The financial statements can be found in the PDF. There are also pictures of the questions in case that makes them easier to read.
(a) Based on the information contained in these financial statements, determine each of the following for each company. Show all numerical equations including numerator and denominator, not just a final number. Present your work in a comparative format using a table as illustrated below (show the work within the table). Leave the numbers rounded as they appear in the financials, and round
results to one decimal place when necessary:
Financial Measure PepsiCo Coca-Cola
Profit margin:
Net income/Net sales
xxxx/xxxx = xx% xxxx/xxxx = xx%
1) Current ratio at the end of 2008.
2) Acid-Test Ratio at the end of 2008.
3) Accounts receivable turnover for 2008.
4) Average Collection Period (aka days sales in receivable) for 2008.
5) Inventory turnover for 2008.
6) Days inventory on hand for 2008.
7) Profit margin expressed as a % of net sales for 2008.
8) Asset turnover ratio at the end of 2008.
9) Return on assets for 2008.
10) Return on common stockholders' equity at the end of 2008.
11) Earnings per share (EPS) for 2008.
12) Debt (excluding "deferred income taxes") to total assets at the end of 2008.
13) Times interest earned for 2008. [(Net income + income tax expense + interest expense)/interest exp.]
14) Book value per common share (aka equity per common share) at the end of 2008. (Hint: Use the value reported for "common shareholders' equity" as the numerator for PepsiCo.)
15) In reference to #'s 14 above, define book value per common share and market value per common share; and explain at least two of the factors attributing to their differences.
(c) What conclusions concerning the relative profitability, liquidity, long-run solvency, and the efficiency of assets can be drawn from your analysis above (compare and contrast the two competitors using specific financial measures from the analysis above)? I am expecting at least one paragraph on each financial measure.
(d) Using information from your analysis (state which parts of the analysis are being used), would the group recommend purchasing the stock of PepsiCo or Coca-Cola?