Pepsico Case Study Essay Example for Free

Pepsico Case Study Essay1. I felt that Nooyis Letter to Sh arholders was moderately effective. She starts by mentioning that the greatest challenge in business today is to renew a successful company through positioning for long-term growth and profitability but also performing in the current marketplace. Her opening statement accurately reflects her emphasis in the letter. She goes on to make several statements that are valuable for investors to hear about making investments for future growth. She highlights Pepsis ongoing global 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 efficiency 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 well as future plans. Wh ile her focuses are effective, I felt that some additional detail about growth within their healthy 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 banter and Analysis seemed to paint 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 realisation rating are also discussed. Furthermore, trouble recognizes that they are operating in a highly competitive market. Some of Pepsis core, high margin products are losing market share to Coke products. Ongoing success is dependent on effective promotion and marketing and Coke has been a widener in this area. Pepsi management rec ognizes the need to innovate to remain competitive and proper positioning is call. It could prove to be an issue if they dont properly anticipate shifts in demand. at that place are also concerns about potential climate changes, and other regulatory measures. These things could severely impact production and demand for certain segments of Pepsis products.3.4. Market to arrest Ratio compares the market value of the firms investments to their cost. Current Ratio is current assets divided by current liabilities and gives a measure of short-term liquidity. Debt to uprightness Ratio is a measure of a companys financial leverage calculated by dividing its total liabilities by stockholders equity. Total Asset turnover rate 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 pastime obligations covered and is calculated by dividing EBIT by Interest. Profit Margin is calculated by dividing internet income by sales. ROA is a measure of profit per dollar of assets and hard 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 past three years, revenues and expenses have increased. solve profits have also increased. Debt to Equity has increased over the last few years. Profit margins have decreased and focus has shifted to less profitable products. ROA has been decrease as well. Daily sales in inventory are decreasing. Intangible assets, including goodwill, have greatly increased. Also, Return on Capital 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. Investing Activities 1)Acqusition of WBD 2) Change i n Gross quick-frozen 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 abet 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 competition already existing in their many segments. Reduction of accountsreceivable can lead to better bottom 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.