Instructions:

1. Compute the following liquidity ratios for 2014 for Coca-Cola and PepsiCo and comment on the relative liquidity of the two competitors.
   1. Current ratio
   2. Accounts receivable turnover
   3. Average collection period
   4. Inventory turnover
   5. Days in inventory
   6. Current cash debt coverage.
2. Compute the following solvency ratios for the two companies and comment on the relative solvency of the two competitors.
   1. Debt to asset ratio
   2. Times interest earned
   3. Cash debt coverage
   4. Free cash flow.
3. Compute the following profitability ratios for the two companies and comment on the relative probability of the two competitors.
   1. Profit margin
   2. Asset turnover
   3. Return on assets
   4. Return on common stockholders equity.
4. Interpret your findings for the ratio comparatives analysis for Coca-Cola and PepsiCo.
5. Evaluate what, if any, options with regard to financial activities should Coca-Cola and PepsiCo consider (i.e., how can these companies improve financial performance)? What impact would each of these have on the above ratios?

Option Choice #2: Coca-Cola vs. PepsiCo The Coca-Cola Company and PepsiCo, Inc., provide refreshments to every corner of the world. Selected data from the 2014 consolidated financial statements for the Coca-Cola Company and for PepsiCo, Inc., are presented here (in millions). Coca-Cola PepsiCo $12,551 $12,571 Total current liabilities 13,721 8,756 Net Sales 30,990 43,332 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 13,335 8,772 Average total liabilities 21,960 23,466 Total assets 48,671 39,848 Total liabilities 23,872 23,044 2,040 2,100 Total current assets Income taxes 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 Instructions: 1. Compute the following liquidity ratios for 2014 for Coca-Cola and PepsiCo and comment on the relative liquidity of the two competitors. 1. Current ratio 2. Accounts receivable turnover 3. Average collection period 4. Inventory turnover 5. Days in inventory 6. Current cash debt coverage. 2. Compute the following solvency ratios for the two companies and comment on the relative solvency of the two competitors. 1. Debt to asset ratio 2. Times interest earned 3. Cash debt coverage 4. Free cash flow. 3. Compute the following profitability ratios for the two companies and comment on the relative probability of the two competitors. 1. Profit margin 2. Asset turnover 3. Return on assets 4. Return on common stockholders' equity. 4. Interpret your findings for the ratio comparatives analysis for Coca-Cola and PepsiCo. 5. Evaluate what, if any, options with regard to financial activities should Coca-Cola and PepsiCo consider (i.e., how can these companies improve financial performance)? What impact would each of these have on the above ratios