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BYP13-4 The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Selected data from the 2004 consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc., are presented here (in millions).Coca-Cola PepsiCoTotal current assets $ 12,094 $ 8,639Total current liabilities 10,971 6,752Net sales 21,962 29,261Cost of goods sold 7,638 13,406Net income 4,847 4,212Average (net) receivables for the year 2,131 2,915Average inventories for the year 1,336 1,477Average total assets 29,335 26,657Average common stockholders’ equity 15,013 12,734Average current liabilities 9,429 6,584Average total liabilities 14,322 27,917Total assets 31,327 27,987Total liabilities 15,392 14,464Income taxes 1,375 1,372Interest expense 196 167Cash provided by operating activities 5,968 5,054Capital expenditures 755 1,387Cash dividends 2,429 1,329Instructions(a) Compute the following liquidity ratios for 2004 for Coca-Cola and for PepsiCo and comment on the relative liquidity of the two competitors.(1) Current ratio. (4) Inventory turnover.(2) Receivables turnover. (5) Days in inventory.(3) Average collection period. (6) Current cash debt coverage.(b) Compute the following solvency ratios for the two companies and comment on the relative solvency of the two competitors.(1) Debt to total assets ratio.(2) Times interest earned.(3) Cash debt coverage ratio.(4) Free cash flow.(c) Compute the following profitability ratios for the two companies and comment on the relative profitability of the two competitors.(1) Profit margin.(2) Asset turnover.(3) Return on assets.(4) Return on common stockholders’ equity.
(a)
Liquidity Ratios
Coca-Cola
PepsiCo
(1)
Current ratio
.92:1
($12,105 ÷
BYP13-4 The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Selected data from the 2004 consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc., are presented here (in millions).Coca-Cola PepsiCoTotal current assets $ 12,094 $ 8,639Total current liabilities 10,971 6,752Net sales 21,962 29,261Cost of goods sold 7,638 13,406Net income 4,847 4,212Average (net) receivables for the year 2,131 2,915Average inventories for the year 1,336 1,477Average total assets 29,335 26,657Average common stockholders’ equity 15,013 12,734Average current liabilities 9,429 6,584Average total liabilities 14,322 27,917Total assets 31,327 27,987Total liabilities 15,392 14,464Income taxes 1,375 1,372Interest expense 196 167Cash provided by operating activities 5,968 5,054Capital expenditures 755 1,387Cash dividends 2,429 1,329Instructions(a) Compute the following liquidity ratios for 2004 for Coca-Cola and for PepsiCo and comment on the relative liquidity of the two competitors.(1) Current ratio. (4) Inventory turnover.(2) Receivables turnover. (5) Days in inventory.(3) Average collection period. (6) Current cash debt coverage.(b) Compute the following solvency ratios for the two companies and comment on the relative solvency of the two competitors.(1) Debt to total assets ratio.(2) Times interest earned.(3) Cash debt coverage ratio.(4) Free cash flow.(c) Compute the following profitability ratios for the two companies and comment on the relative profitability of the two competitors.(1) Profit margin.(2) Asset turnover.(3) Return on assets.(4) Return on common stockholders’ equity.
(a)
Liquidity Ratios
Coca-Cola
PepsiCo
(1)
Current ratio
.92:1
($12,105 ÷