Question

PepsiCo’s portfolio has very good resource fit, with the company’s businesses generating free cash flows of $8.1 billion in 2015, $7.7 billion in 2016, and $7.2 billion in 2017.

  (Click to select)   Yes   No

b. In 2017, the Frito-Lay North American business segment had an estimated cash flow of $4.6 billion, which was highest among the six business segments.

  (Click to select)   Yes   No

c. In 2017, the North American Beverages business segment had an estimated cash flow of $2.3 billion, which was second highest among the six business segments.

  (Click to select)   Yes   No

d. In 2017, the Asia, Middle East, and North Africa business segment had an estimated cash flow of $1 billion, the third highest among the six business segments.

  (Click to select)   Yes   No

e. Latin America’s Operating profit in 2017 increased from $887 million to $908 million.

  (Click to select)   Yes   No

f. Frito Lay North America operating profit margins gradually increased from 2015 to 2017.

  (Click to select)   Yes   No

g. North America Beverage's operating profit margins increased by 10% between 2016 and 2017.

  (Click to select)   Yes   No

h. Asia, Middle East and North Africa business Unit reported the greatest increase in in operating profit margin (approx. 8%).

  (Click to select)   Yes   No

i. PepsiCo’s Frito-Lay North America and North America Beverage's business units generate the vast majority of cash flows.

  (Click to select)   Yes   No

j. With the exception of the Latin America business unit in 2015, all business units had very healthy positive cash flows in each year between 2015 and 2017.

  (Click to select)   Yes   No

k. Due to large annual capital expenditures, PepsiCo International has been unable to generate positive cash flows during the 2015 - 2017 timeframe.

  (Click to select)   Yes   No

l. The North American Beverage's unit has far lower operating profit margins relative to Frito-Lay North America and Quaker Foods North America but compares favorably with PepsiCo’s international business units.

  (Click to select)   Yes   No

m. Between 2015 and 2016 most of the business units reported either losses or very small gains in operating profits.

  (Click to select)   Yes   No

a. PepsiCo’s chief managers have been able to build a collection of food and beverage brands capable of providing shareholders with the opportunity for above-average market returns.

  (Click to select)   Yes   No

b. PepsiCo’s stock price performance has been unimpressive over the past four years (2015 – 2018) with a decrease of around 12%.

  (Click to select)   Yes   No

c. The company’s shares have declined from a peak of $120 per share in January 2018 to about $105 in mid-2018 and have appreciated by only about half the rate of the S&P 500 since mid-2016.

  (Click to select)   Yes   No

d. The company’s businesses all hold impressive positions in their respective industries and some have outstanding potential for growth.

  (Click to select)   Yes   No

e. It is likely that the sales of soft drinks and snack foods will grow quickly along with the current annual growth rates.

  (Click to select)   Yes   No

f. PepsiCo has the potential to increase Gatorade’s sales outside of the U.S. and Frito-Lay’s focus on developing BFY and GFY snacks is likely to contribute to revenue and volume gains in developed countries where health and fitness are growing concerns of consumers.

  (Click to select)   Yes   No

g. There is some question concerning the ability to gain synergistic benefits between some of Quaker’s food businesses and PepsiCo’s convenience food and beverage businesses, but the cash flow analysis and operating profit margins suggest that these businesses do have the ability to contribute to increased shareholder value through their impressive cash flows and stellar profit margins.

  (Click to select)   Yes   No

Answer 1

1.A. The given statement is completely TRUE as PepsiCo free cash flows to the firm was 8.1 billion dollars in 2015, it decreased slightly to 7.8 billion dollars in 2016 and it decreased 6.3% from 2016 to 7.2 billion dollars in 2017.

So the given statement is completely TRUE.

B. The given statement is FALSE as frito-lay North American business segment was not the highest among all six business segment.

C. This given statement is TRUE as North American beverages business segment was second highest among all of its 6 revenue generating units.

D.this given statement is also FALSE as Asian business was the fourth major contributor to the overall revenue of Pepsico.