The following financial information (in US$ millions) is for two major corporations for the three years ended December 31:

Instructions
(a) Calculate the inventory turnover, days sales in inventory, current ratio, acid-test ratio, gross profit margin, and profit margin for each company for 2011 and 2010.
(b) Comment on each company's profitability and liquidity.
Taking It Further
Companies are required to disclose in a significant accounting policies note how they determine the cost of their inventory. Both Pepsi and Coca-Cola state that they use average and FIFO. Under what circumstances would it make sense for a company use both cost formulas?

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2011 2010 PepsiCo Inc. Net sales Cost of sales Profit Cash and short-term investments Accounts receivable Inventory Prepaid expenses and other current assets Current liabilities $66,504 31,593 6,462 4,425 6,912 3,827 2,277 18,154 2009 $43,232 20,099 5,979 4,135 4,624 2,618 1,194 8,756 $57,838 26,575 6,338 6,369 6,323 3,372 1,505 15,892 Coca-Cola Company Net sales Cost of sales Profit Cash and short-term investments Accounts receivable Inventory Prepaid expenses and other current assets Current liabilities $46,542 18,216 8,634 14,035 4,920 3,092 3450 24,283 $35,119 12,693 11,859 11,337 4,430 2,650 3,162 18,508 $30,990 11,088 6,906 9,213 3,758 2,354 2,226 13,721