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PepsiCo PEP Significant unobservable input used in level 3 fair value measurement - Other AFS, discount rate assumption

Significant unobservable input used in level 3 fair value measurement - Other AFS, discount rate assumption at other companies

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Other financials

Income statement

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Revenue$24.2B+6.4%
Gross profit$13.1B+5.5%
Operating income$4.0B+125%
Net income$3.0B+136%
EPS (diluted)$2.18+137%

Balance sheet

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Cash & equivalents$10.3B+33.6%
Total debt$53.2B+3.6%
Total equity$22.1B+20.0%
Total assets$112.19B+6.5%

Cash flow

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Operating cash flow$2.4B+137%
CapEx$1.3B-16.0%
Free cash flow$1.1B+315%

Valuation

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Market cap$189.42B-1.7%
Enterprise value$232.33B-1.7%
P/E18.1×-7.4×
P/S-0.1×

Profitability

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Gross margin54%-0.5pp
Operating margin14.8%+3.4pp
Net margin10.8%+2.6pp
FCF margin10.8%+3.0pp

Returns & leverage

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Return on equity51.6%+11.7pp
Debt / equity2.4×-0.4×
Current ratio0.9×+0.2×

Where this comes from

Reported directly by PepsiCo in its filing.

Tagged under the XBRL concept pep:SignificantUnobservableInputUsedInLevel3FairValueMeasurementOtherAFSDiscountRateAssumption.

The source filing: PepsiCo’s 10-K, filed February 3, 2026.

Filed
Feb 2, 2026, 7:00 PM EST
Fiscal year
FY2025
Accession
0000077476-26-000007

(b)Classified as other assets. The fair value of our investment in Celsius is estimated using probability-weighted discounted future cash flows based on a Monte Carlo simulation using significant unobservable inputs such as an 80% probability that a certain market-based condition will be met and an average estimated discount rate of 8.5% and 7.3% as of December 27, 2025 and December 28, 2024, respectively. The fair value of the other investment is estimated using a lattice model primarily based on the underlying stock price, volatility and certain significant unobservable inputs, such as a discount rate of 8.3% based on an estimated synthetic credit rating. An increase in the probability that certain market-based conditions will be met or a decrease in the discount rate would result in a higher fair value measurement, while a decrease in the probability that certain market-based conditions will be met or an increase in the discount rate would result in a lower fair value measurement.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FAQ

What is PepsiCo's significant unobservable input used in level 3 fair value measurement - other AFS, discount rate assumption?
PepsiCo (PEP) reported significant unobservable input used in level 3 fair value measurement - other AFS, discount rate assumption of 8.3% in Q4 2024.
What does significant unobservable input used in level 3 fair value measurement - other AFS, discount rate assumption mean?
This refers to the discount rate assumption used in valuing Level 3 financial assets or liabilities where market data is unavailable. It represents the risk-adjusted rate applied to project future cash flows to their present value.

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