Stock Analysis on Net

PepsiCo Inc. (NASDAQ:PEP)

Analysis of Operating Leases

Microsoft Excel

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Adjustments to Financial Statements for Operating Leases

PepsiCo Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018
Adjustment to Total Assets
Total assets (as reported) 92,187 92,377 92,918 78,547 77,648
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 1,656
Total assets (adjusted) 92,187 92,377 92,918 78,547 79,304
Adjustment to Total Debt
Total debt (as reported) 39,071 40,334 44,150 32,068 32,321
Add: Operating lease liability (before adoption of FASB Topic 842)2 1,656
Add: Current operating lease liabilities 483 446 460 442
Add: Non-current operating lease liabilities (classified in Other liabilities) 1,933 1,598 1,233 1,118
Total debt (adjusted) 41,487 42,378 45,843 33,628 33,977

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29).

1, 2 Equal to total present value of future operating lease payments.


PepsiCo Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

PepsiCo Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018
Total Asset Turnover1
Reported total asset turnover 0.94 0.86 0.76 0.86 0.83
Adjusted total asset turnover 0.94 0.86 0.76 0.86 0.82
Debt to Equity2
Reported debt to equity 2.28 2.51 3.28 2.17 2.23
Adjusted debt to equity 2.42 2.64 3.41 2.27 2.34
Return on Assets3 (ROA)
Reported ROA 9.67% 8.25% 7.66% 9.31% 16.12%
Adjusted ROA 9.67% 8.25% 7.66% 9.31% 15.78%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. PepsiCo Inc. adjusted total asset turnover ratio improved from 2020 to 2021 and from 2021 to 2022.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. PepsiCo Inc. adjusted debt to equity ratio improved from 2020 to 2021 and from 2021 to 2022.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. PepsiCo Inc. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.

PepsiCo Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018
As Reported
Selected Financial Data (US$ in millions)
Net revenue 86,392 79,474 70,372 67,161 64,661
Total assets 92,187 92,377 92,918 78,547 77,648
Activity Ratio
Total asset turnover1 0.94 0.86 0.76 0.86 0.83
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net revenue 86,392 79,474 70,372 67,161 64,661
Adjusted total assets 92,187 92,377 92,918 78,547 79,304
Activity Ratio
Adjusted total asset turnover2 0.94 0.86 0.76 0.86 0.82

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29).

2022 Calculations

1 Total asset turnover = Net revenue ÷ Total assets
= 86,392 ÷ 92,187 = 0.94

2 Adjusted total asset turnover = Net revenue ÷ Adjusted total assets
= 86,392 ÷ 92,187 = 0.94

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. PepsiCo Inc. adjusted total asset turnover ratio improved from 2020 to 2021 and from 2021 to 2022.

Adjusted Debt to Equity

Microsoft Excel
Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018
As Reported
Selected Financial Data (US$ in millions)
Total debt 39,071 40,334 44,150 32,068 32,321
Total PepsiCo shareholders’ equity 17,149 16,043 13,454 14,786 14,518
Solvency Ratio
Debt to equity1 2.28 2.51 3.28 2.17 2.23
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 41,487 42,378 45,843 33,628 33,977
Total PepsiCo shareholders’ equity 17,149 16,043 13,454 14,786 14,518
Solvency Ratio
Adjusted debt to equity2 2.42 2.64 3.41 2.27 2.34

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29).

2022 Calculations

1 Debt to equity = Total debt ÷ Total PepsiCo shareholders’ equity
= 39,071 ÷ 17,149 = 2.28

2 Adjusted debt to equity = Adjusted total debt ÷ Total PepsiCo shareholders’ equity
= 41,487 ÷ 17,149 = 2.42

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. PepsiCo Inc. adjusted debt-to-equity ratio improved from 2020 to 2021 and from 2021 to 2022.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019 Dec 29, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to PepsiCo 8,910 7,618 7,120 7,314 12,515
Total assets 92,187 92,377 92,918 78,547 77,648
Profitability Ratio
ROA1 9.67% 8.25% 7.66% 9.31% 16.12%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to PepsiCo 8,910 7,618 7,120 7,314 12,515
Adjusted total assets 92,187 92,377 92,918 78,547 79,304
Profitability Ratio
Adjusted ROA2 9.67% 8.25% 7.66% 9.31% 15.78%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29).

2022 Calculations

1 ROA = 100 × Net income attributable to PepsiCo ÷ Total assets
= 100 × 8,910 ÷ 92,187 = 9.67%

2 Adjusted ROA = 100 × Net income attributable to PepsiCo ÷ Adjusted total assets
= 100 × 8,910 ÷ 92,187 = 9.67%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. PepsiCo Inc. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.