PepsiFinancial Reporting Problem Part 1
Financial reporting Problem, Part 1
The company’s annual report is important because it gives the shareholders a clear picture and understanding about how the company is doing financially. The annual reports provide thorough information on very significant section of the accounts, such as the balance sheet, the income statement, and the cash flow statement. The information presented in the annual report would also be essential to potential investor, employee, and any other people that may have interest in financial aspect of the business.
The company’s total assets at the end of 2009 were $39,848,000 (PepsiCo, n.d.). However, in 2010 it’s most recent annual report shows an increase to the previous annual reporting period of $28,305,000 that brings PepsiCo’s total assets to $68,153,000 (PepsiCo, n.d.). This information is important because it demonstrate what the company owns. It gives an understanding of the financial condition of the company, whether or not there have been improvement from the previous years.
The current assets are the first thing on the balance sheet under the asset column. A company lists all of the possessions that it may convert into cash in a short period, that normally takes place with a year or less. Because these assets can easily turn into cash the company refers to them as “liquid” assets. Cash and cash equivalents are the most liquid assets found within the asset portion of a company’s balance sheet. PepsiCo’s cash and cash equivalents for the year end December 25, 2010 are $17,569,000 whereas; in 2009 the company had $12,571,000 in cash and cash equivalents (PepsiCo, n.d.). PepsiCo had a $4,998,000 increase in cash and cash equivalents. This includes short-term investments, accounts and notes receivable, inventories and prepaid expenses, and other current assets. This represents the company’s liquidity. The more cash and short-term investments on hand, the lower a firm’s...