Consider the financial data for PepsiCo, Inc. and The Coca-Cola Company for the fiscal year 2022:

($ millions)	PepsiCo, Inc.	The Coca-Cola Company
Net sales	$86,396	$65,312
Cost of sales	41,981	25,681
Gross profit	44,415	39,631
Operating expenses:
Selling, general, and administrative (SG&A)	16,708	15,763
Research and development (R&D)	1,201	987
Operating income	26,506	22,881
Interest and other (income) expense	3,259	2,394
Interest and investment income	(1,048)	(809)
Earnings before provision for income taxes	24,295	21,296
Provision for income taxes	5,831	4,883
Net earnings	$18,464	$16,413

Required:

1. Compute the return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for each company in fiscal year 2022. Assume a tax rate of 25%.
2. Disaggregate the ROA into profit margin (PM) and asset turnover (AT) components. Identify which factor drives the ROA for each company.
3. Assess the trend in operating income over the past five years. How does it impact each company’s financial health and ability to invest in new products?
4. Evaluate the debt-to-equity ratio for PepsiCo, Inc. and The Coca-Cola Company. What does it suggest about their financial leverage?
5. Compare the net profit margins of PepsiCo, Inc. and The Coca-Cola Company. What insights can be drawn about their profitability?