Financial Analysis Project Requirements: Use the provided Annual Reports/Financial Statements for Coke and Pepsi to complete the following analysis: 1. Calculate the curent 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 eftectiveness 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? 4. Calculate the gross margin, profit margin and return on investment for both companies for 2016 and 2017. Explain in a paragraph what these ratios show about each company's profitability compared to the year before and compared to each other. Indicate which company shows the best prospects for future profits and explain in detail why you think the ratios support your observation 5. Prepare a vertical analysis of same size income staternern and balance sheet for Pepsi and Coca Cola for 2016 and 2017. Write a paragraph highlighting what you learn from the percentages of sales or total assets calculated from the financial statements. Write also about the comparison between 2016 and 2017 and between Coke and Pepsi. 6. Compare Pepsi's income statement for 2016 with their income statement for 2017 - calculate the change in dollars and percent for all of the revenues and expenses. What do the changes indicate about Pepsi's success in 2016 relative to 2017? Do the same comparison for Coke's income statement. What do the changes indicate about Coke's improvement or lack thereof between 2016 and 2017? With this comparison of both companies over time now compare Coke vs. Pepsi and explain why one company is better than the other. 7. Based on all of your calculations and observations described above, make a recommendation as to which company would be a better investment. Give the reasons for your conclusion Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 30, 2017 and December 31, 2016 (in millions except per share amounts) 2017 2016 S 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 Affiliates 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 S 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 $ S $ 5,485 15,017 20,502 33,796 11,283 3,242 68,823 6,892 14,243 21,135 30.053 6,669 4.434 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) 41 (192) 24 3,996 52,839 (13,057) (32,757) 11,045 92 10,981 79,804 24 4,091 $2,518 (13,919) (31,468) 11,246 104 11,199 73,490 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 2017 2016 $8.555 9.595 $ 6,006 9,352 15,358 5,317 3,667 2,655 2,000 219 7,329 18,150 4,051 3,856 2,675 2,481 2,797 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 value; 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 36,545 20,856 1,096 4,560 8,203 6,729 138 9,401 368 $ 87,896 34.010 16,260 989 4,248 10,633 6,097 3,676 10,629 726 $ 87.270 $ 9,490 12,498 3.527 307 710 $ 8,748 13,205 3,298 410 37 1,496 27,194 31,182 8,021 2.522 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 1.760 14,993 65,502 (11,205) (47.988) 23,062 158 23.220 $ 87,270