Preparation of Cash Flow statement of PEPSICO using Indirect Method example 2

Note: In this second example of cash flow preparation, I am using the actual data of PEPSICO.

How to prepare cash flow from the start, you can check my post previous http://mohsinpage.wordpress.com/2010/11/15/preparation-of-cash-flows-statement-using-direct-method-example-1/. In my previous post used additional information extracted from the analyses of two year balance sheet. In this tutorial I will analyze whole two year balance sheet and will extract additional information in the categories of Operating activities, Investing activities and Financing Activities.

Analyze the Balance Sheet and income statement:

Below is the balance sheet of PEPSICO of 2000 and 2001 and income statement .of 2001

CONSOLIDATED BALANCE SHEET FOR PEPSICO,INC., AS OF DEC 31
Millions of dollars
	2001	2000
Assets
Current Assets
Cash and equivalent	1649	1505
Receivable	2142	2129
Inventories	1310	1192
Other Current Assets	752	791
Total Current Assets	5853	5617
Fixed Assets
Property, Plant and Equipment	12866	11466
Less: Accumulated Depreciation	5990	4908
Net Fixed Assets	6876	6558
Net Intangible Assets	4841	4714
Other Assets	4125	3868
Total Assets	21695	20757
Liabilities and Shareholders Equity
Current Liabilities
Debt Due for repayment	354	202
Accounts Payable	1238	1212
Other Current Liabilities	3406	3381
Total Current Liabilities	4998	4795
Long term debt	2651	3009
Other long term liabilities	5398	5349
Total Liabilities	13047	13153
Shareholders Equity
Common Stock and other paid-in capital	35	667
Retained earnings	8605	6937
Total Shareholders equity	21695	20757
Total Liability and Shareholders Equity	21695	20757

Preparation of cash flows statement using Direct Method Example 1

Cash flows statement prepared using two financial statements, 1^st Income Statement and 2^nd Balance Sheet.

Before preparing cash flows statement,

a. Analyze Balance Sheet

b. Reordering of Income Statements

Step1:

a. Analyze Balance Sheet:

we will analyze balance sheet each account of current year and previous year. From balance sheet analyzing we extract additional information (AI) for cash flows statement and regroup these additional information in three major categories.

• Operational Activities
• Investing Activities
• Financing Activities

In this tutorial, I will not explain the analyzing of balance sheet, I just provide data in the form of additional information according to above three categories. I will use this categorize additional information for cash flow preparation directly.