Working capital is measured by subtracting current liabilities from current assets. For PepsiCo, working capital for 2005 is $1,887 MM up from $1,080 MM in 2004 primarily due to a reduction in accounts receivables and a slight reduction in inventory (1). Accounts payable also decreased substantially (1).
Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much current debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lack the funds necessary for growth.
Functions of Intermediaries and Financial Regulatory Bodies
According to the 2005 Annual Report, PepsiCo is subject to federal, state and local governmental agencies in the United States, as well as to foreign laws and regulations administered by government entities and agencies in markets internationally (1).
In the United States, PepsiCo is required to comply with federal laws, such as the
Food, Drug and Cosmetic Act, the Occupational Safety and Health Act, the Clean
Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the
Federal Motor Carrier Safety Act, laws governing equal employment opportunity,
customs and foreign trade laws and regulations, laws governing the sales of
products in schools, and various other federal statutes and regulations (2).
The Company is also subject to various state and local statutes and regulations, including California Proposition 65 which requires that a specific warning appear on any product that contains a component listed by the State of California as having been found to cause cancer or birth defects (3). Under Proposition 65, even trace amounts of listed components can necessitate the need for products to have warning labels. As a result,...