(Answered) Analytical case comparative analysis of profitability and

Accounting

Analytical case comparative analysis of profitability and financial leverage measures. The annual reports of the Coca Cola Co. and Pepsi Co, Inc., indicate the following for the year ended December 31, 2011 (amounts in millions):

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a. Calculate ROI and ROE for each company for 2011.

b. Based on the results of your ROI and ROE analysis in part a , do you believe that either firm uses financial leverage more effectively than the other? Explain your answer. c. Calculate the debt ratio and debt/equity ratio for each firm at the end of 2011.

d. Compare the results of your analysis in part c to your expectations concerning the relative use of financial leverage in part b. Do the debt and debt/equity ratios calculated in part c make sense relative to your expectations? Explain your answer.

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