Question

Suppose this information is available for PepsiCo, Inc. for 2020, 2021, and 2022. (in millions) Beginning inventory Ending inventory Cost of goods sold Sales revenue 2020 $2,100 2,400 16,200 39,800 2021 $2,400 2,700 18,105 42,600 2022 $2,700 2,800 17,600 42,510 Calculate the inventory turnover for 2020, 2021, and 2022. (Round inventory turnover to 1 decimal place, e.g. 5.1.) 2020 2021 2022 Inventory turnover times times times Calculate the days in inventory for 2020, 2021, and 2022. (Round days in inventory to 1 decimal place, e.g. 5.1.) 2020 2021 2022 Days in inventory days days days Calculate the gross profit rate for 2020, 2021, and 2022. (Round gross profit rate to 1 decimal place, e.g. 5.1%.) 2020 2021 2022 Gross profit rate % % % Click if you would like to show Work for this question: Open Show Work Dolica 000 2010 obwino Con Ts Al Diabte Decod Diction fobs lo con te

Answer 1

A) Pepsi Cola Inc. (In $)

		2020	2021	2022
Inventory turnover ratio	COGS/Average inventory	16,200/(2100+2400)/2 = 7.2 times	18,105/(2400+2700)/2 = 7.1 times	17,600/(2700+2800)/2 = 6.4 times
Days in inventory	365/Inventory turnover ratio	365/7.2 = 50.7 days	365/7.1 = 51.4 days	365/6.4 = 57 days
Gross profit ratio	Gross profit/ Sale revenue	(39,800-16,200)/39,800 = 59.3%	(42,600-18,105)/42,600 = 57.5%	(42,510-17,600)/42,510 = 58.6%

B) Pepsi Co Inc.

	2020	2021	2022
Inventory turnover ratio	18,038/(1926+2290)/2 = 8.6 times	20,351/(2290+2522)/2 = 8.5 times	20,099/(2522+2618)/2 = 7.8 times
Days in inventory	365/8.6 = 42.4 days	365/8.5 = 42.9 days	365/7.8 = 46.8 days
Gross profit	(39,474-18,038)/39,474 = 54.3%	(43,251-20,351)/43,251 = 52.9%	(43,232-20,099)/43,232 = 53.5%

In year 2021, the efficiency of business was lower than previous year, and thereafter increased negligibly hence gross profit margin decreased in 2021 and increases there after.