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

PepsiCo Inc. (NASDAQ:PEP)

Financial Reporting Quality: Aggregate Accruals

Advanced level

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

PepsiCo Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
Operating Assets
Total assets 78,547  77,648  79,804  74,129  69,667 
Less: Cash and cash equivalents 5,509  8,721  10,610  9,158  9,096 
Less: Short-term investments 229  272  8,900  6,967  2,913 
Less: Restricted cash —  1,997  —  —  — 
Operating assets 72,809  66,658  60,294  58,004  57,658 
Operating Liabilities
Total liabilities 63,679  63,046  68,823  62,930  57,637 
Less: Short-term debt obligations 2,920  4,026  5,485  6,892  4,071 
Less: Long-term debt obligations 29,148  28,295  33,796  30,053  29,213 
Operating liabilities 31,611  30,725  29,542  25,985  24,353 
 
Net operating assets1 41,198  35,933  30,752  32,019  33,305 
Balance-sheet-based aggregate accruals2 5,265  5,181  (1,267) (1,286)
Financial Ratio
Balance-sheet-based accruals ratio3 13.65% 15.54% -4.04% -3.94%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Coca-Cola Co. 12.15% 1.43% -1.60% -6.92%
Balance-Sheet-Based Accruals Ratio, Sector
Beverages 12.81% 7.33% -2.58% -5.72%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Goods -0.30% -0.14% 4.92% -0.80%

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 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 72,80931,611 = 41,198

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 41,19835,933 = 5,265

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 5,265 ÷ [(41,198 + 35,933) ÷ 2] = 13.65%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, PepsiCo Inc. improved earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

PepsiCo Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015
Net income attributable to PepsiCo 7,314  12,515  4,857  6,329  5,452 
Less: Net cash provided by operating activities 9,649  9,415  9,994  10,404  10,580 
Less: Net cash (used for) provided by investing activities (6,437) 4,564  (4,403) (7,148) (3,569)
Cash-flow-statement-based aggregate accruals 4,102  (1,464) (734) 3,073  (1,559)
Financial Ratio
Cash-flow-statement-based accruals ratio1 10.64% -4.39% -2.34% 9.41%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Coca-Cola Co. 4.88% -15.62% -7.25% -2.62%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Beverages 7.40% -10.92% -5.27% 2.22%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Goods -3.45% -4.32% 5.86% 2.87%

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 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 4,102 ÷ [(41,198 + 35,933) ÷ 2] = 10.64%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, PepsiCo Inc. deteriorated earnings quality from 2018 to 2019.