Question

Expand Your Critical Thinking 9-3 The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Suppose selected data from recent consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc. are presented here (in millions). Total current assets Total current liabilities Net sales Cost of goods sold Net income Average (net) accounts receivable for the year Average inventories for the year Average total assets Average common stockholders' equity Average current liabilities Average total liabilities Total assets Total liabilities Coca-Cola $17,551 13,721 30,990 11,088 6,824 3,424 2,271 44,595 22,636 13,355 21,960 48,671 23,872 2,040 355 8,186 1,993 3,800 PepsiCo $12,571 8,756 43,232 20,099 5,946 4,654 2,570 37,921 14,556 8,772 23,466 39,848 23,044 2,100 Income taxes 397 Interest expense Net cash provided by operating activities Capital expenditures Cash dividends 6,796 2,128 2,732

Answer 1

pepsico Coca-cola 1.28 11 o current ratio luu (2) Accounts receivable tumover 9.1 times 9.3 Times (3) Average collection period 40.3 days 39.3 days. (1) Inventory turnover 4.9 times 7.8 trinxs 6 days an inventory 74.5 days 46.8 days

profitability ratios - Coca-cola @ profit margin 22 p (2) Asset turnover 0.69 times pepsico 13 .8 1.14 Time & Return on assets 1513 ore 15.7 % W Return on common Stockholders equity 3011 o 40.8 1.1 working Notes O current ratio- current assets, current liabilities current ratio coca cola 1.28 $17551 $13721 pepsico 1.44 $ 12574 $8756

e Accounts receivable turnover - 2 Net sales. - Average accounts receivables Coca-cola pepsico Accocents receivable tumover gol $30990 $3424 9.3 $43232 $4654 (3) Average collection period - Average accounts receivables x365 - net sales Coca-cola 403 pepsi-co 39.3 Average collection period $3104 X365 30990 $4654x65 $43232

(4) Inventory turnover = cost of goods sold Average anventory coca-cola Prventery turnover 4.9 Depsico 7.8. $(1088 $ 2271 5. 20099 $2570 Days an onventory 74.5 46.8 365 365 4.9 7.8 profit margin = Netancouse x 100 Net sales - profit margin. Coca-cola 222 Pepsi-co 13.8.1 $6824 x 100 $30990 85946 xloo $43232

Asset therbovor = Net Sales Average assets - Asset turnover coca-cola 0.69 pepsico 1.14 $30990 $43232 $3702 $44595 Return on assets = net ancone X100 Average assets Return on assets Coca-cola 15.3) pepsico 15.71. $6824 x 100 $44595 $5946x100 $3792) Return on common stockholders equity - Det ancome X100 Avercege common stock holders equity Retum on equity Coca-cola 30.11 $6824xloo pepsico 0.8 . $5946 S14556 $22636