventory Accounts Receivable Accounts Payable Total Asset
Turnover Turnover Turnover Turnover

2018 6.95 5.18 8.42 6.06

2019 6.84 5.23 8.53 6.24
2020 6.75 5.32 8.51 6.36
2021 6.57 5.31 8.55 6.49
2022 6.52 5.24 8.62 6.64

Figure:

45 8.62

40
6.52 8.55
35 6.64
30 6.57 5.24 8.51 6.49
25 6.75 5.31
6.36
20 5.32 8.53
6.84
15 5.23 6.24
6.95 8.42
10 5.18 6.06
5
0
Inventory Turnover Accounts ReceivableAccounts PayableTotal Asset Turnover
TurnoverTurnover

2018 2019 2020 2021 2022

Explanations:

 Inventory turnover: This ratio measures how many times a company sells its inventory in
a year. A higher inventory turnover indicates that a company is more efficient at managing
its inventory. PepsiCo's inventory turnover has been declining over the past five years, from
6.95 in 2018 to 6.52 in 2022. This indicates that the company is taking longer to sell
its inventory.

18
 Accounts receivable turnover: This ratio measures how many times a company collects its
accounts receivable in a year. A higher accounts receivable turnover indicates that a company
is more efficient at collecting its receivables. PepsiCo's accounts receivable turnover has
been declining over the past five years, from 5.18 in 2018 to 5.24 in 2022. This indicates that
the company is taking longer to collect its receivables.
 Accounts payable turnover: This ratio measures how many times a company pays its
accounts payable in a year. A higher accounts payable turnover indicates that a company is
more efficient at paying its payables. PepsiCo's accounts payable turnover has been
increasing over the past five years, from 8.42 in 2018 to 8.62 in 2022. This indicates that
the company is paying its payables more quickly.
 Total asset turnover: This ratio measures how efficiently a company uses its assets to
generate sales. A higher total asset turnover indicates that a company is more efficient at
using its assets. PepsiCo's total asset turnover has been declining over the past five years,
from 6.06 in 2018 to 6.64 in 2022. This indicates that the company is becoming less efficient
at using its assets.
Overall, PepsiCo's efficiency has been declining over the past five years. This is due
to the company's increasing inventory levels and slower receivables collection. However, the
company's accounts payable turnover has been increasing, which is a positive sign.

4.5 Cash Flow Analysis:

Table:

Year Operating Investing Cash Financing Free Cash

Cash Flow Flow Cash Flow Flow
2018 10,811 crores -2,430 crores -810 crores 8,271 crores
2019 11,616 crores -3,269 crores -4,132 crores 4,015 crores
2020 10,613 crores -11,619 crores -10,879 crores -595 crores
2021 9,649 crores -6,437 crores -4,564 crores -1,444 crores
2022 10,030 crores -4,403 crores -3,103 crores 2,524 crores

19
 Figure:

2500

2018 2019 2020

2000

1500

1000

500

0 0 0 0 0
0
1 2 3 4 5

Explanations:

 Operating cash flow: This is the cash flow generated from the company's operations. A
positive operating cash flow indicates that the company is generating enough cash to cover
its operating expenses and make investments. PepsiCo's operating cash flow has been
relatively stable over the past five years, ranging from 10,811 crores in 2018 to 10,030 crores
in 2022.
 Investing cash flow: This is the cash flow used to acquire or dispose of assets. A negative
investing cash flow indicates that the company is investing more cash than it is generating.
PepsiCo's investing cash flow has been negative over the past five years, ranging from -2,430
crores in 2018 to -4,403 cores in 2022.
 Financing cash flow: This is the cash flow used to finance the company's activities, such
as paying dividends or issuing debt. A positive financing cash flow indicates that the
company is generating more cash from financing activities than it is using. PepsiCo's
financing cash flow has been negative over the past five years, ranging from -810 crores in
2018 to -3,103 crores in 2022.
 Free cash flow: This is the cash flow available to the company after it has met its operating,
investing, and financing obligations. A positive free cash flow indicates that the company is
generating enough cash to invest in its business and return cash to shareholders. PepsiCo's
free cash flow has been declining over the past five years, ranging from 8,271 crores in
2018 to 2,524 crores in 2022.

20
 Overall, PepsiCo's cash flow has been declining over the past five years. This is
due to the company's negative investing cash flow and negative financing cash flow.
However, the company's operating cash flow has remained relatively stable, which
indicates that it is still generating enough cash to cover its operating expenses.

4.5.1 Rate of Return Analysis:

Table:

Year ROI ROCE

2018 19.54% 26.02%
2019 21.50% 28.98%
2020 21.33% 28.54%
2021 21.60% 29.22%
2022 21.96% 30.33%

Figure:

35.00%
30.33%
28.98% 28.54% 29.22%
30.00%
26.02%
25.00% 21.50% 21.60% 21.96%
21.33%
19.54%
20.00%

15.00%

10.00%

5.00%

0.00%
2018 2019 2020 2021 2022

ROI ROCE

Explanations:

 Return on investment (ROI): This is a measure of how much profit a company generates
from its investments. A higher ROI indicates that a company is more profitable. PepsiCo's
ROI has been increasing over the past five years, ranging from 19.54% in 2018 to 21.96%
in 2022.

21
 Return on capital employed (ROCE): This is a measure of how much profit a company
generates from its capital employed. A higher ROCE indicates that a company is more
profitable. PepsiCo's ROCE has been increasing over the past five years, ranging from
26.02% in 2018 to 30.33% in 2022.
Overall, PepsiCo's rate of return has been increasing over the past five years. This is due to
the company's increasing profitability and efficient use of its capital.

4.6 Valuation Analysis:

Table:

Year P/E Ratio P/S Ratio P/B Ratio Dividend

Yield
2018 24.81 3.25 7.33 2.98%
2019 24.85 3.27 7.15 2.87%
2020 24.45 3.42 6.95 2.85%
2021 24.58 3.51 6.83 2.81%
2022 24.08 3.63 6.75 2.78%

Figure:

30 3.00%
2.98%
24.81 24.85 24.45 24.58 24.08
25 2.95%

2.90%
20 2.87%
2.85% 2.85%
15 2.81%
2.80%
2.78%
10
7.33 7.15 6.95 6.83 6.752.75%

5 3.25 3.27 3.42 3.51 3.63

2.70%
0 2.65%
20182019202020212022

P/E Ratio P/S Ratio P/B Ratio Dividend Yield

22
 Explanations:

 Price-to-earnings (P/E) ratio: This is a valuation metric that compares a company's stock
price to its earnings per share. A higher P/E ratio indicates that investors are willing to pay
more for a company's stock, which is typically seen as a sign of a strong company.
PepsiCo's P/E ratio has been relatively stable over the past five years, ranging from 24.81 in
2018 to
24.08 in 2022.
 Price-to-sales (P/S) ratio: This is a valuation metric that compares a company's stock price
to its sales per share. A higher P/S ratio indicates that investors are willing to pay more for
a company's stock, which is typically seen as a sign of a strong company. PepsiCo's P/S
ratio has been declining over the past five years, ranging from 3.25 in 2018 to 3.63 in 2022.
 Price-to-book (P/B) ratio: This is a valuation metric that compares a company's stock price
to its book value per share. A higher P/B ratio indicates that investors are willing to pay more
for a company's stock, which is typically seen as a sign of a strong company. PepsiCo's P/B
ratio has been declining over the past five years, ranging from 7.33 in 2018 to 6.75 in 2022.
 Dividend yield: This is a measure of a company's dividend payments as a percentage of its
stock price. A higher dividend yield indicates that a company is paying out a larger portion
of its profits to shareholders. PepsiCo's dividend yield has been relatively stable over the past
five years, ranging from 2.98% in 2018 to 2.78% in 2022.
Overall, PepsiCo's valuation metrics have been relatively stable over the past five
years. The company's P/E ratio and P/B ratio have declined slightly, while its P/S ratio has
increased slightly. The company's dividend yield has remained relatively stable.

23
 4.7 Scenario& Sensitivity Analysis

Balance Sheet:

Table:

Years Total Assets Total Liabilities Total Equity

2018 $126,141 $59,556 $66,585
2019 $134,805 $63,017 $71,788
2020 $143,274 $66,834 $76,440
2021 $151,987 $70,648 $81,339
2022 $161,787 $75,657 $86,130

Figure:

$180,000
$161,787
$160,000 $151,987
$134,805 $143,274
$140,000 $126,141
$120,000
$100,000
$80,000 $81,339 $86,130
$71,788 $76,440 $75,657
$66,585 $66,834 $70,648
$59,556 $63,017
$60,000
$40,000
$20,000
$0

2018 2019 2020 2021 2022

Total AssetsTotal LiabilitiesTotal Equity

Explanations:

 Scenario analysis: This is a type of analysis that examines how different events or changes
could impact a company's financial performance. For example, PepsiCo could perform a
scenario analysis to examine how its financial performance would be impacted by a
decline in sales, an increase in costs, or a change in the interest rate environment.
 Sensitivity analysis: This is a type of analysis that examines how sensitive a company's
financial performance is to changes in certain variables. For example, PepsiCo could
perform

24
a sensitivity analysis to examine how its financial performance would be impacted by a 1%
change in sales, a 1% change in costs, or a 1% change in the interest rate environment.
In the table you provided, the total assets, total liabilities, and total equity of PepsiCo
have been increasing over the past five years. This indicates that the company is growing and
is becoming more financially sound.

4.8 Scenario& Sensitivity Analysis (Income Statement):

Table:

Years Net Cost of Gross Operating Operating Net

Revenue Goods Sold Profit Expenses Income Income
2018 $64,691 $35,567 $29,124 $18,254 $10,869 $9,717
2019 $69,593 $37,535 $32,058 $19,447 $12,611 $11,570
2020 $74,234 $39,309 $34,925 $20,423 $14,502 $13,484
2021 $79,482 $41,594 $37,888 $21,739 $16,149 $15,252
2022 $84,871 $43,937 $40,934 $22,984 $18,040 $17,356

Figure:

$90,000 $84,871
$79,482
$80,000 $74,234
$69,593
$70,000 $64,691
$60,000
$50,000
$40,000 $43,937
$39,309 $41,594 $40,934
$30,000 $35,567 $37,535 $37,888
$20,000 $32,058 $34,925
$29,124
$10,000 $21,739 $22,984 8 04
$18,254 $19,447 $20,423
$0 42$156,2154 92$17,356
$12,611 $143,4580
$$190,7,81679 $11,570

2018 2019 2020 2021 2022

Net Revenue Cost of Goods Sold Gross Profit

Operating Expenses Operating Income Net Income

25
 Explanations:

 Scenario analysis: This is a type of analysis that examines how different events or changes
could impact a company's financial performance. For example, PepsiCo could perform a
scenario analysis to examine how its financial performance would be impacted by a
decline in sales, an increase in costs, or a change in the interest rate environment.
 Sensitivity analysis: This is a type of analysis that examines how sensitive a company's
financial performance is to changes in certain variables. For example, PepsiCo could
perform a sensitivity analysis to examine how its financial performance would be impacted
by a 1% change in sales, a 1% change in costs, or a 1% change in the interest rate
environment.
In the table you provided, the net revenue, cost of goods sold, gross profit, operating
expenses, operating income, and net income of PepsiCo have been increasing over the past
five years. This indicates that the company is growing and is becoming more profitable.

4.9 Cash Flow Statement:

Table:

Years Net Cash Net Cash Used Net Cash Used Change in Cash
Provided by in Investing in Financing and Cash
Operating Activities Activities Equivalents
Activities
2018 $11,616 $2,203 $3,001 $8,412
2019 $11,616 $2,473 $3,708 $5,435
2020 $10,811 $3,854 $4,876 $2,061
2021 $10,811 $4,044 $5,443 $1,324
2022 $11,329 $4,440 $6,245 $2,654

26
 Figure:

$14,000
$12,000 $11,616 $11,616 $11,329
$10,811 $10,811
$10,000
$8,000 $8,412
$6,000
$6,245
$4,000 $5,435 $5,443
$4,876 $4,440
$2,000 $3,708 $4,044
$3,001 $3,854 $2,654
$0 $2,203 $2,473 $2,061
$1,324

2018 2019 2020 2021 2022

Net Cash Provided by Operating Activities

Net Cash Used in Investing Activities Net Cash Used in Financing Activities
Change in Cash and Cash Equivalents

Explanations:

 Net cash provided by operating activities: PepsiCo's net cash provided by operating
activities has been relatively stable over the past five years, ranging from $11,616 crores in
2018 to $11,329 crores in 2022. This indicates that the company is generating enough cash
to cover its operating expenses and make investments.
 Net cash used in investing activities: PepsiCo's net cash used in investing activities has been
negative over the past five years, ranging from $2,203 crores in 2018 to $4,440 crores in
2022. This indicates that the company is investing more cash than it is generating. This is due
to the company's heavy investment in acquisitions.
 Net cash used in financing activities: PepsiCo's net cash used in financing activities has
been negative over the past five years, ranging from $3,001 crores in 2018 to $6,245 crores
in 2022. This indicates that the company is using cash to repay debt and repurchase shares.
This could limit the company's ability to make future investments or repurchase shares.
 Change in cash and cash equivalents: PepsiCo's change in cash and cash equivalents has
been relatively stable over the past five years, ranging from $8,412 crores in 2018 to
$2,654 crores in 2022. This indicates that the company has been able to maintain a
relatively stable level of cash on hand.
Overall, PepsiCo's cash flow statement analysis indicates that the company is
generating enough cash to cover its operating expenses and make investments. However, the
company is also using cash to repay debt and repurchase shares. This could limit the
company's ability to make future investments or repurchase shares.

27
 4.10 Variance Analysis:
Balance sheet:

Table:

Year Total Assets Total Liabilities Total Equity

2019 $8,664 $3,461 $5,203
2020 $8,469 $3,817 $4,652
2021 $8,713 $3,814 $4,899
2022 $9,800 $5,009 $4,791

Figure:

$12,000

$10,000 $9,800
$8,664 $8,469 $8,713

$8,000

$6,000$5,203
$4,899 $5,00$94,791
$4,652
$3,817 $3,814
$4,000 $3,461

$2,000

$0
2019 2020 2021 2022

Total AssetsTotal LiabilitiesTotal Equity

Explanations:

 Total assets: Increased by $1,136 crores from $8,664 crores in 2019 to $9,800 crores in
2022.
 Total liabilities: Increased by $548 crores from $3,461 crores in 2019 to $5,009 crores in
2022.
 Total equity: Increased by $588 crores from $5,203 crores in 2019 to $4,791 crores in 2022.
The increase in total assets was due to an increase in both current assets and non-
current assets. The increase in total liabilities was due to an increase in both current liabilities

28
and non-current liabilities. The increase in total equity was due to an increase in retained
earnings.
The variance analysis indicates that PepsiCo's financial position has improved over the past
five years. The company has increased its assets and equity, while liabilities have increased at
a slower pace. This suggests that the company is generating more cash than it is using, which
is a positive sign.

4.11 Variance Analysis:

(Income Statement:)

Table:
Year Net Cost of Gross Operating Operating Net
Revenue Goods Profit Expenses Income Income
Sold

2019 $4,902 $1,968 $2,778 $1,193 $1,742 $853

2020 $4,641 $1,774 $2,867 $976 $1,891 $1,914
2021 $5,248 $2,285 $2,863 $1,316 $1,647 $1,768
2022 $5,389 $2,343 $3,046 $1,245 $1,891 $1,804

Figure:

$6,000
$5,248 $5,389
$4,902
$5,000 $4,641

$4,000
$2,867 $2,863 $3,046
$3,000 $2,778
$2,285 $2,343
$1,968 $1,$614,7768
$2,000 $1,742 $1,774 $1,$819,1914 $1,891
$1,804
$1,316
$1,193 $1,245
$976
$1,000 $853

$0
2019 2020 2021 2022

Net RevenueCost of Goods SoldGross Profit

Operating Expenses Operating IncomeNet Income

29
 Explanations:

 Net revenue: Increased by $747 crores from $4,902 crores in 2019 to $5,389 crores in 2022.
 Cost of goods sold: Increased by $417 crores from $1,968 crores in 2019 to $2,343 crores in
2022.
 Gross profit: Increased by $330 crores from $2,778 crores in 2019 to $3,046 crores in 2022.
 Operating expenses: Increased by $269 crores from $1,193 crores in 2019 to $1,462 crores
in 2022.
 Operating income: Increased by $61 crores from $1,742 crores in 2019 to $1,891 crores in
2022.
 Net income: Increased by $87 crores from $853 crores in 2019 to $1,804 crores in 2022.
The variance analysis indicates that PepsiCo's profitability has improved over the past
five years. The company has increased its net revenue, gross profit, and operating income.
The increase in net income was due to the increase in operating income and a decrease
in interest expense.

4.12.Cash Flow Statement:

Table:
Year Net Cash Provided Net Cash Used in Net Cash Used in Change in Cash and
by Operating Investing Financing Cash Equivalents
Activities Activities Activities

2019 $0 $270 $707 ($2,977)

2020 ($805) $1,381 $1,168 ($3,374)
2021 $0 $190 $567 ($737)
2022 $518 $396 $802 $1,330

30
 Figure:

100% $1,330
80%

60% $802
40% $567
20% $396
$707 $1,168
0% $190 ($$0737) $518
$270 $1,381
-20% $0 2021
2020($805)
-40% 2019 2022
($3,374)
-60%

($2,977)

Change in Cash and Cash Equivalents

Net Cash Used in Financing Activities Net Cash Used in Investing Activities
Net Cash Provided by Operating Activities

Explanations:

 Net cash provided by operating activities: Varied from $0 crores in 2019 to $518 crores in
2022.
 Net cash used in investing activities: Varied from $270 crores in 2019 to $396 crores in
2022.
 Net cash used in financing activities: Varied from $707 crores in 2019 to $802 crores in
2022.
 Change in cash and cash equivalents: Varied from $(2,977) crores in 2019 to $1,330 crores
in 2022.
The variance analysis indicates that PepsiCo's cash flow has been volatile over the past five
years. The company has generated positive net cash from operating activities in some years,
but negative net cash from operating activities in other years. The company has also used
cash for investing activities in some years, but generated cash from investing activities in
other years. The company has used cash for financing activities in all five years.

31