A Financial Analysis of the PepsiCO COMPANY

Published: 2021-06-26 05:10:04
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The financial analysis is based done to find which place in the field and company which place they are all in and in the market .it else are project different pictures based on the mind on the observation these observer are different people who are related to company in some way like managers is a person who as to observe the growth of the company to frame policy to improve it. ABOUT PEPSI CO: Pepsi co is one of the leading hygienic food corporation, because they invest lot of things to produce the good and use full products to the customers .They started their business in the year of 1965, for that those are not a leading company, it has lot of companies who has a competitors to them self’s. In the competitive field they must to show something different things, then only they can achieve and shine in the compare to others, normally each and every organization introduce the new product’s, by complete these all things they came to their position, they are not suddenly came to their position, they developed by step by step in the way of initially they get the profit of 15%, after, they work hard and good encourage of their employees they develop their profit as double the term of they get before. After they are very much of interest in develop their business in worldwide and their market shares also growing very high compare to before, they get new share holders and investors to the corporation. Finally they successes, they develop their business in the world wide in the last few years. Now they are the leading competitors, so they are push to regain their capital investment as double, and they need to repay the money if they borrow from any bank, and they must have the liquid money in hand because, some times they need to face the situation at any time or else suddenly some fluctuation will happen, the company flows down Not only based on that we can’t decide the company goes as a good level, we need to concentrate the managers and employees and stock holders. MANAGERS: The manager will focus on where the company success and where it fails by using the standard method ratio analysis the data which is available for manager will not available for other peoples work in the organization. Because manager holding the details about the secret deals and the finance details about the organization. So he is in the situation to keep it safe and secure .if any problem will happen we need to ask the manager. The managers have some works to become a successful organization to all data related to growth of frames like 1. Performance of employee. 2. All the project ability ratio. 3. Current depth and current liability. 4. Access to the stack holders data. STOCK HOLDERS: Stack holders are the real owners of the company because they have all the investments and majority of the company. All the investments of the stock holders put in the company name. Important aspect here is access to only certain data like what is current profit, and company earning, and company liability, and depth and all the external data. They don’t have permission to access to the internal data, as well as what’s going inside. But they have a rights to only put the pressure to the company managers, as what’s status of the company and they can ask the details about the profit and investments, because they are all the real owners of the organization. The company CEO has the full permission to access the all details. Employers and the investors, buy the company in the form public share certificate the company release the balance sheet every year, which contain all the financial detail of the company that is performance of the company observer by release the balance sheet. Example: The gross profit represents the profit of the company and it gives the company has it hand here the expenses included where as by the net profit. They can identify where the company stand. Because here we excluded the income tax cost of producing good and all the other related to the company product. i.e for each dolor investor what they here at the end of the day these represent the true profitability of the company. THE EMPLOYEE: Employee has access to the records. he can’t see all the records, that has seen by CEO of the company, he will not shown the true profit of the company earnings. Since he is internal to the company he can send the certain data for happenings. CEO: He is the one having all the power & he has the rights to access the all legal data’s and he is person going to decide what’s going to happen next and he is the one having the power of final decision. DATA ANALYSIS: Ratio is nothing but the dividing one numerical value by another and we get the proportion that can be expressed in percentage by seen the balance sheet we cant understand anything we here to divide certain value by other we conclude are advice on profit less and planning the budget of the company. Example Current value = current assessment / current liability The main purpose of doing analysis on corporation is compare to other company which involved in food and privilege production like coca cola,cardbury, by doing this we can find where pepsi corporation stand in terms of profit, shares, investments, and so on we can find the shares of pepsi corporation over estimated. And under planning policies for the company restricting the existing structure or processors to improve the profitability. It is used by banks, managers, and other external financial to determine whether the loan can be granted to the current financial performances its investments, and future groups. The bank managers use the ratio to see whether the company in good position and they can manage the current depth. Finally they take the decision to grand loan to the company or not. The only limitation of ratio analysis is that its done by company itself. We can predict the fails of the ratio analysis. Net Debt Ratio: CALCULATION D + PVOL – CMS L* = _________________ NP + D + PVOL – CMS D = total market value of the net debt PVOL = the present value of the operating lease commitments CMS = is the cash and marketable securities N = is the number of common shares P = is the common stock price According to case study of the PepsiCo, the values for net debt ratio is, D = 9453 $ PVOL = 479 * 5 = 2395 CMS = 1498 (1498*25/100) = 1123.50 N = 55.875 P = 790 NP = 55.875 * 790 = 44, 141.25 9453+ 2395 – 1123.50 Net debt ratio = ____________________________ = 19.54 % 44,141.25 + 9453 +2395 – 1123.50 Ratios How it Works PepsiCo Cadbury Schweppes Coca-Cola Coca -Cola Enterprise Mac Donald Interest Coverage ratio EBIT/INTEREST 4.8 % 4.9 % 16.9 % 1.4 % 7.3 % Fixed charge coverage ratio EBIT +Fixed cost before tax/interest+fixed cost before tax 3.09 % 4.2 % 16.9 % 14.06 % 3. 58 5 Long-Term debt ratio Long-term debt ratio/longterm debt+ Equtiy (No of shares * No of Prices) 1.657 % .9031 % .9031 % 51.76 % 11.251 % Total debt to Adjusted to total capitalization Long-term debt+short term/Long-term debt+short-term debt +common stock 17.6 % 14.61 % 1.65 % 15.21 % 12.6 % Ratio of cash to long-term debt Cash flow/long-term debt 42.7 % 52.694 % 27.3 % 15.56 % 53.9 % Ratio of cash to total debt Cash flow/Total debt 39.55 % 33.02 % 18.39 % 15.32 % 47.47 % A measure of a company’s ability to repay all debt if it were immediately or for a long time period. Many investors use net debt in making investment decisions, as it gives them an idea of a company’s financial status and its level of leverage compared to liquid assets. Some industries may have mere net debt than others, therefore, investors often company’s net debt to others in the same business.(1) It can be calculate by the adding the total market value of net debt by present value of operating lease commitments and minus the cash and market security and then divide by the common shares and prices the add total net debt by lease commitments and minus the cash and market security. The Net Debt ratio of the PepsiCo is 19.45% which indicates the company overall debt situation. The company has long term debt which is 8,747 $ and the short term debt is 706 $ while compare with the last year the debt shrinks and cash increase, this shows the improvement in the balance sheet. From the above graph we can easily find out the debt ratio for the last few years, and easily compare to the last years and tell that they are still developing. In other aspects PepsiCo too much long term debt will find themselves overwhelmed with interest payments, a risk having too little capital and ultimately bankruptcy. In other words the ratio of debt of PepsiCo used in the analysis of balance sheet to show the amount of protection available to creditors. The 19.54 % ratio indicates that the business has a lot of risk because if more principal and interested on its obligation. Its depends upon the share holders are reluctant to give financing with a high debt postion. However, the status of debt vary on the type of business. According to PepsiCo it has a liquid cash which can maintain the share holders compensation. Usually book value is used to measure a firms of debt security in calculating the ratio. Market value may be more realistic measures, anyhow because it takes account into current market conditions. Measure of a firms assets financed y debt and therefore, a measure of its financial risk. PepsiCo generally the better off the firm. RATIO ANALYSIS: Ratio is a general term, it is obtained by one value divide by another. It is denoted in the form of percentage (%), there are certain ratio’s to calculate .The purpose of analysis on the PepsiCo corporation is to compare with other companies with same category soft drink & packed food production coca-cola .By this calculation we can find were the PepsiCo corporation stand in term of profit ,sales , investments. With help of this calculation we can say that PepsiCo share is over estimated or under estimated, ratio are fundamental analysis . Ratio analysis fails when compression made with different category company ie (the company taken for analysis should be same category) here let take PepsiCo and Coca-Coca because this companies were same category and opponent. Here we have to calculate six different ratios to PepsiCo and we going to compare with other companies. Interest coverage ratio Fixed charge coverage ratio Long term debt ratio Total debt to adjusted total capitalization Ratio of cash flow to long term debt Ratio of cash flow to total debt INTEREST COVERAGE RATIO It is a type of gearing ratio that is used by the outside the finance parties loan to the business (i.e.) it tells the extent to which to which the business in currently finance by the outside factor for the accessing risk, because how much they we can tell how much is the own money we have inside huge amount of outside finance, the currently profitability decreases for the finance raises very high, in that situation they can’t pay back. The company will go bank erupt. Here the interest cover rate ratio represents the amount of profit that available to they interest cover lower it means that they can pay the interest at the greater risk like this means the coke is more strong in earning compare the McDonalds corporation doing better than Pepsi. Interest Coverage Ratio=EBIT(earnings before interest tax) / Interest As per data’s given in the questions The Different interest cover ratio’s are For PepsiCo is 4.6 %, its somewhat better to others because the EBIT is $ 3,114, then the interest is $682, finally Interest Coverage Ratio 4.6. For the Cadbury Schweppes, EBIT is $ 4,600, the interest is $ 272, finally the interest coverage ratio is 4.9% For McDonald, EBIT is $2,509, and the interest is 340 and finally the interest coverage ratio is 7.3%. From the above the PepsiCo is more stronger than Coca-Cola enterprise , this means more strong in earning to back the interest the only way to solve this problem, company should increase the sales and repayment to the concern parties. pay back ratio comes down then other option is liquidity (i.e.) money in cash . If the company invests more in assert and having less liquidity then it will not give back loan and it will leads to company to get bank tarp. The only way to solve the problem (i.e.) it should try to increase the shares and payback certain amount to the leaders thus , once the depth are come down, or the others once option is asserts are liquid it can easily pay back in case of emergency, the asserts are not liquid . We can Pay Back the loan in the time period to the bank, it will lead to the bank erupt. TOTAL DEPTH TO TOTAL CAPITAL: It measures the company here age to grow that is how fast company wants to grow here if receives lot of depth and expanses business it’s going it has lot of risk and it has to pay back to outside financers the major advantages of these ratio is high, that means the cost of depth is greater than the earning from the depth then it go to the bank erupt. Total debt to total capitalization= Total debt / Total debt + Common stock How we calculate the total depth to total capital? For the PepsiCo Total Debt to Total Capitalization is 17.6% by the Total Depth and Common Stack. For the Cadbury Schweppes Total Debt to Total Capitalization is 1.65% by the Total Depth and Common Stack. For the McDonald Total Debt to Total Capitalization is 12.6% by the Total Depth and Common Stack. From the calculated data PepsiCo has 17.6, its more high compare to other companies in the field. in PepsiCo they maintaining gradual level to reach the 17.6%. if the debt is higher than the capital then risk is higher, from my point of view PepsiCo should avoid the risk by reducing the debt when it goes higher than capital, PepsiCo have to reduce their debt ratio then risk become less .By this way we can reduce the Total debt to total Capitalization. FIXED CHARGE COVERING RATIO: Fixed charge coverage ratio, explained, is a strong indicator of a company’s future problems if sales drop to any extent. It is especially important for a company who spends heavily on leases. The lower the operation profit, the worse negative effects of fixed payments will become. For example, a company will feel heavier burden of lease payments combined with interest expense with declining sales. What Does Fixed-Charge Coverage Ratio Mean? A ratio that indicates a firm’s ability to satisfy fixed financing expenses, such as interest and leases. It is calculated as the following: (EBIT + Lease Expenses) / (Lease Expenses + Interest) The fixed charge coverage ratio is a broader measure of how well a firm covers their fixed costs than the times interest earned ratio. The fixed charge coverage ratio includes lease payments as well as interest payments. Lease payments, like interest payments, must be met on an annual basis. The fixed charge coverage ratio is especially important for firms that extensively lease equipment. EBIT, Taxes, and Interest Expense are taken from the company’s income statement. Lease Payments are taken from the balance sheet and are usually shown as a footnote on the balance sheet. The result of the fixed charge coverage ratio is the number of times the company can cover its fixed charges per year. The higher the number, the better the debt position of the firm, similar to the times interest earned ratio. Like all ratios, you can only make a determination if the result of this ratio is good or bad if you use either historical data from the company or if you use comparable data from the industry. Ron owns a small business which provides artisan-quality roofing services to upscale homes. Ron has carved a unique niche for his company over time. He is proud of his achievements and satisfied customer base. Recently, the recession has caused Ron to see less jobs for Spanish tile roofing. With this serving as the bread-and-butter of Ron’s company, he wants to be prepared for additional dips in his revenues due to fewer sales. Ron, essentially, wants to perform fixed charge coverage ratio analysis to assure that his company can survive the recession. Ron, after speaking with his controller, is confident that his company can survive an extended recession. He now needs to make sure his fixed charge coverage ratio covenant (bank requirement) is not violated for his bank loan. Ron has his company controller look at the agreement. Ron, after a little work, realizes that his company has not violated a covenant. Despite the fact that Ron’s company has an acceptable fixed charge coverage ratio, will need to remain the same for his covenants with the bank to stay unbroken. Ron respects the value of keeping up-to-date with financial statements, as well as bank agreements, thanks to the hand of his company accountant. A ratio calculated by dividing profits before payment of interest and income taxes by interest paid on bonds and other long-term debt. The larger the ratio, the safer the company is because it has more of a cushion to pay its debts and avoid default. The ratio illustrates how many times interest charges have been earned by the corporation on a pretax basis. If the ratio is five, the company has earned five times its interest charges, for example. (l. k. nozick / transportation research part E37 (2001) ) All the company should maintain these ratio value as well as good. Based on this we can calculate how well the organization is running (i.e.) the company running in a successful manner or not. It is must for each and every company. If we increase the level of fixed charge coverage ratio, the company is always going in a successful manner, How we calculate fixed charge coverage ratio? Fixed Charge Coverage ratio= (EBIT+FIXED COST) / (INTEREST + FIXED COST) Data’s are given as per in the exhibit. The PepsiCo EBIT is $ 3,114, the Fixed Cost is $ 479, the Interest is $682 And finally the Fixed Charge Coverage ratio is 3.09% The Cadbury Schweppes the EBIT is $ 661, Fixed cost is $ 25, Interest is $ 135, then finally the Fixed Charge Coverage ratio is 4.2%. The McDonald EBIT is 2509, the interest is 340%,the fixed cost is 498, then finally the Fixed Charge Coverage ratio is 3.58 % From the above PepsiCo Fixed Charge Coverage is very low comparing to others, to improve that fixed charge coverage ratio Pepsi co must develop the sales and profit simultaneously. Then only he can reach the target without any interruption. From this value PepsiCo has low value compare to other companies, PepsiCo have to develop their sales they have to elaborate the product so by doing this Fixed Charge Coverage will raise surely it’s my suggestions. Long Term Debt Ratio: Long Term Debt Ratio shows the financial leverage of firm, If a Long Term Debt is outstanding mean, the company can run in the profit side. A variation of the traditional debt-to-equity ratio, this value computes the proportion of a company’s long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company’s risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios. The Long Term Debt to Total Capitalization Ratio measures the percentage of the company’s Total Assets that are financed with long term debt. For this ratio, Long-Term Debt and Total Stockholder’s Equity are both considered long-term, as the equity provided by stockholders is part of the total capitalization (full debt load) of the company. This ratio is another way of looking at the debt structure of the company, specifically determining what portion of the total capitalization is comprised of Long-Term Debt. The Long Term debt ratio = long Term Debt / Long Term debt +Equity How we calculate the long term depth ratio? Data’s are given as per in the exhibit? For the PepsiCo Long Term Debt Ratio is 16.57% it’s calculated by using the table values of Number of Shares and Share Values. For the Cadbury Schweppes Long Term Debt Ratio is 4.2% it’s calculated by using the table values of Number of Shares and Share Values. For the McDonalds the Long Term Debt Ratio is 11.25% it’s calculated by using the table values of Number of Shares and Share Values. From the above data PepsiCo long term debt ratio is higher than the all other companies. The ratio is high because due to this developing and they expanding finally introduce the very new ideas to the field. This two companies Were expanding their business so long debt will going higher because they were reinvest their profit for expanding their business this two company Long term depth is higher compare to other company. Ratio of cash flow to Long term debt: Expense or revenue flow that changes a cash account over a particular period cash inflows usually arise from activates financing, operations or investing, cash outflow are expenses or investor. Long term debt obligations such as bond and note, which have maturities greater than one year, would be considered long term debt .the cash flow ratio is evaluation the organization strength and profitability and the important view of cash flow is sufficiency and efficiency To calculate cash flow to long term debt The cash flow to long term debt = Cash flow / Long term debt How we calculate the cash flow long term debt? Data’s as per in the exhibit in the table? For PepsiCo Ratio of Cash Flow to Long Term 42.7% is calculated by Cash Flow and Long term. For Cadbury Schweppes the Ratio Cash Flow to long Term is 56.94% is calculated by Cash Flow and Long term. For McDonald of Cash Flow to Long Term is 53.9% is calculated by Cash Flow and Long term. From the above data Cadbury higher compare to PepsiCo, if the ratio of cash flow and long term is higher compare to all the other companies in the field, debt will reduce, when the cash flow is higher , so that company is growing higher . if we focus on PepsiCo its nearly to 43% of growth in this ratio , when the cash flow higher then return also be higher so debt will be reduce, then the investor become more as of reducing debt rate. Ratio of Cash flow to total debt: The ratio of cash flow to total debt representing a company ability to satisfy debt, Increase of cash flow to total debt ratio is really positive sign , it shows company is in risk less financial position with this ratio, The ability to satisfy its company’s debts there useful in bankruptcy the ratio equals cash flow from operation divided by total liabilities. The cash flow to total debt=cash flow / total debt How we calculate the cash flow long term debt? Data’s as per given in the exhibit. For PepsiCo Ratio of cash flow to total debt is 39.55%, is calculated by Cash Flow and Long dept for Cadbury Ratio of cash flow to total debt is 33.02% is calculates by Cash Flow and Long dept For McDonald Ratio of cash flow to total debt is 47.47% is calculates by Cash Flow and Long dept From the above data double digit percent ratio would be the sign of financial strength, Pepsi Co is in sign of finical strength, In low percentage companies has too much of debt and weaker in cash flow generation .it’s important to invest the large company with low ratio, without no risk, with help of ratio we find the warring sign of company. RATINGS Rating is defined in the form of how much quality they produced and how much amount of product they released each and every year, sometimes it is combination of both & quantity they produced and delivered each year based on that we can define the ratings. In rating they have two types here Standard & Poor’s Ratings Moody ratings Standard & Poor’s Ratings: Based on, all financial companies are rated. They are mainly about the financial and research analysis of stock and bonds. It is well known for the stock based indexes. Moody Ratings: It is the international financial business analysis and research on commercial and government entities. It is standardized commercial rating scale. It’s all are mainly mentioned in grades. Moody’s long-term ratings have a lot of opinions Maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings use Moody’s Global Scale and reflect both the likelihood of default and any financial loss suffered in the event of default. Aaa Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk. Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. A Obligations rated A are considered upper-medium grade and are subject to low credit risk. Baa Obligations rated Baa are subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics. Ba Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk. B Obligations rated B are considered speculative and are subject to high credit risk. Caa Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk. Ca Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. C Obligations rated C are the lowest rated class and are typically in default, with little Prospect for recovery of principal or interest. Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The Modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid – range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category Standard & Poor’s Ratings: A It is a strong capacity to meet the financial commitments. AA It is a very strong capacity to meet the financial commitments A – A means it is string capacity to meet the financial commitments and – represents the relative standing with in the majority categories. (i.e) strong capacity to meet the financial commitments but somewhat suspensible to adverse economic change in circumstance. In this calculation we need to explain about the A, Aa, A- in S & p, A, Aa in Moody’s Pepsi co A McDonalds A Cadbury Schweppes AA What should going to explain about the ratings in PepsiCo? By the above ratings of S & P PepsiCo get the ratings as A because of the interest in develop the business widely and they are eager to reach the high position, for that they need to working hard, then only company will be top compare to others. (i.e) It is a strong capacity to meet the financial commitments. By that I conclude and suggest, encourage & motivate the workers to achieve the same work and introduce the more new ideas, to maintain the same level so as for the forth coming years. Then only the company can shine in the field for the long time as in the same position and move to the next level. What should going to explain about the ratings in McDonalds? By the above ratings of S & P McDonalds get the ratings as A because of the interest in develop the business widely and they are eager to reach the high position, for that for that they need to working hard, then only company will be top compare to others. (i.e) It is a strong capacity to meet the financial commitments. By that I conclude and suggest, encourage & motivate the workers to achieve the same work and introduce the more new ideas, to maintain the same level so as for the forth coming years. Then only the company can shine in the field for the long time as in the same position and move to the next level. What should going to explain about the ratings in Cadbury Schweppes? By the above ratings of S & P, Cadbury Schweppes get the ratings as AA. They are more better compare to the PepsiCo and McDonalds (i.e) It is a very strong capacity to meet the financial commitments. By that I conclude and suggest, encourage & motivate the workers to achieve the same work and introduce the more new ideas, to maintain the same level so as for the forth coming years. Then only the company can shine in the field for the long time as in the same position. Moody’s Rating: Pepsi co A McDonalds A2 Cadbury Schweppes A2 In moody’s rating they give a notation as A1, A2, A3 and B1, B2, B3, upto C1, C2, C2, What should going to explain about the ratings in PepsiCo? By the above ratings of Moody’s PepsiCo get the ratings as A1 because of the interest in develop the business, (i.e) low risk rate investment, in that when you going to invest in this so don’t need to care about the tuff situation, because in that less investment risk compare to others. By that I conclude and suggest, encourage & motivate the workers to achieve the same work and introduce the more new ideas, to maintain the same level so as for the forth coming years. Then only the company can shine in the field for the long time as in the same position. What should going to explain about the ratings in McDonalds? By the above ratings of Moody’s McDonalds get the ratings as A2 because of the interest in develop the business, compare to PepsiCo its very low risk investment(i.e) very low risk rate investment, in that when you going to invest in this so don’t need to care about the tuff situation, because in that less investment risk compare to others. By that I conclude and suggest, encourage & motivate the workers to achieve the same work and introduce the more new ideas, to maintain the same level so as for the forth coming years. Then only the company can shine in the field for the long time as in the same position and move to the next level. What should going to explain about the ratings in Cadbury Schweppes? By the above ratings of Moody’s Cadbury Schweppes get the ratings as A1 because of the interest in develop the business, (i.e.) low risk rate investment. Same as above the McDonalds because the both two companies are in the same ratings. PepsiCo get the rating A Does its it reasonable or not? Surely, after the ratings of PepsiCo until March 17th 2010 they getting A Ratings, because they producing and introduce the new ideas daily, then only he can stand in the field without any tuff comphetion. Because it’s a competitive world with out any new implements we can’t survey here. Not only implementing the new ideas and the company should motivate the employees, to should work hard and we need to reward them, then only the employees would work for the company, and the company profit will automatically increased. In exactly before ten years later PepsiCo get the rating A- after that they work hard and introduce the new concept and try to develop the business widely, after the tuff time of PepsiCo they improve step by step now reached the rating A. How and which basis PepsiCo get the rating A? Based on that all financial status companies are rated. Sometimes they are mainly focus on the financial position and research analysis of stock and bonds. It is well known for the stock based indexes. Except all that the above main reason for PepsiCo get A and the rating given by S & P is based on some reasons are Total market value of the net debt D The present value of the operating lease commitments ( pvol ) Is the number of common shares N Is the common stock price P Interest coverage ratio Fixed charge coverage ratio Long term debt ratio Total debt to adjusted total capitalization Ratio of cash flow to long term debt Ratio of cash flow to total debt The rating is mainly based on the above all share values, investment, profit, equity, and the ratio of the share holders, how much amount of net profit company having in the each an d every year. The above values are mostly important for the company and those are independent to others if any of the value is decreases total debt rate of the company will lose, in some case the value may have chance to increase, at time the total profit of the company is surely increased. Then only people will invest the money in the company, then the shares of the company is automatically increased .If the shares of the company is increased means, the company earn more profit in that, by that company can easily pay the fixed expenses and other expenses and the due amount to the bank and, mainly to the borrower, after payback to the all borrowers, the company having some balance amount, based on that the profit of the company is calculated. Sometimes the company will show the fath documents, due to the faith document we can identify that the company going earning more profit, then we automatically inverse the money in that company, for example the satyam softwares in india they show the faith documents. For instance to avoid that faith document showing , S & P ratings are introduce and gives the rating to the company. They are fully reviewed about the company and gave the rating to the company. By the conclusion of S & P the PepsiCo get the rating A, after verify the all the details of the company like profit, the net income and all the details mentioned above. In that above graph we can easily, find out the improvement of S & P ratings result of PepsiCo. GOOD THING: By that above all conclusion, I should recommend PepsiCo to maintain the same level. for that they must to push and introduce the new ideas and services to the peoples. if they maintain the same level so far the next few years they are the leading business company. They getting the grade A upto till march 17th 2010, before ten years that is approximately 1989 they get the rating as A-. this not happened suddenly they improve the business step by step. For that wise they are came to the High Rating. concentrated Areas: They are still in the same level or the past few years, they need to develop and introduce some more new products to the customer. In my point of view, if they will concentrate in those particular areas like, customer satisfaction, employee encouragement, and leadership then teamwork, they will surely achieve his target. And they will move to the next stage without any doubt. If the net profit increased means, they have possibilities to add some more new share holders and share investors.

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