The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Selected data from the 2009 consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc. are presented here (in millions).

Instructions

(a) Compute the following liquidity ratios for 2009 for Coca-Cola and for PepsiCo and comment on the relative liquidity of the two competitors.
(1) Current ratio. (4) Inventory turnover.
(2) Receivables turnover. (5) Days in inventory.
(3) Average collection period. (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.
(2) Times interest earned.
(3) Cash debt coverage ratio.
(4) Free cash flow.

(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.
FINANCIAL ANALYSIS ON THE WEB

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Coca-Cola Total current assets Total current liabilities $17,551 PepsiCo $12,571 13,721 8,756 Net sales 30,990 43,232 Cost of goods sold 11,088 20,099 Net income 6,824 5,946 Average (net) receivables for the year 3,424 4,654 Average inventories for the year 2,271 2,570 Average total assets 44,595 37,921 Average common stockholders' equity 22,636 14,556 Average current liabilities 13,355 8,772 Average total liabilities 21,960 23,466 Total assets 48,671 39,848 Total liabilities 23,872 23,044 Income taxes 2,040 2,100 Interest expense 355 397 Cash provided by operating activities 8,186 6,796 Capital expenditures 1,993 2,128 Cash dividends 3,800 2,732