Financial Health of Pepsi Company

Running head: FINANCIAL HEALTH OF PEPSI CO.
FINANCIAL HEALTH OF PEPSI CO.
Name of the Student
Name of the University
Author's Note:

FINANCIAL HEALTH OF PEPSI CO.1
Executive Summary
Pepsi co., considered as one of the world's largest food and beverage providing a brand whose
headquarter is situated in Harrison, New York. The profitability, liquidity ratio of the Company
along with its competitor "Coca-cola" has been discussed in the report to know the financial
health of the businesses. In addition, the funding structure of the Company has also been
discussed in the report along with the assessment of whether the share price is under, over or
fairly priced. Lastly, DuPont style analysis has been made in the report to analyse the ROE and
factors that lead to maximum change in ROE.

FINANCIAL HEALTH OF PEPSI CO.2
Table of Contents
Introduction................................................................................................................................................3
Discussion..................................................................................................................................................3
Profitability ratio....................................................................................................................................3
Liquidity ratio.........................................................................................................................................4
Funding structure..................................................................................................................................6
Assessment of Share Price.................................................................................................................7
Conclusion.................................................................................................................................................8
References..............................................................................................................................................10
Bibliography.............................................................................................................................................10
Appendix..................................................................................................................................................12

FINANCIAL HEALTH OF PEPSI CO.3
Introduction
Pepsi co., considered as one of the world's largest food and beverage providing brand
whose headquarter is situated in Harrison, New York. The profitability, liquidity ratio of the
Company along with its competitor "Coca-Cola" has been discussed in the report to know the
financial health of these different businesses. In addition, the funding structure of the
Companies has also been discussed in the report along with the assessment of whether the
share price is under, over or fairly priced. Lastly, DuPont style analysis has been covered in the
report.
Discussion
Profitability ratio
It is one of the important ratio which analyzes the profit of a business by stating how
particular business is focusing on its profit in terms of revenues, cost of operating, assets of the
entity. It presents whether the business is doing good by making profit/ income after making
some deduction of relevant costs and other expenses leading to ultimately ensuring growth of
business (Xu, 2019).
2014 2015 2016 2017 2018
48.00%
50.00%
52.00%
54.00%
56.00%
58.00%
60.00%
62.00%
64.00%
Gross Profit Margin
Gross profit margin ratio is a profitability ratio of a business showing a relationship
between the profit of business in gross and the total revenue coming from sales. Here, in 2017,
the ratio is 0.547 which shows the profit of a company in relative to its sales is better, but again
in 2018, the gross profit margin ratio is declining at 0.546 stating that the Company is not
making proper profit is relative to its sales. This chart shows that gross profit margin is falling