PepsiCo’s financial statements are presented in Appendix A. Financial statements of The Coca-Cola Company are presented in Appendix B. 3 PEPSICO Instructions

(a) Based on the information contained in these financial statements, compute the 2010 book value per share for each company. (Hint: Use the value reported for “common shareholders’

equity” as the numerator for PepsiCo.)

(b) Compare the market value per share for each company to the book value per share at year-end 2010. Assume that the market value of Coca-Cola’s stock was $65.77 at year-end 2010.

(c) Why are book value and market value per share different?

(d) Compute earnings per share and return on common stockholders’ equity for both companies for 2010. Assume PepsiCo’s weighted-average shares were 1,590 million and Coca-Cola’s weighted-average shares were 2,308 million. Can these measures be used to compare the profitability of the two companies? Why or why not?

(e) What was the total amount of dividends paid by each company in 2010?

Real-World Focus