Reading PepsiCo's Statement of Cash Flows
A portion of the Financing Activities section of PepsiCo's statement of cash flows for the year ended December 31, 2011, follows (in millions):
Financing Activities
|
Proceeds from issuances of long-term debt
|
$ 3,000
|
|
Payments of long-term debt
|
(1,596)
|
|
Debt repurchase
|
(771)
|
|
Short-term borrowings, by original maturity
|
|
|
More than three months-proceeds
|
523
|
|
More than three months-payments
|
(559)
|
|
Three months or less, net
|
339
|
|
Cash dividends paid
|
(3,257)
|
|
Share repurchases-common
|
(2,489)
|
|
Share repurchases-preferred
|
(7)
|
Source: PepsiCo, Form 10-K, For the Fiscal Year Ended December 31, 2011.
Required
1. Explain why proceeds from debt is shown as a positive amount and payment of debt is shown as a negative amount.
2. During 2011, interest rates remained at low levels. Explain why the company might have paid off debt during such conditions.
3. What are possible reasons why the company repurchased some of its stock?