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BYP6-1 The notes that accompany a company’s financial statements

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BYP6-1 The notes that accompany a company’s financial statements provide informative details
that would clutter the amounts and descriptions presented in the statements. Refer to the financial
statements of PepsiCo and the Notes to Consolidated Financial Statements in Appendix A.

Instructions
Answer the following questions. Complete the requirements in millions of dollars, as shown in
PepsiCo’s annual report.
(a) What did PepsiCo report for the amount of inventories in its consolidated balance sheet at
December 31, 2005? At December 25, 2004?
(b) Compute the dollar amount of change and the percentage change in inventories between
2004 and 2005. Compute inventory as a percentage of current assets at December 31, 2005.
(c) How does PepsiCo value its inventories? Which inventory cost flow method does PepsiCo
use? (See Notes to the Financial Statements.)
(d) What is the cost of sales (cost of goods sold) reported by PepsiCo for 2005, 2004, and 2003?
Compute the percentage of cost of sales to net sales in 2005

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