Accounts Receivable and Inventory Analyses for Coca-Cola and PepsiCo The following information was obtained from the 2008 and 2007 fi nancial statements of Coca-Cola Company and Subsidiaries and PepsiCo Inc. and Subsidiaries. (Yearends for PepsiCo are December 27, 2008, and December 29, 2007.) Assume all sales are on credit for both companies.

(in millions) Coca-Cola PepsiCo Accounts and notes receivable, neta 12/31/08 $ 3,090 $ 4,683 12/31/07 3,317 4,389 Inventories 12/31/08 2,187 2,522 12/31/07 2,220 2,290 Net revenueb 2008 31,944 43,251 2007 28,857 39,474 Cost of goods soldc 2008 11,374 20,351 2007 10,406 18,038 aDescribed as “trade accounts receivable, less allowances” by Coca-Cola.

bDescribed as “net operating revenues” by Coca-Cola.

cDescribed as “cost of sales” by PepsiCo.

Required 1. Using the information provided, compute the following for each company for 2008:

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 briefl y on the liquidity of each of these two companies.

AppendixLO1