Refer to the profitability ratios of Coca-Cola in Problem 4.25 in Chapter 4. Exhibit 5.17 presents risk

Question:

Refer to the profitability ratios of Coca-Cola in Problem 4.25 in Chapter 4. Exhibit 5.17 presents risk ratios for Coca-Cola for 2006-2008. As we did within the chapter for PepsiCo, we utilize Coca-Cola’s footnote disclosures to extract the amount of trade included within the line item and accrued expenses.

Required
a. Assess the changes in the short-term liquidity risk of Coca-Cola between 2006 and 2008.
b. Assess the changes in the long-term risk of Coca-Cola between 2006 and 2008.
c. Compare the short-term liquidity ratios of Coca-Cola with those of PepsiCo discussed in the chapter. Which firm appears to have more short-term liquidity risk? Explain.
d. Compare the long-term ratios of Coca-Cola with those of PepsiCo discussed in the chapter. Which firm appears to have more long-term risk? Explain.

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