The Coca-Cola Company and PepsiCo, Inc., provide refreshments to every corner of the world. Selected data from the 2014 consolidated financial statements for the Coca-Cola Company and for PepsiCo, Inc., are presented here (in millions).
|
|
Coca-Cola
|
PepsiCo
|
|
Total current assets
|
$12,551
|
$12,571
|
|
Total current liabilities
|
13,721
|
8,756
|
|
Net Sales
|
30,990
|
43,332
|
|
Cost of Goods Sol
|
11,088
|
20,099
|
|
Net income
|
6,824
|
5,946
|
|
Average (net) accounts receivable for the year
|
3,424
|
4,654
|
|
Average inventories for the year
|
2,271
|
2,570
|
|
Average total assets
|
44,595
|
37,921
|
|
Average common stockholders' equity
|
22,636
|
14,556
|
|
Average current liabilities
|
13,335
|
8,772
|
|
Average total liabilities
|
21,960
|
23,466
|
|
Total assets
|
48,671
|
39,848
|
|
Total liabilities
|
23,872
|
23,044
|
|
Income taxes
|
2,040
|
2,100
|
|
Interest expense
|
355
|
397
|
|
Net cash provided by operating activities
|
8,186
|
6,796
|
|
Capital expenditures
|
1,993
|
2,128
|
|
Cash dividends
|
3800
|
2,732
|
Instructions:
-Compute the following liquidity ratios for 2014 for Coca-Cola and PepsiCo and comment on the relative liquidity of the two competitors.
- Current ratio
- Accounts receivable turnove
- Average collection period
- Inventory turnover
- Days in inventory
- Current cash debt coverage.
-Compute the following solvency ratios for the two companies and comment on the relative solvency of the two competitors.
- Debt to asset ratio
- Times interest earned
- Cash debt coverage
- Free cash flow.
-Compute the following profitability ratios for the two companies and comment on the relative probability of the two competitors.
- Profit margin
- Asset turnover
- Return on assets
- Return on common stockholders' equity.
-Interpret your findings for the ratio comparatives analysis for Coca-Cola and PepsiCo.
-Evaluate what, if any, options with regard to financial activities should Coca-Cola and PepsiCo consider (i.e., how can these companies improve financial performance)? What impact would each of these have on the above ratios?
5-7 pages.
3 references.