Coke and Pepsi are well-known international brands. Coca-Cola sells more than $35 billion worth of beverages each

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Coke and Pepsi are well-known international brands. Coca-Cola sells more than $35 billion worth of beverages each year while annual sales of Pepsi products exceed $43 billion. Compare the two companies as a potential investment based on the following ratios:

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Required:

1. Which company appears more profitable? Describe the ratio(s) that you used to reach this decision.

2. Which company appears more liquid? Describe the ratio(s) that you used to reach this decision.

3. Which company appears more solvent? Describe the ratio(s) that you used to reach this decision.

4. Are the conclusions from your analyses in requirements 1 to 3 consistent with the value of the two companies, as suggested by their P/E ratios? If not, offer one explanation for any apparent inconsistency.

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Related Book For  book-img-for-question

Fundamentals of Financial Accounting

ISBN: 978-1259269868

5th Canadian edition

Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh

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