Reference no: EM131139213
THE PROJECT NEEDS TO BE COMPLETED FROM ACCEPTING IT
I chose for the discussion PepsiCo, a diverse food and beverage company that includes Pepsi, Frito-Lay, Gatorade, Quaker, and Tropicana. The report is generally pretty flashy, and starts with lots of highlights. The one page that I like and caught my eye was its efforts with sustainability, and their goal to leave a "positive imprint on society and the environment. Other highlights from the letter from the CEO include: shareholder return, free cash flow, innovation, promotions, and diversity in the workplace.
The report does a nice job of breaking down its business. It talks about what sells during what time of year, and its typical customer (stores, wholesalers, and other distributors). It also breaks down the competition and how it spends on R&D. A large section is dedicated to risk factors, such as law concerning the environment, and laws concerning food prep, packaging, and distribution. It also discusses potential factors that could negatively affect business. There is one disclosure of a pending legal issue. They mention quite a bit about Venezuelan impairment charges.
The diversity of PepsiCo definitely makes it somewhat difficult to go through all the information. The whole annual report is 168 pages. It does nicely break down each segment, and has comparisons for a 5 year period. It continues to break down each segment, and its international operations.
The retained earnings is $5,452,000 for the year 2015. The company already returned nearly $9 billion through dividends and stock buyback programs. 2015 marked the 43 straight years of a dividend increase, and has done so this year to make it 44 years. PepsiCo also reports free cash flow of over $8 billion for 2015 and over $24 billion from 2013-2015. The retained earnings could be held for further restructuring costs, R&D, and potential acquisitions (was rumored to be in the running to purchase Whitewave, but thought the price was too high, later Danone bought Whitewave for over $12 billion).
My understanding of materiality is that anything that could be deemed necessary for an individual or governing body to be able to interpret a company's standing. As an accountant it is important to use judgement in what is filed material or immaterial.
Temporary accounts are those account entries that capture a specific period of time that are then closed as an accountant moves them to the Income Summary account and this determines the net income or net loss.
REFERENCES
Annual Report https://www.pepsico.com/docs/album/annual-reports/pepsico-2015-annual-report_final_s57dqszgmy22ggn.pdf?sfvrsn=0
Kosman, J. (2016). Pepsi sticks with soda after passing on milk company. Retrieved July 15, 2016, from ttp://nypost.com/2016/07/10/pepsi-sticks-with-soda-after-passing-on-milk-company/
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