Rafael A. Rivera-Torres
ACCT 301.001
Mr. J. Eason
March 6, 2014
Financial Reporting Research
A. What were the cash and cash equivalents reported by Coca-Cola and PepsiCo at the end of 2011? What does each company classify as cash equivalents?
1. The only cash/cash equivalents Coca-Cola reported was their Operating Cash.
The Company reported $9,474(in millions) as Cash in their Selected Financial
Data, Year Ended Dec. 31, 2011.
2. PepsiCo reported investments with original maturities of three months or less as cash equivalents. Other investments with maturities older than three months were reported as Short Investments. The total amount reported by PepsiCo on their
Consolidated Balance Sheet as Cash and Cash Equivalents was $4,067(in millions) dated Dec. 31, 2011.
B. What were the accounts receivable (net) for Coca-Cola and PepsiCo at the end of
2011? Which Company reports the greater allowances for doubtful accounts
(amount and percentage of gross receivable) at the end of 2011?
1. The accounts receivable (net) for Coca-Cola as of Dec. 31, 2011 are unknown.
Coca-Cola did not provide either a Balance Sheet or the balance on this account on their 2011 annual report.
2. The accounts receivable (net) for PepsiCo, including notes receivable, as of Dec.
31, 2011 have a balance of $6,912 (in millions).
3. PepsiCo reported $157 (in millions) as allowance for doubtful accounts, 2.22% of their gross receivables. Since Coca-Cola did not provide with this information either it is unknown which company reported the greater allowance for their receivables. Rivera-Torres 2
C. Assuming that all “net operating revenues” (Coca Cola) and all “net sales”
(PepsiCo) were net credit sales, compute the accounts receivable turnover for 2011 for Coca-Cola and PepsiCo; also compute the days outstanding for receivables.
What is your evaluation of the difference?
Accounts Receivable Turnover 2011 (PepsiCo)
Net Sales ÷ Accounts Receivable