The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies complete annual reports, including the notes to the financial statements, are available online.

Instructions

Use the companies financial information to answer the following questions.

(a)What format(s) did these companies use to present their balance sheets?

(b)How much working capital did each of these companies have at the end of 2014? Speculate as to their rationale for the amount of working capital they maintain.

(c)What are the companies annual and 5-year (20102014) growth rates in total assets and long-term debt 2012?

(d)What were these two companies trends in net cash provided by operating activities over the period 20122014?

(e)Compute both companies (1) current cash debt coverage, (2) cash debt coverage, and (3) free cash flow. What do these ratios indicate about the financial condition of the two companies?

D Specimen Financial Statements: PepsiCo, Inc. Pepsies, Inc. in a nating global food and beverage company with complements portfolio of erogable brands, including Frito Lay Gatorade, Pepsi-Cola, Quake, and Tropicans. Through its operations, therined boties, contract manfactures, and other third parties, PepsiCo was alles, distributes, and is avide varie of vent and sale berge, food, and said, serving customers and is in now than 100 ans Towns Popies contes por indeling one to the financial statements, follow these steps: Gehws.com/mesters 2. Select SC Pings and then the so, dated a/b/s(maleet the pdf vial 3. Selestariem. The Notes to Consolidated Financial Statements begin op Consolidated Statement of Income Papala, Inc. and Subuldilarius Fincanded December 2, 2016 December 28, 2nd December 2012 On millions et per share acest C 110 11 Anh 11 Net Lowongan 15 SIN 419 Walang 1. 18 Consolidated Statement of Comprehensive Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012 in millions) 14 Cunny Bademoiselle 10 44 Two derela A 45 Net 21 97 Two Comprenehome Comprehensive carbunike e coding aan 145 2100 A. 719 5 919 8 SCO Te 3 5 38 16 Tel Oher Comprehensive becomes Comprehensive bome 00 Consolidated Statement of Cash Flows PepsiCo, Inc. and Subsidiaries Fiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012 (in millions) 6715 Sed bl. Catherine fermopard gecher Rwand 12 Premendohematical dan pemes Powder De we welcherche de 19 121 + 148 where Award 38 Net Gelds 18 34 rating in 2. 0.11 IS (12 D. 11 Momente che IN Necati berada di (21) 12.15 HT . S Prolog Payments of a dhe 04 1 04 . 0.31 Share personel centeret for 1.121 134 114 14 320 4 Cuts at Ch aikare, hearing a Cab Caledolow Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 27, 2014 and December 28, 2013 (in millions except per share amounts) ANETS Chicago 303 M FIA 22 pad Are Nesmrtelange Amste SIDE Oh TA (0.7) (181) (0.6) (171) (164) 25 26 1.544 (15) (41) 1.488 1,565 (21) 1,544 25 4,095 297 (200) 4,178 303 4461 278 (87) 14 4,115 (70) (60) 4,178 4.095 43,158 46.420 6,513 (1) (26) (3.451) (1) (26) 46.420 6,178 (3,312) (1) (23) 43158 (5.127) (6.229) (5.487) (1,301) Balans, end of you Common Stock Balmo, beginning of your Repurchased common deck Balance, end of you Capitalises of Par Value Balance, beginning of your Stock-based compensation experie Stock option series RSU, PSUs and PES covered Wahholding tax on RSUS and PSL converted Other Balance, end of you Retained Earnings Balance, beginning of year Net income tributable top Cash dividends declared common Clash dividends declared preferred Clash dividends declared - RSUs and PSUs Balance, end of your Accumulated Other Comprehensive Low Balance, beginning of year Currency translation adjustment Cash flow hodges, net of tax Reclusafication of het beste net income Net derivativesses Pension and we matica, net of taxi Recification of net bus to net income Remement of stabilities and treat Unrealed gains en series, not of ux Other Bals, end of your He purchased Comma Stock Balunos, beginning of your Share repudia Stock optioner Other Hound of yow Total Popke Comme Shareholders Yuky Nascentreting Interests Halos, beginning of your Net income true to non convalling Die controlling interes Curwny ruslation met Acquations und der Othernet Round of your Total Equity 154 28 S8 (40) (10) 247 (886) (6 230 1.400 421 (493) (10,669) (16) (5,127) 36 (5487) 0301 (21,004) (5.012) (57) (7) (17870) (219) 1488 (3.000) 1.301 153 (21,000) 165 3 078) 2 (337) 2 (22) (1945) 23411 103 110 45 47 (34) (2) (6) (200) (2) 110 17.548 110 24319 105 22,399 (a) Includes toul tax benefits of $74 milion in 2014,545 milion in 2013 and $84 million in 2012. See accompanying notes to the constancias C Specimen Financial Statements: The Coca-Cola Company The Coca-Cola Company is the world's largest beverage company. It was ories and markets more than oncolle berabrand, primarily sparkling berpes, but also a variety of still beverages that enhanced waters, jules and drinks ready to drinks and crafts, and and aperta deialPinibed beverage products bearing Coca Cola trademarks sold in the United States since 1886, are now wable more than 200 countries. To cos Coca Coli's complete and report, including met te 1. Go to http://www.coccolacompany.com/vestors 2. Select Financial Reports and Information and then click on 2014 Annual Report on Form 10-K 3. The one to Consolidated Financial Statements begin on page 78 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Tear Taded hember (In mempercare data) NET OPERATING REVENUES 07 Cost of goodsalt 19.03 GROSS PROFIT 38,964 Selling and the 17.30 Oberperingar 647 OPERATING INCOME 79 390 530 997 6 Other comes) - (26) 576 INCOME BEFORE INCOME TAXES . a, 2.793 CONSOLIDATED NET INCOME 7.34 Les et income attributable telling interest 67 NET INCOSLE ATTRIBUTARLE TO SHAREOWNERS OF THE COCA-COLA COMPANY $7,098 BASIC NET INCOME PER SHARE DILUTED NET INCOME PER SHARE $ 1.90 $19 AVERAGE SHARES OUTSTANDING 4. wegedourado 63 78 AVEDLCE CHADESATTAVAT C-1 Aa 42 $ BUNE $ 0.00 $ 2,098 $ 1.62 $2.00 $ 90 Lencome Dress NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY BASIC NET INCOME PER SHARE DILUTED NET INCOME PER SHARE AVERAGE SHARES OUTSTANDING Effect of dilutie es AVERAGE SHARES OUTSTANDING ASSUMING DILUTION Calculated based on a comarbetable shares of The Coca Cola Company $ 1.60 438 63 4434 $ 97 4504 so 4584 4.450 4.509 2014 2013 2012 $7.13 58.620 $9.066 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME F irl , (In million) CONSOLIDATED NET INCOME Other comprehensive income: Net foreign currency translation adjustment Negain son derivats Net unrealised pain on available for sale securities Net change in pension and other fit liabilities TOTAL COMPREHENSIVE INCOME Les Comprehensive income do attributable to controlling interest TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 178 714 (1,039 4.774 (80) 1,066 39 $ 85 8343 305 $ 8.000 $4.53 2014 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December (in millions et par le ASSETS CURRENT ASSETS Cash and cash equivalent Short-term west TOTAL CASH, CASH EQUIVALENTS AND SHORT TERSE INVESTMENTS Martables $ 8,958 $ 10414 0707 18,010 3,665 37.13 3.447 18.00 3.665 4.466 3.100 3.666 6 32.986 9.00 3.7% 2,886 31,304 16.30 1,119 4.409 6,689 12, 100 TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Maslatable securities Trades receivable, lass allowances of 8331 and $61, respectively Lavtories Prepaid expenses and other assets Assets held for sale TOTAL CURRENT ASSETS EQUITY METHOD INVESTMENTS OTHER INVESTMENTS OTHER ASSETS PROPERTY, PLANT AND EQUIPMENT - TRADEMARKS WITH INDEFINITE LIVES BOTTLERS FRANCHISE RIGHTS WITH INDEFINITE LIVES GOODWILL OTHER INTANGIBLE ASSETS TOTAL ASSETS LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable and accrud expenses Los payable Current maturities of long-term debit Aened income Liabilities held for sale TOTAL CURRENT LIABILITIES LONG-TERI DEBT OTHER LIABILITIES DEFERRED INCOME TAXES THE COCA-COLA COMPANY SHAREOWNERS EQUITY Common stock. 50.25 per values Authored -11,100 shares Issued -7,040 and 7.040 shares, respectively Capital surplus 6.744 7.415 12,312 1,140 $ 90,055 1.050 $9.023 $ 0,234 19.130 16,901 1,034 400 309 32,374 19.063 7. 9154 3.498 652 5.636 1.760 View Aa be here to search E do 120 5/23 27.8 32.374 19.063 4.39 5.636 19.154 3.98 16 TOTAL CURRENT LIAEILITIES LONG-TERS DET OTHER LIABILITIES DEFERRED INCOME TAXES THE COCA-COLA COMPANY SHAREOWNERS EQUITY Common stock. $0.25 par val Authorind - 1.200 share lavand - 7,040 and 7,00 shares, respectively Capital surplus Beiwested earnings Accumulated other comprehensive income osa) Treasury stock, at cost-2,674 and 2,658 shares, respectively EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY EQUITY ATTRIBUTABLE TO NON CONTROLLING INTERESTS TOTAL EQUITY TOTAL LIABILITIES AND EQUITY 63.108 6.432) (39.090) 33.73 (42,RRS) 30.320 2:41 30.361 $ 92.033 Sous THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31 2014 2013 2012 $ 7,1248636 $ 9,086 209 259 632 648 OPERATING ACTIVITIES Consolidated Income Depreciation and more Stock based compensation expense Deferred income Equity Gincome) lous - set of dividends Foreign currency adjustments Significant (pai) on sales of Other operating charges Other items Ne change in operating and be Net cash provided by operating activities INVESTING ACTIVITIES (37) 415 168 961 149 (439) 10,615 us 234 (932) 30.542 254 (108) 30.645 Geory $ 7,124 $ 8,626 S 9,086 1,976 1,977 1,982 209 227 259 (40) 648 632 (371) (201) (426) 415 168 (130) 831 (670) (98) 761 465 166 149 234 254 (439) (932) (1,080) 10,615 10,542 10,645 OPERATING ACTIVITIES Consolidated net income Depreciation and amortization Stock-based compensation expense Deferred income taxes Equity (income) loss - net of dividends Foreign currency adjustments Significant (gains) losses on sales of assets - net Other operating charges Other items Net change in operating assets and liabilities Net cash provided by operating activities INVESTING ACTIVITIES Purchases of investments Proceeds from disposals of investments Acquisitions of businesses, equity method investments and nonmarketable securities Proceeds from disposals of businesses, equity method investments and nonmarketable securities Purchases of property, plant and equipment Proceeds from disposals of property, plant and equipment Other investing activities Net cash provided by (used in) investing activities FINANCING ACTIVITIES Issuances of debt Payments of debt Issuances of stock Purchases of stock for treasury Dividends Other financing activities Net cash provided by (used in) financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS Net increase (decrease) during the year (17,800) (14.782) (14,824) 12,986 12,791 7.791 (389) (353) (1,486) 148 872 20 (2,406) (2,550) (2,780) 223 111 143 (268) (303) (268) 7,506) (4,214) (11,404) 41,674 43,425 42,791 (36,962) (38,714) (38,573) 1,532 1,328 1,489 (4,162) (4,832) (4,559) (5,350) (4,969) (4.595) (363) 17 100 (3,631) (3.745) (3.347) (934) (611) (255) (1,456) 1,972 (4.361) (934) (255) Wprotasource com/0011 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS Nu incredere during the year Balance at beginning of year Balance at end of year 1.973 10,414 8.442 13.Bos 8.958 810444 3 8.442 2014 2013 (98) (120) 54 4.400 4.366 4.469 3 760 . 1.760 $o 11.379 1933 640 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY Year Ended December 31 (In williams epper share dar) EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY NUMBER OF COMMON SHARES OUTSTANDING Balance at beginning of year Purchases of treasures stock Treasury stokissaad to employees related to stock compensation plans Balance end of year COMMON STOCK CAPITAL SURPLUS Balance at beginning of your Stocked to employees to compensation plans Test bereit(charge) from stock compensation plus Stock-based compensation Other activities Balance standar REINVESTED EARNINGS Balance at beginning of year Net Income attributable to shareowners of The Coca-Cola Company Dividends (per share-$29, $1.12 and $1.on in 2014, 2013 and 2012, respectively) Balance end of year ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balesetbeginning of your Net the chances) Balance and of year 169 (26) 11.30 7098 (5.390 63-08 8584 (4.066 61,660 53,601 9,019 (4-995) 365) (2.774) (5.7771 (343) * 13.154 12,2 1L379 58.045 8.584 61.660 7.098 (6390) 63.401 53.00 9.099 (4.595) 5045 6.66 Otheti Balance and a year EINVESTED EARNINGS Balance at beginning of your Net Income tributable to sharewers of The Coca-Cola Company Dividends (per share - $1.22. 112 od 51.02 in 2014, 2019 and 2013, respectively) Balance and dyear ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance at beginning of year et ether comprehensive income (lon) Balance at end of your TREASURY STOCK Balance at beginning of year Stolto amply related to compensation plans Purchases of treasury stock (3:43) (38) (2.774) (6) (3.432) 389 786 745 (6 091) 30.30 $ 3.790 . 26 $ 986 26 62 (3) OTAL EQUITY ATTRIBUTARLE TO SHAREOWNERS OF THE COCA-COLA COMPANY QUITY ATTRIBUTABLE TO NON CONTROLLING INTERESTS Salence tegning of year Net inte attributable to trigo Net foreign currency translation adjustment Dividends pald to socialing tants Acquisition of staldby trolling owners Contribution by controlling Busine combinations Deconsolidation of artistas OTAL EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS 400 30 . 25 (8) (aa) $ 24 $ 25