1. Calculate the current ratio and quick ratio for both companies for 2016 and 2017. Write a paragraph describing what these ratios indicate about the liquidity of Pepsi and Coke in 2016 compared to 2017. Write a paragraph describing what these ratios indicate about the liquidity of Pepsi compared to Coke for both years. Which company seems to be more liquid? What are the advantages and disadvantages of liquidity? 2. Calculate the accounts receivable turnover and days sales in receivables for both companies for 2016 and 2017. Write a paragraph comparing 2016 with 2017 and Coke with Pepsi using these two ratios to indicate the effectiveness of their accounts receivable collection. Which of the two seems to be doing a better job with receivables? How does this collection process affect the overall success of the company. 3. Calculate inventory turnover and days in inventory for both companies for 2016 and 2017. Write a paragraph comparing 2016 with 2017 and Coke with Pepsi using these two ratios to indicate how they manage their inventory. Which one of the two companies has a better approach to inventory management? Why? What are the problems that come with poor inventory management? Consolidated Statement of Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 30, 2017, December 31, 2016 and December 26, 2015 (in millions except per share amounts) 2017 63,525 $ 28,785 34,740 24,231 Net Revenue Cost of sales Gross profit Selling, general and administrative expenses Venezuela impairment charges Operating Profit Interest expense Interest income and other Income before income taxes Provision for income taxes (See Note 5) Net income Less: Net income attributable to noncontrolling interests Net Income Attributable to PepsiCo Net Income Attributable to PepsiCo per Common Share Basic Diluted Weighted average common shares outstanding Basic Diluted Cash dividends declared per common share 59 2016 2015 62,799 $ 63,056 28,209 28,731 34,590 34,325 24,805 24,613 1,359 9,785 8,353 (1,342) (970) 110 8.553 7,442 2,174 1,941 5,501 49 6,329 $ 5,452 10,509 (1,151) 244 9,602 4,694 4,908 6,379 SO 51 $ 4,857 $ $ $ 3.40 $ 3.38 $ 4.39 $ 4.36 $ 3.71 3.67 1,425 1,438 3.1675 $ 1,439 1,452 2.96 1.469 1,485 2.7625 $ $ Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 30, 2017 and December 31, 2016 (in millions except per share amounts) 2017 2016 $ ASSETS Current Assets Cash and cash equivalents Short-term investments Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Total Current Assets Property, Plant and Equipment, net Amortizable Intangible Assets, net Goodwill Other nonamortizable intangible assets Nonamortizable Intangible Assets Investments in Noncontrolled Amiliates Other Assets Total Assets 10,610 8.900 7,024 2,947 1,546 31,027 17,240 1,268 14,744 12,570 27,314 2,042 913 79,804 9,158 6,967 6,694 2,723 908 26,450 16,591 1,237 14,430 12.196 26,626 1,950 636 73,490 $ $ $ 5,485 $ 15,017 20,502 33,796 11,283 3,2424 68,823 6,892 14.243 21.135 30,053 6,669 ,434 62.291 LIABILITIES AND EQUITY Current Liabilities Short-term debt obligations Accounts payable and other current liabilities Total Current Liabilities Long-Term Debt Obligations Other Liabilities Deferred Income Taxes Total Liabilities Commitments and contingencies Preferred Stock, no par value Repurchased Preferred Stock PepsiCo Common Shareholders' Equity Common stock, par value 1 per share (authorized 3.600 shares, issued, net of repurchased common stock at par value: 1.420 and 1.428 shares, respectively) Capital in excess of par value Retained earnings Accumulated other comprehensive loss Repurchased common stock, in excess of par value (446 and 438 shares, respectively) Total PepsiCo Common Shareholders' Equity Noncontrolling interests Total Equity Total Liabilities and Equity 41 (197) (192) 24 3996 52,839 (13,057) (32,757) 11,045 92 10.981 79,804 4,091 52,518 (13919 (31,468) 11.246 104 $ 11.199 73,490 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME 2017 2016 2015 $ 41,863 16,465 25,398 15,262 1,510 8,626 642 Year Ended December 31, (In millions except per share data) NET OPERATING REVENUES Cost of goods sold GROSS PROFIT Selling, general and administrative expenses Other operating charges OPERATING INCOME Interest income Interest expense Equity income (loss) - net Other income (loss)-net INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income taxes from continuing operations NET INCOME FROM CONTINUING OPERATIONS Income from discontinued operations (net of income taxes of $47, $0 and $0, respectively) CONSOLIDATED NET INCOME Less: Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY $ 35,410 13,256 22,154 12,496 2,157 7,501 677 841 1,071 (1,666) 6,742 5,560 1,182 101 1,283 $ 44,294 17,482 26,812 16,427 1,657 8,728 613 856 489 631 9,605 2,239 7,366 733 835 (1.234) 8,136 1,586 6,550 6,550 7,366 35 23 15 $ 1,248 $ 6,527 $ 7,351 $ $ 1.51 $ 1.69 $ 0.28 0.02 0.299 0.27 0.02 $ $ 1.69 Basic net income per share from continuing operations! Basic net income per share from discontinued operations BASIC NET INCOME PER SHARE Diluted net income per share from continuing operations! Diluted net income per share from discontinued operations DILUTED NET INCOME PER SHARE AVERAGE SHARES OUTSTANDING-BASIC Effect of dilutive securities AVERAGE SHARES OUTSTANDING - DILUTED $ $ 1.51 1.49 - 4,317 4,352 4,272 52 4,324 VI 4,367 4,405 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 2017 2016 $ $ 6,006 9,352 15,358 5317 3,667 2.655 2,000 219 7,329 36,545 20,856 1,096 ASGO 8,203 6,729 8.555 9,595 18,150 4,051 3,856 2,675 2,481 2,797 34,010 16,260 118 9.401 4.248 10,635 6,097 3,676 10,629 726 $ 87,270 368 $ 87,896 December 31. (In millions except par value) ASSETS CURRENT ASSETS Cash and cash equivalents Short-term investments TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Marketable securities Trade accounts receivable, less allowances of $477 and $466, respectively Inventories Prepaid expenses and other assets Assets held for sale Assets held for sale - discontinued operations TOTAL CURRENT ASSETS EQUITY METHOD INVESTMENTS OTHER INVESTMENTS OTHER ASSETS PROPERTY, PLANT AND EQUIPMENT-net TRADEMARKS WITH INDEFINITE LIVES BOTTLERS' FRANCHISE RIGHTS WITH INDEFINITE LIVES GOODWILL OTHER INTANGIBLE ASSETS TOTAL ASSETS LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses Loans and notes payable Current maturities of long-term debt Accrued income taxes Liabilities held for sale Liabilities held for sale - discontinued operations TOTAL CURRENT LIABILITIES LONG-TERM DEBT OTHER LIABILITIES DEFERRED INCOME TAXES THE COCA-COLA COMPANY SHAREOWNERS' EQUITY Common stock, $0.25 par values Authorized -11,200 shares; Issued 7,040 and 7,040 shares, respectively Capital surplus Reinvested earnings Accumulated other comprehensive income (loss) Treasury stock, at cost-2,781 and 2,752 shares, respectively EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS TOTAL EQUITY TOTAL LIABILITIES AND EQUITY $ $ 8,748 13,205 3.298 410 9,490 12,498 3.527 307 710 1,496 27,194 31,182 8,021 26,532 29,684 4,081 3,753 1,760 15,864 60,430 (10,305) (50,677) 17,072 1,905 18,977 $ 87,896 1.750 14,993 65,502 (11,205) (47,988) 23,062 158 23,220 $ 87,270