Name: Financial Leverage

Definition: Financial leverage tells you how much borrowed money the company uses to boost its size and profits. Using leverage can help a business grow faster, but it also increases pressure if sales slow down. Moderate leverage is common and often healthy. Excessive leverage can be dangerous, especially during tough economic times.

Interpretation:
• In '2021', PEP's financial leverage was 5.76, indicating how much debt is used to finance assets. Industry average for Beverages (Production/Distribution) in '2021' stood at 2.45.
• In '2022', PEP's financial leverage was 5.56, indicating how much debt is used to finance assets. The decrease since '2021' reflects improving financial health. Industry average for Beverages (Production/Distribution) in '2022' stood at 2.26. Industry average declined by 0.20 from previous year.
• In '2023', PEP's financial leverage was 5.40, indicating how much debt is used to finance assets. The decrease since '2022' reflects improving financial health. Industry average for Beverages (Production/Distribution) in '2023' stood at 2.34. Industry average increased by 0.08 compared to previous year.
• In '2024', PEP's financial leverage was 5.47, indicating how much debt is used to finance assets. The increase compared to '2023' may signal growing financial pressure. Industry average for Beverages (Production/Distribution) in '2024' stood at 2.51. Industry average increased by 0.17 compared to previous year.
Overall, PEP's financial leverage has consistently declined during the past 4 years.

Formula: Financial Leverage = Average Total Assets / Average Shareholders' Equity

Good Range: 1 to 3 common; above 3 may indicate high leverage risk.