Question

Suppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017.

(in millions)		2015		2016		2017
Beginning inventory		$2,100		$2,200		$2,800
Ending inventory		2,200		2,800		2,600
Cost of goods sold		17,951		20,435		20,445
Sales revenue		38,895		42,974		43,152

Calculate the inventory turnover for PepsiCo, Inc. for 2015, 2016, and 2017. (Round inventory turnover to 1 decimal place, e.g. 5.1.)

		2015			2016			2017
Inventory turnover			times			times			times

Calculate the days in inventory for PepsiCo, Inc. for 2015, 2016, and 2017. (Round days in inventory to 1 decimal place, e.g. 5.1.)

		2015			2016			2017
Days in inventory			days			days			days

Calculate the gross profit rate for PepsiCo, Inc. for 2015, 2016, and 2017. (Round gross profit rate to 1 decimal place, e.g. 5.1%.)

		2015		2016		2017
Gross profit rate		%		%		%

Answer 1

Inventory turnover ratio = Cost of goods sold / Average inventory

Average inventory = (Beginning inventory + Ending inventory) / 2

2015 = $17,951 / ($2,100 + $2,200) / 2

= $17,951 / $2,150

= 8.3 times

2016 = $20,435 / ($2,200 + $2,800) /2

= $20,435 / $2,500

= 8.2 times

2017 = $20,445 / ($2,800 + $2,600)

= $20,445 / $2,700

= 7.6 times

Days in inventory = 365 / Inventory turnover ratio

2015 = 365 / 8.3

= 44.0 days

2016 = 365 / 8.2

= 44.5 days

2017 = 365 / 7.6

= 48.0 days

Gross Profit rate = (Sales Revenue - cost of goods sold) / Sales revenue

2015 = ($38,895 - $17,951) / $38,895

= $20,944 / $38,895

= 53.8%

2016 = ($42,974 - $20,435) / $42,974

= $22,539 / $42,974

= 52.4%

2017 = ($43,152 - $20,445) / $43,152

= $22,707 / $43,152

= 52.6%