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Financial Statement Analysis Package (FSAP): Version 7.0Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th EditionBy James Wahlen, Steve Baginski and Mark Bradshaw
The FSAP User Guides appear in column I to the right.
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: PepsiCoYear (Most recent in far right column.) 2003 2004 2005 2006 2007
BALANCE SHEET DATAAssets:Cash and Cash Equivalents 820 1,280 1,716 1,651 910Marketable Securities 1,181 2,165 3,166 1,171 1,571Accounts Receivable - Net 2,830 2,999 3,261 3,725 4,389Inventories 1,412 1,541 1,693 1,926 2,290Prepaid Expenses and Other Current Assets 687 654 618 657 991Deferred Tax Assets - Current
Other Current Assets (1)
Other Current Assets (2) Current Assets 6,930 8,639 10,454 9,130 10,151Long Term Investments 2,920 3,284 3,485 3,690 4,354Property, Plant & Equipment - at cost 14,755 15,930 17,145 19,058 21,896 -6,927 -7,781 -8,464 -9,371 -10,668Amortizable Intangible Assets (net) 718 598 530 637 796Goodwill and Nonamortizable Intangibles 4,665 4,842 5,174 5,806 6,417Deferred Tax Assets - Noncurrent
Other Non-Current Assets (1) 2,266 2,475 3,403 980 1,682Other Non-Current Assets (2)
Total Assets 25,327 27,987 31,727 29,930 34,628Liabilities and Equities:Accounts Payable - Trade 1,638 1,731 1,799 2,102 2,562Current Accrued Liabilities 3,575 3,868 4,172 4,394 5,040Notes Payable and Short Term Debt 145 894 2,746 274 0Current Maturities of Long Term Debt 446 160 143 0 0Deferred Tax Liabilities - CurrentIncome Taxes Payable 611 99 546 90 151Other Current Liabilities (1)
Other Current Liabilities (2)
Current Liabilities 6,415 6,752 9,406 6,860 7,753Long Term Debt 1,702 2,397 2,313 2,550 4,203Long Term Accrued Liabilities 4,075 4,099 4,323 4,624 4,792Deferred Tax Liabilities - Noncurrent 1,261 1,216 1,434 528 646Other Non-Current Liabilities (1)Other Non-Current Liabilities (2)
Total Liabilities 13,453 14,464 17,476 14,562 17,394Minority Interest
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Total Liabilities and Equities 25,327 27,987 31,727 29,930 34,628
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INCOME STATEMENT DATA 2003 2004 2005 2006 2007
Revenues 26,971 29,261 32,562 35,137 39,474 -11,691 -12,674 -14,176 -15,762 -18,038 Gross Profit 15,280 16,587 18,386 19,375 21,436 -10,148 -11,031 -12,252 -12,711 -14,208
-145 -147 -150 -162 -58
Other Operating Income (1)Other Operating Income (2)Non-Recurring Operating Gains
-206 -150
Operating Profit 4,781 5,259 5,984 6,502 7,170Interest Income 51 74 159 173 125 -163 -167 -256 -239 -224Income from Equity Affiliates 323 380 495 553 560Other Income or Gains
Income before Tax 4,992 5,546 6,382 6,989 7,631 -1,424 -1,372 -2,304 -1,347 -1,973
Income from Discontinued Operations 38Extraordinary Gains Changes in Acctg. Principles
Net Income (computed) 3,568 4,212 4,078 5,642 5,658Net Income (enter reported amount as a check) 3,568 4,212 4,078 5,642 5,658
Other Comprehensive Income Items 405 381 -167 456 1,294
Comprehensive Income 3,973 4,593 3,911 6,098 6,952
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STATEMENT OF CASH FLOWS DATA 2003 2004 2005 2006 2007
Net Income 3,568 4,212 4,078 5,642 5,658Add back Depreciation and Amortization Expenses 1,221 1,264 1,308 1,406 1,426Add back Stock-Based Compensation Expense 407 368 311 270 260Deferred Income Taxes -323 17 440 -510 118 -276 -297 -414 -442 -441 Decrease in Accounts Receivable -220 -130 -272 -330 -405 Decrease in Inventories -49 -100 -132 -186 -204 Decrease in Prepaid Expenses 23 -31 -56 -37 -16 Decrease in Other Current Assets (1)
Decrease in Other Current Assets (2)Increase in Accounts Payable -11 216 188 223 500Increase in Other Current Liabilities (1)
Increase in Other Current Liabilities (2)Increase in Other Non-Current Liabilities ( 182 -268 609 -295 128Increase in Other Non-Current Liabilities ( -171 -100 227 64 -107Other Addbacks to Net Income 621 491 464 544 535 -644 -588 -899 -265 -518Other Operating Cash Flows
Net CF from Operations 4,328 5,054 5,852 6,084 6,934
Proceeds from Sales of Property, Plant, and Equipmen 49 38 88 49 47 -1,345 -1,387 -1,736 -2,068 -2,430 Decrease in Marketable Securities -950 -969 -991 2,017 -383Investments Sold 46 52 3 37 27 -71 -64 -1,095 -547 -1,320Other Investment Transactions (1) 214 318 315Other Investment Transactions (2)
Net CF from Investing Activities -2,271 -2,330 -3,517 -194 -3,744Increase in Short-Term Borrowing 128 1,272 1,933 185 83 -115 -160 -85 -2,526 -478
Increase in Long-Term Borrowing 52 504 25 51 2,168 -641 -512 -177 -157 -579Issue of Capital StockProceeds from Stock Option Exercises 689 965 1,099 1,194 1,108 -1,945 -3,055 -3,031 -3,010 -4,312 -1,070 -1,329 -1,642 -1,854 -2,204Other Financing Transactions (1) 134 208Other Financing Transactions (2)
Net CF from Financing Activities -2,902 -2,315 -1,878 -5,983 -4,006Effects of exchange rate changes on cash 27 51 -21 28 75
Net Change in Cash -818 460 436 -65 -741Cash and Cash Equivalents, Beginning of Year 820 1,280 1,716 1,651Cash and Cash Equivalents, End of Year 1,280 1,716 1,651 910
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SUPPLEMENTAL DATA 2003 2004 2005 2006 2007
Statutory Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0%Average Tax Rate Implied from Income Statement Dat 28.5% 24.7% 36.1% 19.3% 25.9%After-tax Effects of Nonrecurring and Unusual Itemson Net Income -206 -112 0 0 0Total Deferred Tax Assets (from above) 0 0 0 0 0Deferred Tax Asset Valuation Allowance 438 564 532 624 695Allowance for Uncollectible Accounts Receivable 105 97 75 64 69Depreciation Expense 1,020 1,062 1,103 1,182 1,304Preferred Stock Dividends (total, if any) 3 3 3 1 2Common Shares Outstanding 1,705 1,679 1,656 1,638 1,605Earnings per Share (basic) 2.07 2.45 2.43 3.42 3.48Common Dividends per Share 0.63 0.79 0.99 1.13 1.37Market Price per Share at Fiscal Year End 46.47 51.94 55.80 60.18 75.67
FINANCIAL DATA CHECKSAssets - Liabilities - Equities 0 0 0 0 0Net Income (computed) - Net Income (reported) 0 0 0 0 0Cash Changes 0 0 0 0
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2008
2,064213
4,6832,5221,324
10,8063,883
22,552-10,889
732
6,252
2,658
35,994
2,8465,427
3690
145
8,7877,8587,017
226
23,888
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2008
43,251
-20,35122,900
-15,901
-64
6,93541
-329374
7,021-1,879
5,142
5,142
-3,793
1,349
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2008
5,1421,543
238573
-202
-549-345
-68
718
-180-367
1,002-506
6,999
98-2,446
1,282364
-1,925
-40
-2,667714
-269
3,719-649
620-4,726
-2,541107
-3,025-153
1,154910
2,064
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2008
35.0%26.8%
0
065770
1,4221
1,553
3.261.64
54.77
000
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Financial Statement Analysis Package (FSAP): Version 7.0Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th EditionBy James Wahlen, Steve Baginski and Mark Bradshaw
The FSAP User Guides appear in column J to the right.
Analyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
DATA CHECKSAssets - Liabilities - Equities 0 0 0 0 0
Net Income (computed) - Net Income (reported) 0 0 0 0 0Cash Changes 0 0 0 0In the computations below, a #DIV/0! message indicates that a ratio denominator is zero.
PROFITABILITY FACTORS:Year 2004 2005 2006 2007 2008
RETURN ON ASSETS (based on reported amounts): Profit Margin for ROA 14.8% 13.0% 16.5% 14.7% 12.4%x Asset Turnover 1.1 1.1 1.1 1.2 1.2
= Return on Assets 16.2% 14.2% 18.8% 18.0% 15.2%
RETURN ON ASSETS (excluding the effects of nonrecurring items): Profit Margin for ROA 15.1% 13.0% 16.5% 14.7% 12.4%x Asset Turnover 1.1 1.1 1.1 1.2 1.2= Return on Assets 16.6% 14.2% 18.8% 18.0% 15.2%
RETURN ON COMMON EQUITY (based on reported amounts): Profit Margin for ROCE 14.4% 12.5% 16.1% 14.3% 11.9%x Asset Turnover 1.1 1.1 1.1 1.2 1.2x Capital Structure Leverage 2.1 2.1 2.1 2.0 2.4= Return on Common Equity 33.1% 29.2% 37.9% 34.5% 34.8%
RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items): Profit Margin for ROCE 14.8% 12.5% 16.1% 14.3% 11.9%x Asset Turnover 1.1 1.1 1.1 1.2 1.2x Capital Structure Leverage 2.1 2.1 2.1 2.0 2.4= Return on Common Equity 33.9% 29.2% 37.9% 34.5% 34.8%
OPERATING PERFORMANCE:Gross Profit / Revenues 56.7% 56.5% 55.1% 54.3% 52.9%
Operating Profit / Revenues 18.0% 18.4% 18.5% 18.2% 16.0%Net Income / Revenues 14.4% 12.5% 16.1% 14.3% 11.9%Comprehensive Income / Revenues 15.7% 12.0% 17.4% 17.6% 3.1%
PERSISTENT OPERATING PERFORMANCE (excluding the effects of nonrecurring items):Persistent Operating Profit / Revenues 18.5% 18.4% 18.5% 18.2% 16.0%Persistent Net Income / Revenues 14.8% 12.5% 16.1% 14.3% 11.9%
GROWTH:
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Leverage Index 105.5% 106.7% 107.5% 106.4% 101.2%Tax Index 75.9% 63.9% 80.7% 74.1% 73.2%Net Profit Margin 14.4% 12.5% 16.1% 14.3% 11.9%
Comprehensive Income Performance:Comprehensive Income Index 109.0% 95.9% 108.1% 122.9% 26.2%Comprehensive Income Margin 15.7% 12.0% 17.4% 17.6% 3.1%
RISK FACTORS:Year 2004 2005 2006 2007 2008
LIQUIDITY:Current Ratio 1.28 1.11 1.33 1.31 1.23Quick Ratio 0.95 0.87 0.95 0.89 0.79
Operating Cash Flow to Current Liabilities 76.8% 72.4% 74.8% 94.9% 84.6%
ASSET TURNOVER:Accounts Receivable Turnover 10.0 10.4 10.1 9.7 9.5 Days Receivables Held 36 35 36 38 38Inventory Turnover 8.6 8.8 8.7 8.56 8.46 Days Inventory Held 43 42 42 42.66 43.15
Accounts Payable Turnover 7.6 8.1 8.2 7.9 7.6 Days Payables Held 48 45 45 46 48Net Working Capital Days 31 32 34 34 33Revenues / Average Net Fixed Assets 3.66 3.87 3.83 3.77 3.78
Cash Turnover 27.9 21.7 20.9 30.8 29.1 Days Sales Held in Cash 13.1 16.8 17.5 11.8 12.5
SOLVENCY:Total Liabilities / Total Assets 51.7% 55.1% 48.7% 50.2% 66.4%Total Liabilities / Shareholders' Equity 106.6% 122.0% 94.3% 100.4% 195.8%LT Debt / LT Capital 15.0% 13.9% 14.2% 19.5% 39.2%LT Debt / Shareholders' Equity 17.7% 16.2% 16.5% 24.3% 64.4%Operating Cash Flow to Total Liabilities 36.2% 36.6% 38.0% 43.4% 33.9%Interest Coverage Ratio (reported amounts) 34.4 25.9 30.2 35.1 22.3Interest Coverage ratio (recurring amounts) 35.1 25.9 30.2 35.1 22.3
RISK FACTORS:Bankruptcy Predictors:
Altman Z Score 6.35 5.86 7.29 7.30 5.27 Bankruptcy Probability 0.00% 0.00% 0.00% 0.00% 0.00%Earnings Manipulation Predictors:Beneish Earnings Manipulation Score -2.60 -2.69 -2.41 -2.49 -2.75 Earnings Manipulation Probability 0.46% 0.35% 0.80% 0.64% 0.30%
STOCK MARKET-BASED RATIOS:
Stock Returns 13.5% 9.3% 9.9% 28.0% -25.5%Price-Earnings Ratio (reported amounts) 21.20 22.96 17.60 21.74 16.80Price-Earnings Ratio (recurring amounts) 20.64 22.96 17.60 21.74 16.80Market Value to Book Value Ratio 6.4 6.5 6.4 7.0 7.0
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INCOME STATEMENT ITEMS AS A PERCENT OF REVENUES:Year 2004 2005 2006 2007 2008
Revenues 100.0% 100.0% 100.0% 100.0% 100.0% -43.3% -43.5% -44.9% -45.7% -47.1% Gross Profit 56.7% 56.5% 55.1% 54.3% 52.9% -37.7% -37.6% -36.2% -36.0% -36.8% 0.0% 0.0% 0.0% 0.0% 0.0% -0.5% -0.5% -0.5% -0.1% -0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Other Operating Income (1) 0.0% 0.0% 0.0% 0.0% 0.0%Other Operating Income (2) 0.0% 0.0% 0.0% 0.0% 0.0%
Non-Recurring Operating Gains 0.0% 0.0% 0.0% 0.0% 0.0% -0.5% 0.0% 0.0% 0.0% 0.0%
Operating Profit 18.0% 18.4% 18.5% 18.2% 16.0%Interest Income 0.3% 0.5% 0.5% 0.3% 0.1% -0.6% -0.8% -0.7% -0.6% -0.8%Income from Equity Affiliates 1.3% 1.5% 1.6% 1.4% 0.9%Other Income or Gains 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Income before Tax 19.0% 19.6% 19.9% 19.3% 16.2% -4.7% -7.1% -3.8% -5.0% -4.3% 0.0% 0.0% 0.0% 0.0% 0.0%
Income from Discontinued Operations 0.1% 0.0% 0.0% 0.0% 0.0%Extraordinary Gains 0.0% 0.0% 0.0% 0.0% 0.0%Changes in Acctg. Principles 0.0% 0.0% 0.0% 0.0% 0.0%Net Income (computed) 14.4% 12.5% 16.1% 14.3% 11.9%
Other Comprehensive Income Items 1.3% -0.5% 1.3% 3.3% -8.8%Comprehensive Income 15.7% 12.0% 17.4% 17.6% 3.1%
INCOME STATEMENT ITEMS: GROWTH RATESYear 2004 2005 2006 2007 2008
COMPOUND
GROWTH
YEAR TO YEAR GROWTH RATES: RATE
Revenues 8.5% 11.3% 7.9% 12.3% 9.6% 9.9% 8.4% 11.9% 11.2% 14.4% 12.8% 11.7% Gross Profit 8.6% 10.8% 5.4% 10.6% 6.8% 8.4% 8.7% 11.1% 3.7% 11.8% 11.9% 9.4% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 1.4% 2.0% 8.0% -64.2% 10.3% -15.1% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Other Operating Income (1) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Other Operating Income (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Non-Recurring Operating Gains #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! -27.2% -100.0% #DIV/0! #DIV/0! #DIV/0! -100.0% Operating Profit 10.0% 13.8% 8.7% 10.3% -3.3% 7.7%Interest Income 45.1% 114.9% 8.8% -27.7% -67.2% -4.3% 2.5% 53.3% -6.6% -6.3% 46.9% 15.1%Income from Equity Affiliates 17 6% 30 3% 11 7% 1 3% -33 2% 3 0%
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Other Comprehensive Income Items -5.9% -143.8% -373.1% 183.8% -393.1% -256.4%Comprehensive Income 15.6% -14.8% 55.9% 14.0% -80.6% -19.4%
COMMON SIZE BALANCE SHEET - AS A PERCENT OF TOTAL ASSETSYear 2004 2005 2006 2007 2008
Assets:Cash and Cash Equivalents 4.6% 5.4% 5.5% 2.6% 5.7%Marketable Securities 7.7% 10.0% 3.9% 4.5% 0.6%
Accounts Receivable - Net 10.7% 10.3% 12.4% 12.7% 13.0%Inventories 5.5% 5.3% 6.4% 6.6% 7.0%Prepaid Expenses and Other Current Assets 2.3% 1.9% 2.2% 2.9% 3.7%Deferred Tax Assets - Current 0.0% 0.0% 0.0% 0.0% 0.0%
Other Current Assets (1) 0.0% 0.0% 0.0% 0.0% 0.0%Other Current Assets (2) 0.0% 0.0% 0.0% 0.0% 0.0% Current Assets 30.9% 32.9% 30.5% 29.3% 30.0%Long Term Investments 11.7% 11.0% 12.3% 12.6% 10.8%Property, Plant & Equipment - at cost 56.9% 54.0% 63.7% 63.2% 62.7% -27.8% -26.7% -31.3% -30.8% -30.3%
Amortizable Intangible Assets (net) 2.1% 1.7% 2.1% 2.3% 2.0%Goodwill and Nonamortizable Intangibles 17.3% 16.3% 19.4% 18.5% 17.4%Deferred Tax Assets - Noncurrent 0.0% 0.0% 0.0% 0.0% 0.0%Other Non-Current Assets (1) 8.8% 10.7% 3.3% 4.9% 7.4%Other Non-Current Assets (2) 0.0% 0.0% 0.0% 0.0% 0.0%
Total Assets 100.0% 100.0% 100.0% 100.0% 100.0%
Liabilities and Equities:Accounts Payable - Trade 6.2% 5.7% 7.0% 7.4% 7.9%Current Accrued Liabilities 13.8% 13.1% 14.7% 14.6% 15.1%Notes Payable and Short Term Debt 3.2% 8.7% 0.9% 0.0% 1.0%Current Maturities of Long Term Debt 0.6% 0.5% 0.0% 0.0% 0.0%Deferred Tax Liabilities - Current 0.0% 0.0% 0.0% 0.0% 0.0%Income Taxes Payable 0.4% 1.7% 0.3% 0.4% 0.4%Other Current Liabilities (1) 0.0% 0.0% 0.0% 0.0% 0.0%Other Current Liabilities (2) 0.0% 0.0% 0.0% 0.0% 0.0% Current Liabilities 24.1% 29.6% 22.9% 22.4% 24.4%Long Term Debt 8.6% 7.3% 8.5% 12.1% 21.8%Long Term Accrued Liabilities 14.6% 13.6% 15.4% 13.8% 19.5%Deferred Tax Liabilities - Noncurrent 4.3% 4.5% 1.8% 1.9% 0.6%Other Non-Current Liabilities (1) 0.0% 0.0% 0.0% 0.0% 0.0%Other Non-Current Liabilities (2) 0.0% 0.0% 0.0% 0.0% 0.0% Total Liabilities 51.7% 55.1% 48.7% 50.2% 66.4%Minority Interest 0.0% 0.0% 0.0% 0.0% 0.0%Preferred Stock -0.2% -0.2% -0.3% -0.3% -0.3%
Common Stock + Paid in Capital 2.3% 2.0% 2.1% 1.4% 1.1%Retained Earnings 66.9% 66.6% 83.0% 81.4% 85.1%
Accum. Other Comprehensive Income -3.2% -3.3% -7.5% -2.7% -13.0%Other Equity Adjustments 0.0% 0.0% 0.0% 0.0% 0.0% -17.6% -20.1% -25.9% -30.0% -39.2%
Common Shareholders' Equity 48.5% 45.1% 51.6% 50.0% 33.9% Total Liabilities and Equities 100.0% 100.0% 100.0% 100.0% 100.0%
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Deferred Tax Assets - Current #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Other Current Assets (1) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Other Current Assets (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Current Assets 24.7% 21.0% -12.7% 11.2% 6.5% 9.3%Long Term Investments 12.5% 6.1% 5.9% 18.0% -10.8% 5.9%Property, Plant & Equipment - at cost 8.0% 7.6% 11.2% 14.9% 3.0% 8.9% 12.3% 8.8% 10.7% 13.8% 2.1% 9.5%
Amortizable Intangible Assets (net) -16.7% -11.4% 20.2% 25.0% -8.0% 0.4%Goodwill and Nonamortizable Intangibles 3.8% 6.9% 12.2% 10.5% -2.6% 6.0%Deferred Tax Assets - Noncurrent #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Other Non-Current Assets (1) 9.2% 37.5% -71.2% 71.6% 58.0% 3.2%Other Non-Current Assets (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Total Assets 10.5% 13.4% -5.7% 15.7% 3.9% 7.3%
Liabilities and Equities:Accounts Payable - Trade 5.7% 3.9% 16.8% 21.9% 11.1% 11.7%Current Accrued Liabilities 8.2% 7.9% 5.3% 14.7% 7.7% 8.7%Notes Payable and Short Term Debt 516.6% 207.2% -90.0% -100.0% #DIV/0! 20.5%Current Maturities of Long Term Debt -64.1% -10.6% -100.0% #DIV/0! #DIV/0! -100.0%Deferred Tax Liabilities - Current #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Income Taxes Payable -83.8% 451.5% -83.5% 67.8% -4.0% -25.0%Other Current Liabilities (1) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Other Current Liabilities (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Current Liabilities 5.3% 39.3% -27.1% 13.0% 13.3% 6.5%Long Term Debt 40.8% -3.5% 10.2% 64.8% 87.0% 35.8%
Long Term Accrued Liabilities 0.6% 5.5% 7.0% 3.6% 46.4% 11.5%Deferred Tax Liabilities - Noncurrent -3.6% 17.9% -63.2% 22.3% -65.0% -29.1%Other Non-Current Liabilities (1) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Other Non-Current Liabilities (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Total Liabilities 7.5% 20.8% -16.7% 19.4% 37.3% 12.2%Minority Interest #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!Preferred Stock 122.7% 40.8% 14.5% 15.2% 6.6% 34.5%
Common Stock + Paid in Capital 12.1% -0.6% -4.7% -21.8% -20.6% -8.0%Retained Earnings 17.3% 12.7% 17.6% 13.5% 8.7% 13.9%
Accum. Other Comprehensive Income -30.1% 18.8% 113.3% -57.6% 393.1% 29.9%Other Equity Adjustments #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 45.7% 29.8% 21.5% 33.9% 36.0% 33.1%Common Shareholders' Equity 14.1% 5.5% 7.9% 12.2% -29.6% 0.5% Total Liabilities and Equities 10.5% 13.4% -5.7% 15.7% 3.9% 7.3%
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RETURN ON ASSETS ANALYSIS (excluding the effects of non-recurring items)
Level 1 RETURN ON ASSETS2006 2007 2008
18.8% 18.0% 15.2%
Level 2 PROFIT MARGIN FOR ROA ASSET TURNOVER2006 2007 2008 2006 2007 2008
16.5% 14.7% 12.4% 1.1 1.2 1.2
Level 3 2006 2007 2008 2006 2007 2008 Turnovers:
Revenues 100.0% 100.0% 100.0% 10.1 9.7 9.5 Receivables -44.9% -45.7% -47.1% 8.7 8.6 8.5 Inventory
Gross Profit 55.1% 54.3% 52.9% 3.8 3.8 3.8 Fixed Assets -36.2% -36.0% -36.8%
Operating Profit 18.5% 18.2% 16.0% Income before Tax 19.9% 19.3% 16.2%
-3.8% -5.0% -4.3%Profit Margin for ROA* 16.5% 14.7% 12.4%*Amounts do not sum.
RETURN ON COMMON SHAREHOLDERS' EQUITY ANALYSIS (excluding the effects of non-recurring items)
RETURN ON COMMON SHAREHOLDERS' EQUITY2006 2007 2008
37.9% 34.5% 34.8%
2006 2007 2008PROFIT MARGIN FOR ROCE 16.1% 14.3% 11.9%
ASSET TURNOVER 1.1 1.2 1.2
CAPITAL STRUCTURE LEVERAGE 2.1 2.0 2.4
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Financial Statement Analysis Package (FSAP): Version 7.0Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th EditionBy James Wahlen, Steve Baginski, and Mark Bradshaw
The FSAP User Guides appear in column L to the right.
FSAP OUTPUT: FINANCIAL STATEMENT FORECASTSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
Row Format: Row Format:Actual Amounts Forecast Amounts Year +6 and beyond:Common Size Percentage Forecast assumption Long-Run Growth Rate: 3.0%Rate of Change Percentage Forecast assumption explanation Long-Run Growth Factor: 103.0%
Actuals ForecastsYear 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6
INCOME STATEMENTRevenues 35,137 39,474 43,251 47,191 51,562 57,502 61,820 67,839 69,875common size 100.0% 100.0% 100.0% 9.1% 9.3% 11.5% 7.5% 9.7%
rate of change 12.3% 9.6% See Forecast Development worksheet for details of revenues forecasts. -15,762 -18,038 -20,351 -22,321 -24,492 -27,429 -29,612 -32,563 -33,540
common size -44.9% -45.7% -47.1% -47.3% -47.5% -47.7% -47.9% -48.0%rate of change 14.4% 12.8%Assume slowly increasing cost of goods sold as a percent of sales.
Gross Profit 19,375 21,436 22,900 24,870 27,070 30,074 32,208 35,277 36,335common size 55.1% 54.3% 52.9% 52.7% 52.5% 52.3% 52.1% 52.0% 52.0%
rate of change 10.6% 6.8% 8.6% 8.8% 11.1% 7.1% 9.5% 3.0%
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-12,711 -14,208 -15,901 -16,517 -18,047 -20,126 -21,637 -23,744 -24,456common size -36.2% -36.0% -36.8% -35.0% -35.0% -35.0% -35.0% -35.0%
rate of change 11.8% 11.9%Assume steady SG&A expense as a percent of sales.
0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions. -162 -58 -64 -64 -63 -62 -60 -56 -58
common size -0.5% -0.1% -0.1% -64.0 -63.0 -62.0 -60.0 -56.0rate of change -64.2% 10.3%Amounts based on PepsiCo disclosures in Note 4.
0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions. 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%rate of change #DIV/0! #DIV/0! Explain assumptions.
Other Operating Income (1) 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions.Other Operating Income (2) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%rate of change #DIV/0! #DIV/0! Explain assumptions.
Non-Recurring Operating Gains 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions Operating Profit 6,502 7,170 6,935 8,289 8,960 9,886 10,511 11,477 11,821
common size 18.5% 18.2% 16.0% 17.6% 17.4% 17.2% 17.0% 16.9% 16.9%rate of change 10.3% -3.3% 19.5% 8.1% 10.3% 6.3% 9.2% 3.0%
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Interest Income 173 125 41 73 81 90 98 107 110common size 0.5% 0.3% 0.1% 3.0% 3.0% 3.0% 3.0% 3.0%
rate of change -27.7% -67.2% Interest rate earned on average balance in cash and marketable securiti
-239 -224 -329 -493 -531 -579 -626 -677 -697common size -0.7% -0.6% -0.8% -5.8% -5.8% -5.8% -5.8% -5.8%
rate of change -6.3% 46.9% Interest rate paid on average balance in financial liabilities.Income from Equity Affiliates 553 560 374 480 509 539 572 606 624
common size 1.6% 1.4% 0.9% 12.0% 12.0% 12.0% 12.0% 12.0%rate of change 1.3% -33.2%Assume expected return of 12% on investments in noncontrolled affilate
Other Income or Gains 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0rate of change #DIV/0! #DIV/0! Explain assumptions
Income before Tax 6,989 7,631 7,021 8,348 9,019 9,935 10,555 11,513 11,858
common size 19.9% 19.3% 16.2% 17.7% 17.5% 17.3% 17.1% 17.0% 17.0%rate of change 9.2% -8.0% 18.9% 8.0% 10.2% 6.2% 9.1% 3.0%
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FSAP OUTPUT: FINANCIAL STATEMENT FORECASTSAnalyst Name: Wahlen, Baginski & Bradshaw
Company Name: PepsiCo
Row Format: Row Format:Actual Amounts Forecast Amounts Year +6 and beyond:Common Size Percent Forecast assumption Long-Run Growth Rate: 3.0%Rate of Change Percent Forecast assumption explanation Long-Run Growth Factor: 103.0%
Actuals Forecasts2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6
BALANCE SHEETASSETS:
Cash and Cash Equivalents 1,651 910 2,064 1,551 1,695 1,890 2,032 2,230 2,297common size 5.5% 2.6% 5.7% 12.0 12.0 12.0 12.0 12.0
rate of change -44.9% 126.8%Assume ending cash balances equal to 12 days sales.Marketable Securities 1,171 1,571 213 1,034 1,130 1,260 1,355 1,487 1,531
common size 3.9% 4.5% 0.6% 8.0 8.0 8.0 8.0 8.0rate of change 34.2% -86.4%Assume ending balances equal to 8 days sales.
Accounts Receivable - Net 3,725 4,389 4,683 5,143 5,593 6,380 6,492 7,633 7,862common size 12.4% 12.7% 13.0% 38.0 38.0 38.0 38.0 38.0
rate of change 17.8% 6.7%Assume 38 days to collect sales in accounts receivable.Inventories 1,926 2,290 2,522 2,730 3,033 3,421 3,546 4,116 4,239
common size 6.4% 6.6% 7.0% 8.5 8.5 8.5 8.5 8.5rate of change 18.9% 10.1%Assume average inventory turnover of roughly 8.5 times per year.
Prepaid Expenses and Other Current Assets 657 991 1,324 1,445 1,578 1,760 1,892 2,077 2,139common size 2.2% 2.9% 3.7% 9.1% 9.3% 11.5% 7.5% 9.7%
rate of change 50.8% 33.6%Assume growth with sales.Deferred Tax Assets - Current 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0% 0% 0% 0% 0%rate of change #DIV/0! #DIV/0! Assume steady growth.
Other Current Assets (1) 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0% 0% 0% 0% 0%
rate of change #DIV/0! #DIV/0! Assume steady growth.
Other Current Assets (2) 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0% 0% 0% 0% 0%
rate of change #DIV/0! #DIV/0! Assume steady growth.Current Assets 9,130 10,151 10,806 11,904 13,029 14,712 15,318 17,543 18,069
common size 30.5% 29.3% 30.0% 30.9% 31.3% 32.1% 31.5% 32.8% 32.8%rate of change 11.2% 6.5% 10.2% 9.5% 12.9% 4.1% 14.5% 3.0%
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Long Term Investments 3,690 4,354 3,883 4,116 4,363 4,625 4,902 5,196 5,352common size 12.3% 12.6% 10.8% 6% 6% 6% 6% 6%
rate of change 18.0% -10.8%Assume steady growth.
Property, Plant & Equipment - at cost 19,058 21,896 22,552 24,723 27,662 30,939 34,463 38,330 39,480common size 63.7% 63.2% 62.7%
rate of change 14.9% 3.0% PP&E assumptions - see schedule in forecast development -9,371 -10,668 -10,889 -12,471 -14,241 -16,220 -18,426 -20,878 -21,504
common size -31.3% -30.8% -30.3%rate of change 13.8% 2.1% See depreciation schedule in forecast development worksheet.
Amortizable Intangible Assets (net) 637 796 732 668 605 543 483 427 440common size 2.1% 2.3% 2.0% -64.0 -63.0 -62.0 -60.0 -56.0
rate of change 25.0% -8.0%Assume amortization per PepsiCo disclosures in Note 4; assume no neGoodwill and Nonamortizable Intangibles 5,806 6,417 6,252 6,822 7,453 8,312 8,936 9,806 10,100
common size 19.4% 18.5% 17.4% 9.1% 9.3% 11.5% 7.5% 9.7%rate of change 10.5% -2.6%Assume growth with sales.
Deferred Tax Assets - Noncurrent 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume steady state growth.Other Non-Current Assets (1) 980 1,682 2,658 2,738 2,820 2,904 2,992 3,081 3,174
common size 3.3% 4.9% 7.4% 3.0% 3.0% 3.0% 3.0% 3.0%rate of change 71.6% 58.0%Assume steady growth.
Other Non-Current Assets (2) 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume steady state growth.
Total Assets 29,930 34,628 35,994 38,499 41,692 45,815 48,669 53,506 55,111common size 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
rate of change 15.7% 3.9% 7.0% 8.3% 9.9% 6.2% 9.9% 3.0%
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LIABILITIES:Accounts Payable - Trade 2,102 2,562 2,846 3,080 3,442 3,875 3,947 4,768 4,911
common size 7.0% 7.4% 7.9% 48.0 48.0 48.0 48.0 48.0
rate of change 21.9% 11.1%Assume a steady payment period consistent with recent years.Current Accrued Liabilities 4,394 5,040 5,427 5,921 6,470 7,215 7,757 8,512 8,768common size 14.7% 14.6% 15.1% 9.1% 9.3% 11.5% 7.5% 9.7%
rate of change 14.7% 7.7%Assume growth with SG&A expenses, which grow with sales.Notes Payable and Short Term Debt 274 0 369 385 417 458 487 535 551
common size 0.9% 0.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%rate of change -100.0% #DIV/0! Assume 1.0 percent of total assets.
Current Maturities of Long Term Debt 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Current maturities of long-term debt per long-term debt note.Deferred Tax Liabilities - Current 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%rate of change #DIV/0! #DIV/0! Assume steady state growth.
Income Taxes Payable 90 151 145 154 167 183 195 214 220common size 0.3% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%
rate of change 67.8% -4.0%Assume a steady percentage of total assets.Other Current Liabilities (1) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%rate of change #DIV/0! #DIV/0! Assume steady state growth.
Other Current Liabilities (2) 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume steady state growth. Current Liabilities 6,860 7,753 8,787 9,540 10,495 11,731 12,385 14,029 14,450
common size 22.9% 22.4% 24.4% 24.8% 25.2% 25.6% 25.4% 26.2% 26.2%rate of change 13.0% 13.3% 8.6% 10.0% 11.8% 5.6% 13.3% 3.0%
Long Term Debt 2,550 4,203 7,858 8,405 9,102 10,002 10,625 11,681 12,031common size 8.5% 12.1% 21.8% 21.8% 21.8% 21.8% 21.8% 21.8%
rate of change 64.8% 87.0%Assume steady percent of total assets.Long Term Accrued Liabilities 4,624 4,792 7,017 7,656 8,365 9,329 10,030 11,006 11,336
common size 15.4% 13.8% 19.5% 9.1% 9.3% 11.5% 7.5% 9.7%rate of change 3.6% 46.4%Assume growth with SG&A expenses, which grow with sales.
Deferred Tax Liabilities - Noncurrent 528 646 226 242 262 288 306 336 346common size 1.8% 1.9% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6%
rate of change 22.3% -65.0%Assume steady percent of total assets.Other Non-Current Liabilities (1) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%rate of change #DIV/0! #DIV/0! Assume steady state growth.
Other Non-Current Liabilities (2) 0 0 0 0 0 0 0 0 0common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume steady state growth. Total Liabilities 14,562 17,394 23,888 25,843 28,224 31,350 33,345 37,052 38,164
common size 48.7% 50.2% 66.4% 67.1% 67.7% 68.4% 68.5% 69.2% 69.2%
rate of change 19.4% 37.3% 8.2% 9.2% 11.1% 6.4% 11.1% 3.0%
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SHAREHOLDERS' EQUITYMinority Interest 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0rate of change
#DIV/0! #DIV/0! Minority interest assumptionsPreferred Stock -79 -91 -97 0 0 0 0 0 0common size -0.3% -0.3% -0.3% 0.0 0.0 0.0 0.0 0.0
rate of change 15.2% 6.6% Preferred stock assumptions
Common Stock + Paid in Capital 614 480 381 408 441 485 515 566 583common size 2.1% 1.4% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1%
rate of change -21.8% -20.6%Assume steady percent of total assets.Retained Earnings 24,837 28,184 30,638 33,565 36,842 40,296 43,624 47,203 48,479
common size 83.0% 81.4% 85.1%rate of change 13.5% 8.7%Add net income and subtract dividends; see dividends forecast box belo
Accum. Other Comprehensive Income -2,246 -952 -4,694 -4,694 -4,694 -4,694 -4,694 -4,694 -4,694common size -7.5% -2.7% -13.0% 0.0 0.0 0.0 0.0 0.0
rate of change -57.6% 393.1%Add accumulated other comprehensive income items from income stateOther Equity Adjustments 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0rate of change #DIV/0! #DIV/0! Other equity adjustments assumptions
-7,758 -10,387 -14,122 -16,622 -19,122 -21,622 -24,122 -26,622 -27,421common size -25.9% -30.0% -39.2% -2500 -2500 -2500 -2500 -2500
rate of change 33.9% 36.0% Treasury stock repurchases, net of treasury stock reissues.Common Shareholders' Equity 15,447 17,325 12,203.0 12,656.1 13,467.4 14,465.3 15,323.5 16,453.6 16,947
common size 51.6% 50.0% 33.9% 32.9% 32.3% 31.6% 31.5% 30.8% 30.8%rate of change 12.2% -29.6% 3.7% 6.4% 7.4% 5.9% 7.4% 3.0%
Total Liabilities and Equities 29,930 34,628 35,994 38,499 41,692 45,815 48,669 53,506 55,111
common size 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%rate of change 15.7% 3.9% 7.0% 8.3% 9.9% 6.2% 9.9% 3.0%
Check figures: Balance Sheet A=L+OE? 0 0 0 0 0 0 0 0 0Initial adjustment needed to balance the balance sheet:
-444 -269 -517 -762 -985 -3,426
Account adjusted: DividendsDividends forecasts:
Common Dividends: 2,571 3,055 3,301 3,636 3,863 3,97950.0% 50.0% 50.0% 50.0% 50.0%
Assume dividend payout of lagged net income from continuing operatioPreferred Dividends: 169 0 0 0 0 0
169.0 0.0 0.0 0.0 0.0Enter preferred stock dividend payments, if any.
Implied Dividends: 444 269 517 762 985 3,426Implied dividend amount to balance the balance sheet.
Total Dividends: 3,184 3,325 3,818 4,398 4,848 7,405
Total dividend forecast amounts.
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FSAP OUTPUT: FINANCIAL STATEMENT FORECASTS
Analyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
Actuals ForecastsIMPLIED STATEMENT OF CASH FLOWS 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6
Net Income 5,658 5,142 6,111 6,602 7,273 7,726 8,427 8,680Add back Depreciation Expense (net) 1,297 221 1,582 1,770 1,980 2,205 2,453 626Add back Amortization Expense (net) 58 64 64 63 62 60 56 58 Decrease in Receivables - Net -664 -294 -460 -450 -787 -112 -1,141 -229
Decrease in Inventories -364 -232 -208 -303 -388 -125 -569 -123 Decrease in Prepaid Expenses -334 -333 -121 -134 -182 -132 -184 -62 Decrease in Other Curr. Assets (1) 0 0 0 0 0 0 0 0 Decrease in Other Curr. Assets (2) 0 0 0 0 0 0 0 0Increase in Accounts Payable - Trade 460 284 234 362 433 72 821 143Increase in Current Accrued Liabilities 646 387 494 548 745 542 755 255Increase in Income Taxes Payable 61 -6 9 13 16 11 19 6Increase in Other Current Liabilities (1) 0 0 0 0 0 0 0 0Increase in Other Current Liabilities (2) 0 0 0 0 0 0 0 0Net Change in Deferred Tax Assets and Liabilities 118 -420 16 20 26 18 30 10Increase in Long-Term Accrued Liabilities 168 2,225 639 709 964 700 977 330
Increase in Other Non-Current Liabilities (1) 0 0 0 0 0 0 0 0Increase in Other Non-Current Liabilities (2) 0 0 0 0 0 0 0 0 Net Cash Flows from Operations 7,104 7,038 8,360 9,201 10,142 10,966 11,644 9,694 Decrease in Prop., Plant, & Equip. at cost -2,838 -656 -2,171 -2,939 -3,278 -3,524 -3,867 -1,150 Decrease in Marketable Securities -400 1,358 -821 -96 -130 -95 -132 -45 Decrease in Investment Securities -664 471 -233 -247 -262 -277 -294 -156 Decrease in Amortizable Intangible Assets (net) -217 0 0 0 0 0 0 -70 Decrease in Goodwill and Nonamort. Intang. -611 165 -570 -632 -859 -624 -870 -294 Decrease in Other Non-Current Assets (1) -702 -976 -80 -82 -85 -87 -90 -92 Decrease in Other Non-Current Assets (2) 0 0 0 0 0 0 0 0 Net Cash Flows from Investing Activities -5,432 362 -3,874 -3,996 -4,613 -4,607 -5,253 -1,808
Increase in Short-Term Debt -274 369 16 32 41 29 48 16Increase in Long-Term Debt 1,653 3,655 547 697 900 623 1,056 350Increase in Minority Interest and Preferred Stock -12 -6 97 0 0 0 0 0Increase in Common Stock + Paid in Capital -134 -99 27 34 44 30 51 17Increase in Accum. OCI and Other Equity Adjs. 1,294 -3,742 0 0 0 0 0 0Increase in Treasury Stock -2,629 -3,735 -2,500 -2,500 -2,500 -2,500 -2,500 -799Dividends -2,311 -2,688 -3,184 -3,325 -3,818 -4,398 -4,848 -7,405 Net Cash Flows from Financing Activities -2,413 -6,246 -4,998 -5,062 -5,333 -6,217 -6,193 -7,820 Net Change in Cash -741 1,154 -513 144 195 142 198 67
Check Figure:
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Net change in cash - Change in cash balance 0 0 0 0 0 0 0 0
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FSAP OUTPUT: FINANCIAL STATEMENT FORECASTSAnalyst Name: Wahlen, Baginski & Bradshaw
Company Name: PepsiCo
Actuals Forecasts2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6
FORECAST VALIDITY CHECK DATA:GROWTH
Revenue Growth Rates: 7.9% 12.3% 9.6% 9.1% 9.3% 11.5% 7.5% 9.7% 3.0%Net Income Growth Rates: 38.4% 0.3% -9.1% 18.8% 8.0% 10.2% 6.2% 9.1% 3.0%Total Asset Growth Rates -5.7% 15.7% 3.9% 7.0% 8.3% 9.9% 6.2% 9.9% 3.0%
RETURN ON ASSETS (based on reported amounts): Profit Margin for ROA 16.5% 14.7% 12.4% 13.7% 13.6% 13.4% 13.2% 13.2% 13.2%x Asset Turnover 1.1 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.3
= Return on Assets 18.8% 18.0% 15.2% 17.4% 17.4% 17.6% 17.3% 17.5% 16.9%
RETURN ON ASSETS (excluding the effects of nonrecurring items): Profit Margin for ROA 16.5% 14.7% 12.4% 13.7% 13.6% 13.4% 13.2% 13.2% 13.2%
x Asset Turnover 1.1 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.3= Return on Assets 18.8% 18.0% 15.2% 17.4% 17.4% 17.6% 17.3% 17.5% 16.9%
RETURN ON COMMON EQUITY (based on reported amounts):
Profit Margin for ROCE 16.1% 14.3% 11.9% 12.6% 12.8% 12.6% 12.5% 12.4% 12.4%x Asset Turnover 1.1 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.3x Capital Structure Leverage 2.1 2.0 2.4 3.0 3.1 3.1 3.2 3.2 3.3= Return on Common Equity 37.9% 34.5% 34.8% 47.8% 50.5% 52.1% 51.9% 53.0% 52.0%
RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items): Profit Margin for ROCE 16.1% 14.3% 11.9% 12.6% 12.8% 12.6% 12.5% 12.4% 12.4%
x Asset Turnover 1.1 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.3x Capital Structure Leverage 2.1 2.0 2.4 3.0 3.1 3.1 3.2 3.2 3.3= Return on Common Equity 37.9% 34.5% 34.8% 47.8% 50.5% 52.1% 51.9% 53.0% 52.0%
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OPERATING PERFORMANCE:Gross Profit / Revenues 55.1% 54.3% 52.9% 52.7% 52.5% 52.3% 52.1% 52.0% 52.0%
Operating Profit Before Taxes / Revenues 18.5% 18.2% 16.0% 17.6% 17.4% 17.2% 17.0% 16.9% 16.9%
ASSET TURNOVER:Revenues / Avg. Accounts Receivable 10.1 9.7 9.5 9.6 9.6 9.6 9.6 9.6 9.0
COGS / Average Inventory 8.7 8.6 8.5 8.5 8.5 8.5 8.5 8.5 8.0Revenues / Average Fixed Assets 3.8 3.8 3.8 3.9 4.0 4.1 4.0 4.1 3.9
LIQUIDITY:Current Ratio 1.3 1.3 1.2 1.2 1.2 1.3 1.2 1.3 1.3
Quick Ratio 1.0 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.8
SOLVENCY:Total Liabilities / Total Assets 48.7% 50.2% 66.4% 67.1% 67.7% 68.4% 68.5% 69.2% 69.2%Total Liabilities / Total Equity 94.3% 100.4% 195.8% 204.2% 209.6% 216.7% 217.6% 225.2% 225.2%
Interest Coverage Ratio 30.2 35.1 22.3 17.9 18.0 18.1 17.9 18.0 18.0
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Financial Statement Analysis Package (FSAP): Version 7.0Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition FSAP User Guides:By James Wahlen, Steve Baginski and Mark Bradshaw
The FSAP user should only ent
The FSAP User Guides appear in column K to the right. Forecast Development:This Forecast Development sprea
- build detailed sales revenue for - build forecasts of capital expen
- build detailed forecasts of otheAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
It is not necessary to use this sprespreadsheet. I f you use this spreforecast amounts to the appropria
Sales Revenue Forecast Development
Actuals ForecastsYear 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
Revenues 35,137 39,474 43,251 47,191 51,562 57,502 61,820 67,839 This sales revenue forecast develrate of change 12.3% 9.6% 9.1% 9.3% 11.5% 7.5% 9.7%
10.9% Sales growth rate assumptions.
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Sales Forecasts for PepsiCo:Year 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
Sales Forecasts Combined by Segments:
Frito-Lay North America 10,844 11,586 12,507 13,269 14,077 15,221 15,843 16,808Quaker Foods North America 1,769 1,860 1,902 1,979 2,058 2,183 2,228 2,317Latin America Foods 3,972 4,872 5,895 6,660 7,524 8,663 9,602 10,848PepsiCo Americas Foods 16,585 18,318 20,304 21,907 23,659 26,067 27,673 29,974
PepsiCo Americas Beverages 10,362 11,090 10,937 11,603 12,310 13,310 13,855 14,698
United Kingdom & Europe 4,750 5,492 6,435 7,168 7,984 9,063 9,905 11,032
Middle East, Africa & Asia 3,440 4,574 5,575 6,513 7,610 9,061 10,387 12,135PepsiCo International 8,190 10,066 12,010 13,681 15,593 18,125 20,291 23,167
PepsiCo Total Net Revenues 35,137 39,474 43,251 47,191 51,562 57,502 61,820 67,839growth rates 12.3% 9.6% 9.1% 9.3% 11.5% 7.5% 9.7%
PepsiCo Americas Foods 16,585 18,318 20,304 21,907 23,659 26,067 27,673 29,974growth rates 10.4% 10.8% 7.9% 8.0% 10.2% 6.2% 8.3%
compound growth rate 10.6%
Frito-Lay North America 10,844 11,586 12,507 13,269 14,077 15,221 15,843 16,808growth rates 6.8% 7.9% 6.1% 6.1% 8.1% 4.1% 6.1%
compound growth rate 7.4%compound growth in volume 1.5% 3.0% 3.0% 3.0% 3.0% 3.0%compound growth in prices 5.6% 3.0% 3.0% 3.0% 3.0% 3.0%
foreign exchange and acquisitions 0.2% 0.0% 0.0% 0.0% 0.0% 0.0%53rd week effect 0.0% 0.0% 1.9% -1.9% 0.0%
Quaker Foods North America 1,769 1,860 1,902 1,979 2,058 2,183 2,228 2,317growth rates 5.1% 2.3% 4.0% 4.0% 6.0% 2.1% 4.0%
compound growth rate 3.7%compound growth in volume 0.2% 1.0% 1.0% 1.0% 1.0% 1.0%compound growth in prices 2.9% 3.0% 3.0% 3.0% 3.0% 3.0%
foreign exchange and acquisitions 0.5% 0.0% 0.0% 0.0% 0.0% 0.0%53rd week effect 0.0% 0.0% 1.9% -1.9% 0.0%
Latin America Foods 3,972 4,872 5,895 6,660 7,524 8,663 9,602 10,848growth rates 22.7% 21.0% 13.0% 13.0% 15.1% 10.8% 13.0%
compound growth rate 21.8%compound growth in volume 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%compound growth in prices 7.0% 5.0% 5.0% 5.0% 5.0% 5.0%
foreign exchange and acquisitions 11.1% 5.0% 5.0% 5.0% 5.0% 5.0%53rd week effect 0.0% 0.0% 1.9% -1.9% 0.0%
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PepsiCo Americas Beverages 10,362 11,090 10,937 11,603 12,310 13,310 13,855 14,698growth rates 7.0% -1.4% 6.1% 6.1% 8.1% 4.1% 6.1%
compound growth rate 2.7%
compound growth in volume -2.8% 3.0% 3.0% 3.0% 3.0% 3.0%compound growth in prices 4.4% 3.0% 3.0% 3.0% 3.0% 3.0%
foreign exchange and acquisitions 1.2% 0.0% 0.0% 0.0% 0.0% 0.0%53rd week effect 0.0% 0.0% 1.9% -1.9% 0.0%
PepsiCo International 8,190 10,066 12,010 13,681 15,593 18,125 20,291 23,167growth rates 22.9% 19.3% 13.9% 14.0% 16.2% 12.0% 14.2%
compound growth rate 21.1%
United Kingdom & Europe 4,750 5,492 6,435 7,168 7,984 9,063 9,905 11,032
growth rates 15.6% 17.2% 11.4% 11.4% 13.5% 9.3% 11.4%compound growth rate 16.4%
compound growth in volume 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%compound growth in prices 2.1% 2.0% 2.0% 2.0% 2.0% 2.0%
foreign exchange and acquisitions 9.6% 5.0% 5.0% 5.0% 5.0% 5.0%53rd week effect 0.0% 0.0% 1.9% -1.9% 0.0%
Middle East, Africa & Asia 3,440 4,574 5,575 6,513 7,610 9,061 10,387 12,135growth rates 33.0% 21.9% 16.8% 16.8% 19.1% 14.6% 16.8%
compound growth rate 27.3%compound growth in volume 12.5% 8.0% 8.0% 8.0% 8.0% 8.0%compound growth in prices 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
foreign exchange and acquisitions 9.8% 5.0% 5.0% 5.0% 5.0% 5.0%53rd week effect 0.0% 0.0% 1.9% -1.9% 0.0%
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Forecast Development: Capital Expenditures, Property, Plant and Equipment, and Depreciation
Capital Expenditures: CAPEX Forecasts: The Capital Expenditures schedul2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
CAPEX:PP&E Acquired 2,068 2,430 2,446
PP&E Sold -49 -47 -98Net CAPEX 2,019 2,383 2,348 2,171 2,939 3,278 3,524 3,867
Net CAPEX as a percent of:Gross PP&E 10.6% 10.9% 10.4%
Revenues 5.7% 6.0% 5.4% 4.6% 5.7% 5.7% 5.7% 5.7%5.7%
Property, Plant and Equipment and Depreciation Property, Plant and Equipment and Depreciation Forecasts: The Property, Plant & EquipmentFSAP automatically links the proj
PP&E at cost: 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5Beg. balance at cost: 22,552 24,723 27,662 30,939 34,463Add: CAPEX forecasts from above: 2,171 2,939 3,278 3,524 3,867End balance at cost: 19,058 21,896 22,552 24,723 27,662 30,939 34,463 38,330
Accumulated Depreciation:Beg. Balance: -10,889 -12,471 -14,241 -16,220 -18,426Subtract: Depreciation expense forecasts from below: -1,582 -1,770 -1,980 -2,205 -2,453End Balance: -9,371 -10,668 -10,889 -12,471 -14,241 -16,220 -18,426 -20,878
PP&E - net 9,687 11,228 11,663 12,252 13,421 14,719 16,038 17,452
Depreciation Expense Forecast Development: Depreciation expense forecast on existing PP&E:Existing PP&E at cost: 22,552 1,443 1,443 1,443 1,443 1,443 This computation shows deprecia
Remaining balance to be depreciated. 11,663 10,220 8,777 7,334 5,891 4,448 This computation shows the amo
PP&E Purchases: Depreciation expense forecasts on new PP&E:
Capex Year +1 2,171 139 139 139 139 139 FSAP automatically computes a nCapex Year +2 2,939 188 188 188 188Capex Year +3 3,278 210 210 210Capex Year +4 3,524 225 225Capex Year +5 3,867 247
Total Depreciation Expense 1,582 1,770 1,980 2,205 2,453
Depreciation methods: 2006 2007 2008
PPE at Cost 19,058 21,896 22,552 FSAP automatically estimates the
Avg Depreciable PPE 20,477 22,224
Depreciation Expense 1,182 1,304 1,422Implied Avg. Useful Life in Years 15.7 15.6Useful Life Forecast Assumption: 15.6
(in years)
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e permits the FSAP user to build detailed forecasts of future capital expenditures as a percent of future revenues, gross PP&E or any other reasonable basis for these forecast assumptions.
and Depreciation schedule automatically computes for the FSAP detailed forecasts of future PP&E based on exisitng PP&E plus projected future capital expenditures. The Depreciation expense schedule acted amounts for gross PP&E, accumulated depreciation, depreciation expense, and capital expenditures into the financial statements in the Forecasts worksheet.
ion expense based on the exisiting depreciable PP&E at the start of the forecast period. The computation assumes straight line depreciation methods, zero salvage value, and the estimated useful life comnt of gross PP&E still to be depreciated. Once this amount falls to zero, depreciation is complete.The FSAP user should be sure that these amounts are not negative.
ew depreciation schedule for each year's capital expenditures, which are included in PP&E. These computations assume straight line depreciation methods and zero salvage value. The computations use t
estimated useful life for depreciation purposes by dividing the average amount of gross depreciable PP&E by depreciation expense. This estimate assume straight line depreciation and zero salvage valu
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ious soruces of revenue.
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utomatically computes future depreciation expense based on exisitng depreciable PP&E future capital expenditures. The expected useful life for depreciation purposes is computed below.
puted below. .
he extimated useful life as computed below.
.
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Financial Statement Analysis Package (FSAP): Version 7.0Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition FSAP User GBy James Wahlen, Steve Baginski and Mark Bradshaw
The FSAP us
The FSAP User Guides appear in column L to the right. A Comment oThe FSAP us
DATA CHECKS - Estimated Value per ShareDividend Based Valuation 83.03$ FSAP automaFree Cash Flow Valuation 83.03$ FSAP automaResidual Income Valuation 83.03$ FSAP automaResidual Income Market-to-Book Valuation 83.03$ FSAP automaFree Cash Flow for All Debt and Equity Valuation 83.99$ FSAP automaCheck: All Estimated Value per Share amounts should be the same, with the possible exception of the share value from the Free Cash Flow for All Debt and Equity model. Se
FSAP OUTPUT: VALUATION MODELSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
VALUATION PARAMETER ASSUMPTIONSMarket Value
Current share price 54.77$ FSAP uses thNumber of shares outstanding 1,553.0 FSAP uses th
Current market value 85,058$ FSAP comput
Long-run growth assumption used in forecasts 3.0% Long Run GrLong-run growth assumption used in valuation. 3.0% Enter the long
(Both long-run growth assumptions should be the same.)
COST OF EQUITY CAPITAL: Cost of EquitEquity risk factor (market beta) 0.75 Enter the marRisk free rate 4.0% Enter a risk-frMarket risk premium 6.0% Enter the expRequired rate of return on common equity: 8.50% Using the abo
COST OF DEBT CAPITAL Cost of DebtDebt capital 8,227$ FSAP uses thCost of debt capital, before tax 5.8% FSAP uses thEffective tax rate -26.8% FSAP uses thAfter-tax cost of debt capital 4.25% FSAP uses th
COST OF PREFERRED STOCK Cost of PrefePreferred stock capital -$ FSAP uses thPreferred dividends -$ FSAP uses thImplied yield 0.00% FSAP uses th
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WEIGHTED AVERAGE COST OF CAPITAL Weighted AvWeight of equity in capital structure 0.912 FSAP computWeight of debt in capital structure 0.088 FSAP comput
Weight of preferred in capital structure 0.00 FSAP computWeighted average cost of capital 8.12% FSAP uses th
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FSAP OUTPUT: VALUATION MODELSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
Continuing1 2 3 4 5 Value Dividends-Ba
Dividends-Based Valuation Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 11 de
Dividends Paid to Common Shareholders 3,015.3 3,324.5 3,818.5 4,398.5 4,848.3 FSAP uses imLess: Common Stock Issues -26.5 -33.8 -43.7 -30.2 -51.2 FSAP uses thPlus: Common Stock Repurchases 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 FSAP uses thDividends to Common Equity 5,488.8 5,790.7 6,274.8 6,868.3 7,297.1 8,186.50 These figures
Present Value Factors 0.922 0.849 0.783 0.722 0.665 These presentPV Net Dividends 5,058.8 4,919.0 4,912.6 4,956.0 4,852.9
Sum of PV Net Dividends 24,699.3 The sum of thPV of Continuing Value 98,988.9 The present vTotal 123,688.2Adjust to midyear discounting 1.043 This adjustmeTotal PV Dividends 128,945.0Shares Outstanding 1,553.0Estimated Value per Share 83.03$ The estimated
Current share price 54.77$Percent difference 52% (Value/price)-1
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FSAP OUTPUT: VALUATION MODELSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
Continuing1 2 3 4 5 Value Free Cash Fl
Free Cash Flows for Common Equity Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 12 de
Net Cash Flow from Operations 8,359.9 9,201.1 10,141.5 10,965.8 11,643.5 9,694.4 FSAP uses neDecrease (Increase) in Cash Required for Operations 512.5 -143.7 -195.3 -141.9 -197.9 -66.9 The analyst sNet Cash Flow from Investing -3,874.4 -3,995.7 -4,612.9 -4,607.1 -5,252.9 -1,807.5 FSAP uses neNet CFs from Debt Financing 562.8 729.0 941.5 651.5 1,104.4 366.5 FSAP uses neNet CFs into Financial Assets 0.0 0.0 0.0 0.0 0.0 0.0 This row enabNet CFs - Pref. Stock and Minority Int. -72.0 0.0 0.0 0.0 0.0 0.0 FSAP uses neFree Cash Flow for Common Equity 5,488.8 5,790.7 6,274.8 6,868.3 7,297.1 8,186.5 These figures
Present Value Factors 0.922 0.849 0.783 0.722 0.665 These presentPV Free Cash Flows 5,058.8 4,919.0 4,912.6 4,956.0 4,852.9Sum of PV Free Cash Flows 24,699.3 The sum of thPV of Continuing Value 98,988.9 The present vTotal 123,688.2Adjust to midyear discounting 1.043 This adjustmeTotal PV Free Cash Flows to Equity 128,945.0Shares Outstanding 1,553.0Estimated Value per Share 83.03$ The estimated
Current share price 54.77$Percent difference 52% (Value/price)-1
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FSAP OUTPUT: VALUATION MODELSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
Free Cash Flow Valuation Sensitivity Analysis:
Long-Run Growth Assumpt ions Sensitivity An83.03 0% 2% 3% 4% 5% 6% 8% 10% The FSAP us
Discount 5% 105.16 160.50 229.67 437.20 #DIV/0! -392.90 -116.20 -60.86Rates: 6% 87.18 120.00 152.81 218.45 415.34 #DIV/0! -175.35 -76.90
7% 74.37 95.73 114.41 145.56 207.85 394.72 -352.77 -103.608.50% 60.84 73.36 83.03 97.00 118.95 158.47 711.69 -210.35
9% 57.34 68.04 76.06 87.30 104.14 132.22 356.87 -317.0610% 51.41 59.41 65.13 72.75 83.42 99.42 179.45 #DIV/0!
11% 46.57 52.71 56.94 62.37 69.61 79.75 120.30 323.0712% 42.55 47.37 50.58 54.59 59.76 66.64 90.73 163.0013% 39.16 43.00 45.50 48.55 52.37 57.28 72.98 109.6314% 36.26 39.37 41.35 43.73 46.63 50.26 61.15 82.9315% 33.76 36.30 37.90 39.78 42.04 44.80 52.70 66.9016% 31.57 33.68 34.98 36.50 38.29 40.44 46.35 56.2118% 27.95 29.44 30.33 31.35 32.53 33.90 37.47 42.8320% 25.08 26.16 26.79 27.51 28.31 29.24 31.55 34.79
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FSAP OUTPUT: VALUATION MODELSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
Continuing1 2 3 4 5 Value Residual Inco
RESIDUAL INCOME VALUATION Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 13 deComprehensive Income Available
for Common Shareholders 5,941.9 6,602.1 7,272.7 7,726.4 8,427.3 8,680.1 FSAP uses coLagged Book Value of Common Shareholders' Equity (at t-1) 12,203.0 12,656.1 13,467.4 14,465.3 15,323.5 16,453.6 FSAP uses be
Required Earnings 1,037.3 1,075.8 1,144.7 1,229.5 1,302.5 1,398.6 FSAP computResidual Income 4,904.6 5,526.3 6,128.0 6,496.9 7,124.8 7,281.5 Residual inco
Present Value Factors 0.922 0.849 0.783 0.722 0.665 These presentPV Residual Income 4,520.4 4,694.4 4,797.6 4,688.0 4,738.3Sum of PV Residual Income 23,438.7 The sum of thPV of Continuing Value 88,046.5 The present vTotal 111,485.2Add: Beginning Book Value of Equity 12,203.0PV of Equity 123,688.2Adjust to midyear discounting 1.043 This adjustmeTotal PV of Equity 128,945.0Shares Outstanding 1,553.0Estimated Value per Share 83.03$ The estimated
Current share price 54.77$Percent difference 52% (Value/price)-1
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FSAP OUTPUT: VALUATION MODELSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
RESIDUAL INCOME VALUATION SENSITIVITY ANALYSIS:
Long-Run Growth Assumpt ions Sensitivity An83.03 0% 2% 3% 4% 5% 6% 8% 10% The FSAP us
Discount 5% 105.16 160.50 229.67 437.20 #DIV/0! -392.90 -116.20 -60.86Rates: 6% 87.18 120.00 152.81 218.45 415.34 #DIV/0! -175.35 -76.90
7% 74.37 95.73 114.41 145.56 207.85 394.72 -352.77 -103.607.48% 69.44 87.23 102.08 125.46 167.70 267.01 -680.30 -123.94
9% 57.34 68.04 76.06 87.30 104.14 132.22 356.87 -317.0610% 51.41 59.41 65.13 72.75 83.42 99.42 179.45 #DIV/0!
11% 46.57 52.71 56.94 62.37 69.61 79.75 120.30 323.0712% 42.55 47.37 50.58 54.59 59.76 66.64 90.73 163.0013% 39.16 43.00 45.50 48.55 52.37 57.28 72.98 109.6314% 36.26 39.37 41.35 43.73 46.63 50.26 61.15 82.9315% 33.76 36.30 37.90 39.78 42.04 44.80 52.70 66.9016% 31.57 33.68 34.98 36.50 38.29 40.44 46.35 56.2118% 27.95 29.44 30.33 31.35 32.53 33.90 37.47 42.8320% 25.08 26.16 26.79 27.51 28.31 29.24 31.55 34.79
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FSAP OUTPUT: VALUATION MODELSAnalyst Name: Wahlen, Baginski & BradshawCompany Name: PepsiCo
ContinuingRESIDUAL INCOME VALUATION 1 2 3 4 5 Value Market-to-BoMarket-to-Book Approach Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 14 deComprehensive Income Available
for Common Shareholders 5,941.9 6,602.1 7,272.7 7,726.4 8,427.3 8,680.1 FSAP uses coBook Value of Common Shareholders' Equity (at t-1) 12,203.0 12,656.1 13,467.4 14,465.3 15,323.5 16,453.6 FSAP uses be
Implied ROCE 48.7% 52.2% 54.0% 53.4% 55.0% 52.8% FSAP computResidual ROCE 40.2% 43.7% 45.5% 44.9% 46.5% 44.3% FSAP computCumulative growth factor in common equity as of t-1 100.0% 103.7% 110.4% 118.5% 125.6% 134.8% FSAP comput
Residual ROCE times cumulative growth 40.2% 45.3% 50.2% 53.2% 58.4% 59.7% The product o
Present Value Factors 0.922 0.849 0.783 0.722 0.665 These presentPV Residual ROCE times growth 0.370 0.385 0.393 0.384 0.388Sum of PV Residual ROCE times growth 1.92 The sum of thPV of Continuing Value 7.22 The present vTotal PV Residual ROCE 9.14Add one for book value of equity at t-1 1.0Sum 10.14Adjust to mid-year discounting 1.043 This adjustmeImplied Market-to-Book Ratio 10.567 The implied m
Times Beginning Book Value of Equity 12,203.0Total PV of Equity 128,945.0Shares Outstanding 1,553.0Estimated Value per Share 83.03$ The estimated
Current share price 54.77$Percent difference 52% (Value/price)-1
Sensitivity analysis for the market-to-book approach should be identical to that of the residual income approach.