The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Selected data from the 2001 consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc., are presented here (in millions). Total current assets Total current liabilities Coca-Cola $ 7,171 8,429 PepsiCo $ 5,853 4,998 Net sales 20,092 26,935 Cost of goods sold 6,044 10,754 Net income 3,979 2,662 Average gross receivables for the year 1,880 2,259 Average inventories for the year 1,061 1,251 Average total assets 21,626 21,226 Average common stockholders' equity 10,341 8,126 Average current liabilities 8,870 4,897 Average total liabilities 11,285 13,100 Total assets 22,417 21,695 Total liabilities Income taxes 11,051 13,047 1,691 1,367 Interest expense Cash provided by operating activities Instructions 289 219 4,110 4,201

(a) Compute the following liquidity ratios for 2001 for Coca-Cola and for PepsiCo and comment on the relative liquidity of the two competitors. (1) Current ratio. (2) Receivables turnover. (3) Average collection period. (4) Inventory turnover. (5) Days in inventory. (6) Current cash debt coverage.

(b) Compute the following solvency ratios for the two companies and comment on the relative solvency of the two competitors. (1) Debt to total assets ratio. (3) Cash debt coverage ratio. (2) Times interest earned.

(c) Compute the following profitability ratios for the two companies and comment on the relative profitability of the two competitors. (1) Profit margin. (2) Asset turnover. (3) Return on assets. (4) Return on common stockholders' equity.

AppendixLO1