Profitability Analysis

Difficulty level: Basic

Profitability ratios measure the company's ability to generate profitable sales from its resources (assets).


Ratios (Summary)

PepsiCo Inc., profitability ratios

 
Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010 Dec 26, 2009
Return on Sales
Gross profit margin 52.96% 52.22% 52.49% 54.05% 53.51%
Operating profit margin 14.61% 13.91% 14.48% 14.41% 18.61%
Net profit margin 10.15% 9.43% 9.69% 10.93% 13.75%
Return on Investment
Return on equity (ROE) 27.76% 27.71% 31.29% 29.86% 35.38%
Return on assets (ROA) 8.70% 8.28% 8.84% 9.27% 14.92%

Source: Based on data from PepsiCo Inc. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. PepsiCo Inc.'s gross profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. PepsiCo Inc.'s operating profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. PepsiCo Inc.'s net profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
ROE A profitability ratio calculated as net income divided by shareholders' equity. PepsiCo Inc.'s ROE deteriorated from 2011 to 2012 but then slightly improved from 2012 to 2013.
ROA A profitability ratio calculated as net income divided by total assets. PepsiCo Inc.'s ROA deteriorated from 2011 to 2012 but then improved from 2012 to 2013 not reaching 2011 level.

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Gross Profit Margin

PepsiCo Inc., gross profit margin calculation

 
Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010 Dec 26, 2009
Selected Financial Data (USD $ in millions)
Gross profit 35,172  34,201  34,911  31,263  23,133 
Net revenue 66,415  65,492  66,504  57,838  43,232 
Ratio
Gross profit margin1 52.96% 52.22% 52.49% 54.05% 53.51%

Source: Based on data from PepsiCo Inc. Annual Reports

2013 Calculations

1 Gross profit margin = 100 × Gross profit ÷ Net revenue
= 100 × 35,172 ÷ 66,415 = 52.96%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. PepsiCo Inc.'s gross profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Operating Profit Margin

PepsiCo Inc., operating profit margin calculation, comparison to benchmarks

 
Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010 Dec 26, 2009
Selected Financial Data (USD $ in millions)
Operating profit 9,705  9,112  9,633  8,332  8,044 
Net revenue 66,415  65,492  66,504  57,838  43,232 
Ratio
Operating profit margin1 14.61% 13.91% 14.48% 14.41% 18.61%
Benchmarks
Operating Profit Margin, Competitors
Coca-Cola Co. 21.83% 22.45% 21.82% 24.06% 26.56%
Operating Profit Margin, Sector
Soft Drinks 17.60% 17.52% 17.50% 18.05% 21.93%
Operating Profit Margin, Industry
Consumer Goods 9.81% 5.15% 9.40% 8.90% 7.80%

Source: Based on data from PepsiCo Inc. Annual Reports

2013 Calculations

1 Operating profit margin = 100 × Operating profit ÷ Net revenue
= 100 × 9,705 ÷ 66,415 = 14.61%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. PepsiCo Inc.'s operating profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Net Profit Margin

PepsiCo Inc., net profit margin calculation, comparison to benchmarks

 
Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010 Dec 26, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to PepsiCo 6,740  6,178  6,443  6,320  5,946 
Net revenue 66,415  65,492  66,504  57,838  43,232 
Ratio
Net profit margin1 10.15% 9.43% 9.69% 10.93% 13.75%
Benchmarks
Net Profit Margin, Competitors
Coca-Cola Co. 18.32% 18.78% 18.42% 33.63% 22.02%
Net Profit Margin, Sector
Soft Drinks 13.53% 13.39% 13.28% 19.50% 17.21%
Net Profit Margin, Industry
Consumer Goods 7.61% 6.77% 8.79% 7.65% 6.07%

Source: Based on data from PepsiCo Inc. Annual Reports

2013 Calculations

1 Net profit margin = 100 × Net income attributable to PepsiCo ÷ Net revenue
= 100 × 6,740 ÷ 66,415 = 10.15%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. PepsiCo Inc.'s net profit margin deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Return on Equity (ROE)

PepsiCo Inc., ROE calculation, comparison to benchmarks

 
Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010 Dec 26, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to PepsiCo 6,740  6,178  6,443  6,320  5,946 
Total PepsiCo shareholders' equity 24,279  22,294  20,588  21,164  16,804 
Ratio
ROE1 27.76% 27.71% 31.29% 29.86% 35.38%
Benchmarks
ROE, Competitors
Coca-Cola Co. 25.88% 27.51% 27.10% 38.09% 27.52%
ROE, Sector
Soft Drinks 26.67% 27.59% 28.75% 34.75% 30.69%
ROE, Industry
Consumer Goods 18.24% 16.51% 21.68% 18.72% 15.25%

Source: Based on data from PepsiCo Inc. Annual Reports

2013 Calculations

1 ROE = 100 × Net income attributable to PepsiCo ÷ Total PepsiCo shareholders' equity
= 100 × 6,740 ÷ 24,279 = 27.76%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. PepsiCo Inc.'s ROE deteriorated from 2011 to 2012 but then slightly improved from 2012 to 2013.

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Return on Assets (ROA)

PepsiCo Inc., ROA calculation, comparison to benchmarks

 
Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010 Dec 26, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to PepsiCo 6,740  6,178  6,443  6,320  5,946 
Total assets 77,478  74,638  72,882  68,153  39,848 
Ratio
ROA1 8.70% 8.28% 8.84% 9.27% 14.92%
Benchmarks
ROA, Competitors
Coca-Cola Co. 9.53% 10.47% 10.72% 16.19% 14.02%
ROA, Sector
Soft Drinks 9.15% 9.45% 9.82% 12.85% 14.43%
ROA, Industry
Consumer Goods 5.63% 4.99% 6.75% 5.66% 4.46%

Source: Based on data from PepsiCo Inc. Annual Reports

2013 Calculations

1 ROA = 100 × Net income attributable to PepsiCo ÷ Total assets
= 100 × 6,740 ÷ 77,478 = 8.70%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. PepsiCo Inc.'s ROA deteriorated from 2011 to 2012 but then improved from 2012 to 2013 not reaching 2011 level.

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