Running Head: EVALUATION OF CORPORATE PERFORMANCE 1 EVALUATION OF CORPORATE PERFORMANCE 2 Evaluation of Corporate Performance Pro-forma Financial Statements of PepsiCo: The pro forma income statement and balance sheet of PepsiCo incorporation areas under (annual report, 2012): PEPSICO INCORPORATION Pro-forma Income Statement 20132014 ($000) ($000) Revenues Gross sales (10%) 72,041 82,041 Less: Cost Of Sales (10%)34,42044,420 Gross Profit (profit/loss) 37,62147,621 Operating expenses Selling, General and Administrative 24,970 34,970 Amortization of intangible assets 119 219 Operating profit 12,532 22,532 Bottling equity income Interest expense (899) (999) Interest income and other 91 101 Income before income taxes 11,724 21,724 Provision for income tax 2,090 3,090 Net income 9,634 10,634 Less: income attributable to non controlling interest 36 46 Net income attributable to PepsiCo 9,598 10,598 Net income attributable to PepsiCo as per common share-holders: Basic 3.96 3.99 Diluted 3.92 3.95 Weighted average common share outstanding Basic 1,557 1,558 Diluted 1,575 1,675 Cash dividend declared per common share 2.12752.2276 PEPSICO INCORPORATION PRO-FORMA BALANCE SHEET 20132014 ($000) ($000) ASSETS Current Assets Cash 6,279 7,279 Net Account Receivables 7,041 8,041 Inventory 3,581 4,581 Temporary Investment 322 422 Prepaid Expenses 1,4782,478 Total Current Assets 18,72019,441 Fixed Assets Long Term Investments 19,136 20,136 Property, Plant &Equipment (Net) 1,781 2,781 Good will 16,971 17,971 Non-amortizable Intangible Assets 31,175 32,175 Investments in Non controlled Affiliates 1,633 2,633 Amortizable Intangible Assets, net 1,718 2,718 Total Fixed Assets 37,888 38,888 TOTAL ASSETS 72,414 82,414 LIABILITIES Current Liabilities Accounts Payable 10,196 11,196 Short Term Notes 4,815 5,815 Income taxes payable 317 417 Total Current Liabilities 15,328 16,328 SHAREHOLDERS’ EQUITY Capital Stock 22,417 32,417 Retained Earnings 34,66944,669 Total Shareholders’ equity 65,57575,575 Total Liabilities &Equity 72,41482,414 These are the pro forma income statement and balance sheet of PepsiCo Incorporation as per the data taken from annual report 2012 of the corporation. Ratio Analysis of PepsiCo: The ratio analysis of PepsiCo incorporation as per the company financial statements reported in 2012 areas under (Annual Report, 2012): A. LIQUIDITY .

1. Running Head: EVALUATION OF CORPORATE
PERFORMANCE 1
EVALUATION OF CORPORATE PERFORMANCE
2
Evaluation of Corporate Performance
Pro-forma Financial Statements of PepsiCo:
The pro forma income statement and balance sheet of PepsiCo
incorporation areas under (annual report, 2012):
PEPSICO INCORPORATION
Pro-forma Income Statement
20132014
($000)
($000)
Revenues
Gross sales (10%) 72,041
82,041
Less: Cost Of Sales (10%)34,42044,420
Gross Profit (profit/loss)

2. 37,62147,621
Operating expenses
Selling, General and Administrative 24,970
34,970
Amortization of intangible assets 119
219
Operating profit 12,532
22,532
Bottling equity income
Interest expense (899)
(999)
Interest income and other 91
101
Income before income taxes 11,724
21,724
Provision for income tax 2,090
3,090
Net income 9,634
10,634
Less: income attributable to non controlling interest
36 46
Net income attributable to PepsiCo
9,598 10,598
Net income attributable to PepsiCo as per common share-
holders:
Basic 3.96
3.99
Diluted 3.92
3.95
Weighted average common share outstanding
Basic 1,557
1,558
Diluted 1,575
1,675
Cash dividend declared per common share
2.12752.2276

3. PEPSICO INCORPORATION
PRO-FORMA BALANCE SHEET
20132014
($000)
($000)
ASSETS
Current Assets
Cash 6,279
7,279
Net Account Receivables 7,041
8,041
Inventory 3,581
4,581
Temporary Investment 322
422
Prepaid Expenses 1,4782,478
Total Current Assets
18,72019,441
Fixed Assets
Long Term Investments 19,136
20,136
Property, Plant &Equipment (Net) 1,781
2,781
Good will 16,971
17,971
Non-amortizable Intangible Assets 31,175
32,175
Investments in Non controlled Affiliates 1,633
2,633
Amortizable Intangible Assets, net 1,718
2,718
Total Fixed Assets 37,888
38,888
TOTAL ASSETS 72,414
82,414

4. LIABILITIES
Current Liabilities
Accounts Payable 10,196
11,196
Short Term Notes 4,815
5,815
Income taxes payable 317
417
Total Current Liabilities 15,328
16,328
SHAREHOLDERS’ EQUITY
Capital Stock 22,417
32,417
Retained Earnings
34,66944,669
Total Shareholders’ equity
65,57575,575
Total Liabilities &Equity
72,41482,414
These are the pro forma income statement and balance sheet of
PepsiCo Incorporation as per the data taken from annual report
2012 of the corporation.
Ratio Analysis of PepsiCo:
The ratio analysis of PepsiCo incorporation as per the company
financial statements reported in 2012 areas under (Annual
Report, 2012):
A. LIQUIDITY RATIO:
This ratio tells us about the liquidity of an organization i.e. how
quickly the firm assets convert into cash.
1. Current ratio:
It is the ratio of current assets to current liabilities of an
organization.

5. It says that current assets are higher than the current liabilities
of the firm and that PepsiCo is able to pay-off its current
liabilities.
2. Acid-test ratio/ Quick ratio:
B. FINANCIAL LEVERAGE RATIO:
This ratio serves to find whether the firm will be able to pay-off
its debts or not and determines how much debt a firm is having
during a particular period (Byrd, Hickman, & McPherson,
2013).
1. Debt to Equity Ratio (amount in millions):
It means that the company debt is too high and has to pay high
interest that automatically declines its profit margin and the
chances for the company to run into solvency gets higher.
2. Long term Debt to Equity Ratio:
It says that the debt rate of the company is higher.
C. ASSET MANAGEMENT:
This ratio tells how an organization is managing its assets. It is
also called activity ratio because the assets purchased by a firm
helps in the day to day activities of that firm (Byrd, Hickman, &
McPherson, 2013).
1. Inventory Turnover Ratio (amount in millions):

6. This says that within a year, the firm’s inventory converts into
sales almost 8 times.
It means that PepsiCo used to keep its inventory in warehouse
for small number of days as they are readily converting into
sales.
2. Fixed Assets Turnover Ratio:
times
This tells us that fixed assets are converting this much time into
sales.
D. PROFITABILITY RATIO:
This ratio evaluates a business ability to generate income as
compared to its expenditures and other costs incurred during a
financial period (Byrd, Hickman, & McPherson, 2013).
1. Gross Profit Margin:
2. Return on Assets:
It says that net income is 8.4% of total assets.
E. MARKET RATIO:
This type of ratio actually gives us a picture of the overall
market. Companies usually have no control over the market and
the different types of market ratios. The organization only can
have control over the supply of shares into the market but not
on the demand that exist in the market (Byrd, Hickman, &
McPherson, 2013).

7. 1. Price Earnings ratio:
Where;
Then
This gives us an idea that the market is giving PepsiCo six
times more earnings.
2. Market to Book ratio:
Where;
Then
Return on Equity (ROE):
This tells us that if PepsiCo has invested 100% of common
equity, we have 27.7% of return on net income.
Economic Value Added:
Where;
C is the weighted average cost of capital (WACC)
K represents the capital employed

8. NOPAT is the net operating profit after tax
Now,
Then
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