Question

Suppose Presented below is 2022 information for for PepsiCo, Inc. and The Coca-Cola Company. ($ in millions) PepsiCo Coca-Cola Net cash provided by operating activities $6,149 $7,857 Average current liabilities 9,231 12,094 Net income 6,025 7,051 Sales revenue 43,354 28,578 Capital expenditures 1,938 1,924 Dividends paid 2,841 3,734 Compute free cash flow for both companies and compare. (Show a negative free cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer:

$1,370 and $2,199

Explanation:

The formula and computation of the free cash flow is shown below:

= Net cash provided by operating activities - Capital expenditures - Dividend paid

For Pepsi Co, it would be

= $6,149 - $1,938 - $2,841

= $1,370

For coca-cola, it would be

= $7,857 - $1,924 - $3,734

= $2,199

As we see that, the coca-cola company has higher free cash flow than the Pepsi co