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May 10, 2023


Part A

Question 1.

(A) Ifyouwerea banker, why would you need information from PepsiCo’s financial statements?

Bankers need the financial statements for multiple purpose. Basically, bankers ask for financial statements for companies at the end of a financial year. Generally, banks want to check balance sheets, profit & loss account statement etc. Herein, below reason for which bankers can see the financial statement:

  • Balance sheet- The Balance Sheet shows the assets, debt and net value (equity) of business at a particular time period (Ahadiat and Martin, 2015). Taking the time to analyse the balance sheet of business enable bankers to get a clear understanding of company`s plan. The Bank must aim for good net worth and the liabilities-to-equity ratio. Analysing the balanced sheet lets the bank decide whether its existing and/or potential debt obligations can be met by the company.
  • Income statement- The Income Statement or Profit and Loss Statement shows how much money the corporation received over a number of years and how much was left after payment of costs (net income). Analysing this argument will enable companies as an owner to assess whether there are possible areas for controlling costs or areas that seem out of line. By help of it, bankers can become able to analyse whether they should make credit transaction with company or not.
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