Question: The Red Soda Company (Red Soda) and The Blue Soda Company (Blue Soda) provide refreshments to every corner of the world. Selected data from the 20X6 consolidated financial statements for Red Soda and Blue Soda are presented here (in millions).
|
Red Soda
|
Blue Soda
|
|
Total current assets
|
$12,551
|
$12,571
|
|
Total current liabilities
|
13,721
|
8,756
|
|
Net Sales
|
30,990
|
43,332
|
|
Cost of Goods Sold
|
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
|
3,800
|
2,732
|
Instructions: Compute the following liquidity ratios for 20X6 for Red Soda and Blue Soda, comment on the relative liquidity of two competitors.
1. Current ratio
2. Accounts receivable turnover
3. Average collection period
4. Inventory turnover
5. Days in inventory
6. Current cash debt coverage