ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 17
EX 17-7 PepsiCo, Inc., the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years:
Dec. 30, 2006 Dec. 31, 2005
(in millions) (in millions)
Cash and cash equivalents $1,651 $1,716
Short-term investments, at cost 1,171 3,166
Accounts and notes receivable, net 3,725 3,261
Inventories 1,926 1,693
Prepaid expenses and other current assets 657 618
Short-term obligations 274 2,889
Accounts payable and other current liabilities 6,496 5,971
Income taxes payable 90 546
a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.
b. What conclusions can you draw from these data?
Check: a. (1) Dec. 31, 2005 Current Ratio, 1.1
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