Accounts Receivable and Inventory Analyses for Coca-Cola and PepsiCo The following information was obtained from the 2006 and 2005 financial statements of Coca-

Cola Company and Subsidiaries and PepsiCo Inc. and Subsidiaries. (Year-ends for PepsiCo are December 30, 2006 and December 31, 2005.)

Required 1. Using the information provided, compute the following for each company for 2006:

a. Accounts receivable turnover ratio

b. Number of days’ sales in receivables

c. Inventory turnover ratio

d. Number of days’ sales in inventory

e. Cash-to-cash operating cycle 2. Comment briefly on the liquidity of each of these two companies.

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(in millions) Coca-Cola PepsiCo $ 3,725 Accounts and notes receivable, net 12/31/06 $ 2,587 12/31/05 2,281 3,261 Inventories 12/31/06 1,641 1,926 12/31/05 1,379 1,693 Net revenueb 2006 24,088 35,137 2005 23,104 32,562 Cost of goods sold 2006 8,164 15,762 2005 8,195 14,176 "Described as "trade accounts receivable, less allowances" by Coca-Cola. "Described as "net operating revenues" by Coca-Cola. "Described as "cost of sales" by PepsiCo.