Expand Your Critical Thinking 13-4

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

			Coca-Cola			PepsiCo
	Total current assets		$17,551			$12,571
	Total current liabilities		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) accounts receivable 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
	Net cash provided by operating activities		8,186			6,796
	Capital expenditures		1,993			2,128
	Cash dividends		3,800			2,732

	Your answer is correct.

Compute the following liquidity ratios for Coca-Cola and for PepsiCo. (Round current ratio and current cash debt coverage ratio to 2 decimal places, e.g. 6.25 and all other answers to 1 decimal place, e.g. 15.1.)

				Coca-Cola			PepsiCo
(1)		Current ratio			: 1			: 1
(2)		Accounts receivable turnover			times			times
(3)		Average collection period			days			days
(4)		Inventory turnover			times			times
(5)		Days in inventory			days			days

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Compute the following solvency ratios for the two companies. (Round times interest earned to 1 decimal place, e.g. 15.2, cash debt coverage to 2 decimal places, e.g. 15.25 and percentages to 0 decimal places, e.g. 15%.)

				Coca-Cola			PepsiCo
(1)		Debt to assets ratio			%			%
(2)		Times interest earned			times			times
(3)		Free cash flow		$			$

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Compute the following profitability ratios for the two companies. (Round percentages to 1 decimal place, e.g. 15.2% and all other answers to 2 decimal places, e.g. 15.25.)

				Coca-Cola			PepsiCo
(1)		Profit margin			%			%
(2)		Asset turnover			times			times
(3)		Return on assets			%			%
(4)		Return on common stockholders equity			%			%