Numbers & Company Analysis Case
Interviewer:
This information is taken from the PepsiCo 2004 Annual Report. PepsiCo is
broken down into four divisions: Frito-Lay North America (FLNA), PepsiCo
Beverages North America (PBNA), PepsiCo International (PI), and Quaker
Foods North America (QFNA). I’d like you to look it over and let me know the
highlights. Think out loud, I’d like to know how you approach this. And do all
the numbers in your head.
Candidate:
You’d like me to scan the number and the pie charts and let you know what
has been going on inside Pepsi over the last year. Besides my summary, is
there anything else you’d like to see?
Interviewer:
No.
Candidate:
Well, the pie charts help a great deal. I’m going to break it down much like
Pepsi did. We know by looking at the chart that Frito Lay division net revenue
for 2004 was 33% of total revenues. In 2003, if we divide 9000 by 27000 we
get 33%. And if we divide 8500 by 25000 we get about… 33% as well. So we
know that the net revenue of frito lay as a percent of Pepsi’s overall sales has
remained constant. I’ll do the same for Pepsi North America. According to the
pie chart, PENA net revenue was 28% in 2004. For 2003, I’ll divide 7700 by
27000, which gives me a little less than 30%, probably 28% or 29%. Then
7200 divided by 25000 will give us around 29% for 2003. So, I’d state that
Pepsi North America remained relatively constant as well.
I’m going to jump to Quaker Oats. I see that Quaker made up 5% of the
revenues in 2004. In 2003, 10% would be 2700 and Quaker total is about half
of that, so I’d say they remain constant as well at 5%. In 2003, they were
around 6% - maybe in the high fives, if we ran the numbers instead of
estimating.
So, if the three that I calculated remained the same, the fourth, Pepsi
International will remain the same as well. I’ll go out on a limb here and say
that as a percentage of revenues, all divisions held steady.
Interviewer:
Who had the biggest jump in sales from 2003 to 2004? Can you eyeball that
as well?
Candidate:
Sure. Frito Lay grew to 9600 from 9100, so that equals 500. The percent
growth would be around 910, so 500 is about 5-6%. PBNA grew to 8300 from
7700, which equals 600. So I’m guessing that Pepsi North America grew by
7%. Pepsi International grew almost 1100 from an 8700 starting point. So
that’s 12%. And finally, Quaker grew by about 60 from a 2003 base of 1500
so that equals a little less than 5%. Hence, Pepsi International grew about
12%, which makes it the leader among the four divisions.
Interviewer:
Good, last one. Eyeball the operating profit as a percentage of revenues for
2004.
Candidate:
You have 6100 divided by 30000, which equals around 20%
It is becoming more common for interviewers to hand you charts and
graphs and ask you not only to interpret them, but to run the numbers in your
head. They are testing for not only your analytical skills, but to see if you show
grace under pressure. Generally, the tripartite interest will be in your (i)
analysis, (ii) innovation, and (iii) calculations. This candidate did well: he
rounded all the numbers off to make his calculations simpler. Instead of doing
the actual calculations he looked at things as percentages, i.e. Quaker was
5%. And most importantly the numbers didn’t fluster him.