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 27, 2014 Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010
Return on Sales
Gross profit margin 53.69% 52.96% 52.22% 52.49% 54.05%
Operating profit margin 14.37% 14.61% 13.91% 14.48% 14.41%
Net profit margin 9.77% 10.15% 9.43% 9.69% 10.93%
Return on Investment
Return on equity (ROE) 37.35% 27.76% 27.71% 31.29% 29.86%
Return on assets (ROA) 9.24% 8.70% 8.28% 8.84% 9.27%

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 improved from 2012 to 2013 and from 2013 to 2014.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. PepsiCo Inc.'s operating profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. PepsiCo Inc.'s net profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014 not reaching 2012 level.
ROE A profitability ratio calculated as net income divided by shareholders' equity. PepsiCo Inc.'s ROE improved from 2012 to 2013 and from 2013 to 2014.
ROA A profitability ratio calculated as net income divided by total assets. PepsiCo Inc.'s ROA improved from 2012 to 2013 and from 2013 to 2014.

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Gross Profit Margin

PepsiCo Inc., gross profit margin calculation

 
Dec 27, 2014 Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010
Selected Financial Data (USD $ in millions)
Gross profit 35,799  35,172  34,201  34,911  31,263 
Net revenue 66,683  66,415  65,492  66,504  57,838 
Ratio
Gross profit margin1 53.69% 52.96% 52.22% 52.49% 54.05%

Source: Based on data from PepsiCo Inc. Annual Reports

2014 Calculations

1 Gross profit margin = 100 × Gross profit ÷ Net revenue
= 100 × 35,799 ÷ 66,683 = 53.69%

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 improved from 2012 to 2013 and from 2013 to 2014.

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Operating Profit Margin

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

 
Dec 27, 2014 Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010
Selected Financial Data (USD $ in millions)
Operating profit 9,581  9,705  9,112  9,633  8,332 
Net revenue 66,683  66,415  65,492  66,504  57,838 
Ratio
Operating profit margin1 14.37% 14.61% 13.91% 14.48% 14.41%
Benchmarks
Operating Profit Margin, Competitors
Coca-Cola Co. 21.11% 21.83% 22.45% 21.82% 24.06%
Operating Profit Margin, Sector
Soft Drinks 17.12% 17.60% 17.52% 17.50% 18.05%
Operating Profit Margin, Industry
Consumer Goods 9.90% 10.19% 5.45% 9.60% 9.19%

Source: Based on data from PepsiCo Inc. Annual Reports

2014 Calculations

1 Operating profit margin = 100 × Operating profit ÷ Net revenue
= 100 × 9,581 ÷ 66,683 = 14.37%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. PepsiCo Inc.'s operating profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014.

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Net Profit Margin

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

 
Dec 27, 2014 Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010
Selected Financial Data (USD $ in millions)
Net income attributable to PepsiCo 6,513  6,740  6,178  6,443  6,320 
Net revenue 66,683  66,415  65,492  66,504  57,838 
Ratio
Net profit margin1 9.77% 10.15% 9.43% 9.69% 10.93%
Benchmarks
Net Profit Margin, Competitors
Coca-Cola Co. 15.43% 18.32% 18.78% 18.42% 33.63%
Net Profit Margin, Sector
Soft Drinks 12.08% 13.53% 13.39% 13.28% 19.50%
Net Profit Margin, Industry
Consumer Goods 7.43% 7.73% 6.81% 8.79% 7.65%

Source: Based on data from PepsiCo Inc. Annual Reports

2014 Calculations

1 Net profit margin = 100 × Net income attributable to PepsiCo ÷ Net revenue
= 100 × 6,513 ÷ 66,683 = 9.77%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. PepsiCo Inc.'s net profit margin improved from 2012 to 2013 but then slightly deteriorated from 2013 to 2014 not reaching 2012 level.

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Return on Equity (ROE)

PepsiCo Inc., ROE calculation, comparison to benchmarks

 
Dec 27, 2014 Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010
Selected Financial Data (USD $ in millions)
Net income attributable to PepsiCo 6,513  6,740  6,178  6,443  6,320 
Total PepsiCo shareholders' equity 17,438  24,279  22,294  20,588  21,164 
Ratio
ROE1 37.35% 27.76% 27.71% 31.29% 29.86%
Benchmarks
ROE, Competitors
Coca-Cola Co. 23.41% 25.88% 27.51% 27.10% 38.09%
ROE, Sector
Soft Drinks 28.50% 26.67% 27.59% 28.75% 34.75%
ROE, Industry
Consumer Goods 19.27% 18.64% 16.76% 21.68% 18.72%

Source: Based on data from PepsiCo Inc. Annual Reports

2014 Calculations

1 ROE = 100 × Net income attributable to PepsiCo ÷ Total PepsiCo shareholders' equity
= 100 × 6,513 ÷ 17,438 = 37.35%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. PepsiCo Inc.'s ROE improved from 2012 to 2013 and from 2013 to 2014.

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Return on Assets (ROA)

PepsiCo Inc., ROA calculation, comparison to benchmarks

 
Dec 27, 2014 Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Dec 25, 2010
Selected Financial Data (USD $ in millions)
Net income attributable to PepsiCo 6,513  6,740  6,178  6,443  6,320 
Total assets 70,509  77,478  74,638  72,882  68,153 
Ratio
ROA1 9.24% 8.70% 8.28% 8.84% 9.27%
Benchmarks
ROA, Competitors
Coca-Cola Co. 7.71% 9.53% 10.47% 10.72% 16.19%
ROA, Sector
Soft Drinks 8.37% 9.15% 9.45% 9.82% 12.85%
ROA, Industry
Consumer Goods 5.45% 5.73% 5.03% 6.75% 5.66%

Source: Based on data from PepsiCo Inc. Annual Reports

2014 Calculations

1 ROA = 100 × Net income attributable to PepsiCo ÷ Total assets
= 100 × 6,513 ÷ 70,509 = 9.24%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. PepsiCo Inc.'s ROA improved from 2012 to 2013 and from 2013 to 2014.

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