Question

The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Suppose selected data from recent consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc. are presented here (in millions).
Coca-Cola PepsiCo
Total current assets $17,551 $12,571
Total current liabilities 13,721 8,756
Net sales 30,990 43,232
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 13,355 8,772
Average total liabilities 21,960 23,466
Total assets 48,671 39,848
Total liabilities 23,872 23,044
Income taxes 2,040 2,100
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
Collapse question part
(a1)
Compute the following liquidity ratios for Coca-Cola and for PepsiCo. (Round current ratio to 2 decimal places, e.g. 6.25 and all other answers to 1 decimal place, e.g. 15.1.)
Coca-Cola PepsiCo
(1) Current ratio : 1 : 1
(2) Accounts receivable turnover times times
(3) Average collection period days days
(4) Inventory turnover times times
(5) Days in inventory days days

Answer 1

Answer:

Please find the detailed answer in the explanation section.

Explanation:

1. Current ratio = total current assets ÷ total current liabilities

For Coca-cola: $17,551 ÷ 13,721

= 1.28

For Pepsi : $12,571 ÷ $8,756

= 1.44

2.Accounts receivable turnover times times = Net sales ÷ average (net) accounts receivable

For Coca-cola: $30,990 ÷ $3,424

= 9.1

For Pepsi : $43,232 ÷ $4,654

= 9.3

3. Average collection period days days = (Accounts Receivable ÷ Net sales ) x 365 days

For coca-cola: ($3,424 ÷ 30,990) x 365 days

=40.3 days

For pepsi: ($4,654 ÷ $43,232) x 365 days

= 39.3 days

4. Inventory turnover times = Sales ÷ Inventory

For Coca-cola: $30,990 ÷ $2,271

=13.6

For Pepsi: $43,232 ÷ $2,570

=16.8

5.Days in inventory days = (Average Inventory ÷ Cost of sales) x 365 days

For Coca-cola: ($2,271 ÷ $11,088 ) x365 days

=74.8 days

For Pepsi:  ($2,570 ÷ $20,099 ) x365 days

=46.7days