Pepsico Case Study Essay Example for Free

Pepsico Case Study Essay1. I entangle that Nooyis letter to Sh beholders was fairly effective. She starts by mentioning that the greatest challenge in business today is to rejuvenate a successful company through positioning for long-term growth and profitability but in like manner performing in the current food securities industryplace. Her opening statement accurately reflects her emphasis in the garner. She goes on to advance several statements that are important for investors to hear about making investings for future growth. She highlights Pepsis ongoing worldwide growth initiatives (innovating globally by delighting locally) and also discusses Pepsis healthier offerings, both of which I feel are appealing concepts for shareholders in todays market. She also makes some important statements about ongoing might and leveraging the brand. Her letter does a good job of answering potential questions that the stockholders may have on thePepsico Case Study current status of the company as thoroughly as future plans. era her focuses are effective, I felt that some additional detail about growth within their respectable segment couldve helped her argument as well as continued discussion on Pepsis ethics. Overall, her letter is a great pitch for prospective investors domestically and abroad.2. Managements Discussion and Analysis seemed to pigment a more pessimistic view of the future of PepsiCo than Nooyis letter. They bring up several factors in order to prepare shareholders for potentially rough times. Part of these factors includes mention of a California proposition, which would force warning labels on unhealthy food. Potential layoffs and a possible knock to Pepsis credit rating are also discussed. Furthermore, management recognizes that they are operating in a highly competitive market. Some of Pepsis core, high margin proceedss are losing market share to Coke products. Ongoing success is dependent on effective promotion and marketing and C oke has been a leader in this area. Pepsi management recognizes the need to present to remain competitive and proper positioning is key. It could prove to be an issue if they dont the right way anticipate shifts in demand. There are also concerns about potential climate changes, and other restrictive esteems. These things could severely impact production and demand for certain segments of Pepsis products.3.4. Market to Book Ratio compares the market value of the firms investments to their cost. Current Ratio is current assets dual-lane by current liabilities and gives a measure of perfectly-term liquidity. Debt to Equity Ratio is a measure of a companys monetary leverage careful by dividing its total liabilities by stockholders equity. Total Asset Turnover is sales divided by total assets and assists with an understanding of dollars generated relative to dollars in assets. Times Interest Earned Ratio measures how well a company has its interest obligations covered and is calc ulated by dividing EBIT by Interest. Profit Margin is calculated by dividing net income by sales. ROA is a measure of profit per dollar of assets and ROE is a measure of how stockholders fared during the year. Finally, EPS gives us market price per share of stock by dividing net income by shares outstanding.5. Over the aside three years, revenues and expenses have increased. Net profits have also increased. Debt to Equity has increased over the furthest few years. Profit margins have decreased and focus has shifted to less profitable products. ROA has been decreasing as well. perfunctory sales in inventory are decreasing. Intangible assets, including goodwill, have greatly increased. Also, Return on smashing Investment has decreased.7.Operating Activities 1) Other net decreased by $688. 2) Accounts Receivable is increasing. Financing Activities 1) Acquisition of non-controlling interests 2) Cash Dividends 3) repurchase of dividends 4) Long term debt is down from 2010-2011. Inves ting Activities 1)Acqusition of WBD 2) Change in Gross Fixed Assets (decreasing debt in 2011)8.In her Letter to Shareholders, Chairman Nooyi made a good case for increasing shareholder value in the short and long runs. Shell need to encourage management to continue to innovate and achieve high sales in the current market while at the same time focusing on future investment and continued global expansion and presence. Transparency with investors is important for building trust and confidence. Marketing and promotion will be another key element to PepsiCos continued growth among the high level of opposition already existing in their many segments. Reduction of accountsreceivable can lead to better seam line results, efficiency, and reduction of long-term debt through the repayment of principle. PepsiCo should also continue to expand its healthy product line such as sports drinks, whole grain healthy snacks, etc. to take advantage of market trends.