PepsiCo’s financial statements are presented in Appendix A. Coca-Cola’s financial PEPSI. statements are presented in Appendix B.

Instructions

(a) At December 31, 2005, what was PepsiCo’s largest current liability account? What were its total current liabilities? At December 31,2005, what was Coca-Cola’s largest current liability account? What were its total current liabilities?

(b) Based on information contained in those financial statements, compute the following 2005 values for each company.

(1) Working capital.

(2) Current ratio.

(c) What conclusions concerning the relative liquidity of these companies can be drawn from these data?

Data from Appendix A

Data from Appendix B

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Consolidated Statement of Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 31, 2005, December 25, 2004 and December 27, 2003 PEPSICO 2003 Het Revenue......... Cost of sales. Selling, general and administrative expenses. $32,562 $29,261 $26,971 14,176 12,674 11,691 12.314 11,031 10,148 Amortization of intangible assets. 150 147 145 Restructuring and impairment charges.. 150 147 Merger-related costs... 59 Operating Profit. 5.922 5,259 4,781 Bottling equity income.. 557 380 323 Interest expense... (256) (167) (163) Interest income... 159 74 51 Income from Continuing Operations before Income Taxes. 6.382 5,546 4,992 Provision for Income Taxes......... 2,304 1,372 1,424 Income from Continuing Operations... 4,078 4,174 3,568 Tax Benefit from Discontinued Operations. 38 Net Income Net Income per Common Share Continuing operations.. Discontinued operations.. Total $4,078 $ 4,212 $ 3,568 Basic $2.43 $2.45 $2.07 0.02 $2.43 $2.47 $2.07