Question

PepsiCo’s and The Coca-Cola Company financial statements are presented net cash provided by operating activities of $8,944; $9,474, cash spent for plant assets of $3,339; $2,920, and cash dividends of $3,157; $4,300 were paid, respectively. (All amounts in millions)

Instructions

1. Based on the information contained in these financial statements, compute free cash flow for each company.
2. What conclusions concerning the management of cash can be drawn from these data?

Answer 1

Particulars	PepsiCo	Coca-Cola Company
Cash flow from Operating activity	$                         8,944	$                         9,474
Cash outflow from Investing activity	$                       (3,339)	$                       (2,920)
(purchase of plant)
Cash outflow from financing activity	$                       (3,157)	$                       (4,300)
(payment of dividend)
Net Change in Cash	$                         2,448	$                         2,254

There is positive change in cash in both the companies hence the management of cash can be settle some due payments and libilities in coming year

Increase in cash from operations signifies the financial strength of the company due to an increase in earnings

Thus companies which can consistently increase their cash from operations can sustain any increase in macro headwinds and thus provide a good investment opportunity.