A recent annual report for PepsiCo contained the following information for the period (dollars in millions): Net income: $5,142 a. Depreciation and amortization: 1,543 b. Increase in accounts receivable: 549 c. Increase in inventory: 345 d. Increase in prepaid expense: 68 e. Increase in accounts payable: 718 f. Decrease in taxes payable: 180 g. Increase in other current liabilities: 738 h. Cash dividends paid: 2,541 i. Treasury stock purchased: 4,720
1. Compute cash flows from operating activities for PepsiCo using the indirect method. 2. Compute the quality of income ratio.