Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

PepsiCo Inc. (NASDAQ:PEP)

Analysis of Operating Leases

Advanced level

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.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

PepsiCo Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
Total undiscounted future operating lease payments 1,840  1,894  1,780  1,860 
Discount rate1 3.46% 3.05% 2.80% 3.16%
 
Total present value of future operating lease payments 1,656  1,718  1,626  1,668 

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-11).

1 Weighted-average interest rate for PepsiCo Inc.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.46%
2019 459  2019 459  444 
2020 406  2020 406  379 
2021 294  2021 294  265 
2022 210  2022 210  183 
2023 161  2023 161  136 
2024 and thereafter 310  2024 161  131 
2025 149  117 
Total: 1,840  1,840  1,656 

Based on: 10-K (filing date: 2019-02-15).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.05%
2018 452  2018 452  439 
2019 403  2019 403  379 
2020 297  2020 297  271 
2021 215  2021 215  191 
2022 160  2022 160  138 
2023 and thereafter 367  2023 160  134 
2024 160  130 
2025 47  37 
Total: 1,894  1,894  1,718 

Based on: 10-K (filing date: 2018-02-13).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.80%
2017 423  2017 423  411 
2018 374  2018 374  354 
2019 289  2019 289  266 
2020 197  2020 197  176 
2021 147  2021 147  128 
2022 and thereafter 350  2022 147  125 
2023 147  121 
2024 56  45 
Total: 1,780  1,780  1,626 

Based on: 10-K (filing date: 2017-02-15).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.16%
2016 387  2016 387  375 
2017 330  2017 330  310 
2018 330  2018 330  301 
2019 190  2019 190  168 
2020 190  2020 190  163 
2021 and thereafter 433  2021 190  158 
2022 190  153 
2023 53  41 
Total: 1,860  1,860  1,668 

Based on: 10-K (filing date: 2016-02-11).


Adjustments to Financial Statements for Operating Leases

PepsiCo Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
Adjustment to Total Assets
Total assets (as reported) 78,547  77,648  79,804  74,129  69,667 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  1,656  1,718  1,626  1,668 
Total assets (adjusted) 78,547  79,304  81,522  75,755  71,335 
Adjustment to Total Debt
Total debt (as reported) 32,068  32,321  39,281  36,945  33,284 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  1,656  1,718  1,626  1,668 
Add: Current lease liabilities 442  —  —  —  — 
Add: Non-current lease liabilities (classified in Other liabilities) 1,118  —  —  —  — 
Total debt (adjusted) 33,628  33,977  40,999  38,571  34,952 

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-11).

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 LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
Total Asset Turnover1
Reported total asset turnover 0.86 0.83 0.80 0.85 0.91
Adjusted total asset turnover 0.86 0.82 0.78 0.83 0.88
Debt to Equity2
Reported debt to equity 2.17 2.23 3.61 3.33 2.79
Adjusted debt to equity 2.27 2.34 3.77 3.48 2.93
Return on Assets3 (ROA)
Reported ROA 9.31% 16.12% 6.09% 8.54% 7.83%
Adjusted ROA 9.31% 15.78% 5.96% 8.35% 7.64%

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-11).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. PepsiCo Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. PepsiCo Inc.’s adjusted debt to equity ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. PepsiCo Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

PepsiCo Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
As Reported
Selected Financial Data (US$ in millions)
Net revenue 67,161  64,661  63,525  62,799  63,056 
Total assets 78,547  77,648  79,804  74,129  69,667 
Activity Ratio
Total asset turnover1 0.86 0.83 0.80 0.85 0.91
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net revenue 67,161  64,661  63,525  62,799  63,056 
Adjusted total assets 78,547  79,304  81,522  75,755  71,335 
Activity Ratio
Adjusted total asset turnover2 0.86 0.82 0.78 0.83 0.88

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-11).

2019 Calculations

1 Total asset turnover = Net revenue ÷ Total assets
= 67,161 ÷ 78,547 = 0.86

2 Adjusted total asset turnover = Net revenue ÷ Adjusted total assets
= 67,161 ÷ 78,547 = 0.86

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. PepsiCo Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt 32,068  32,321  39,281  36,945  33,284 
Total PepsiCo shareholders’ equity 14,786  14,518  10,889  11,095  11,923 
Solvency Ratio
Debt to equity1 2.17 2.23 3.61 3.33 2.79
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 33,628  33,977  40,999  38,571  34,952 
Total PepsiCo shareholders’ equity 14,786  14,518  10,889  11,095  11,923 
Solvency Ratio
Adjusted debt to equity2 2.27 2.34 3.77 3.48 2.93

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-11).

2019 Calculations

1 Debt to equity = Total debt ÷ Total PepsiCo shareholders’ equity
= 32,068 ÷ 14,786 = 2.17

2 Adjusted debt to equity = Adjusted total debt ÷ Total PepsiCo shareholders’ equity
= 33,628 ÷ 14,786 = 2.27

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. PepsiCo Inc.’s adjusted debt-to-equity ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to PepsiCo 7,314  12,515  4,857  6,329  5,452 
Total assets 78,547  77,648  79,804  74,129  69,667 
Profitability Ratio
ROA1 9.31% 16.12% 6.09% 8.54% 7.83%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to PepsiCo 7,314  12,515  4,857  6,329  5,452 
Adjusted total assets 78,547  79,304  81,522  75,755  71,335 
Profitability Ratio
Adjusted ROA2 9.31% 15.78% 5.96% 8.35% 7.64%

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-11).

2019 Calculations

1 ROA = 100 × Net income attributable to PepsiCo ÷ Total assets
= 100 × 7,314 ÷ 78,547 = 9.31%

2 Adjusted ROA = 100 × Net income attributable to PepsiCo ÷ Adjusted total assets
= 100 × 7,314 ÷ 78,547 = 9.31%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. PepsiCo Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.