To answer these questions, you would need to review the financial statements of Coca-Cola and PepsiCo and analyze the information presented in them. Some information that may be relevant to these questions can be found in the notes to the financial statements, the income statement, the balance sheet, and the statement of cash flows.
A. In their notes to the financial statements, Coca-Cola and PepsiCo would likely describe their primary lines of business. B. It is hard to say which of the companies has the dominant position in beverage sales without looking at their financial statements and market share. But it’s fair to say that both companies are major players in the global beverage market C. This would be information that would be found in the balance sheet of each company, comparing the total assets at the end of 2006 and 2007. D. This would be information that would be found in the income statement of each company, comparing the depreciation and amortization expense in 2007. The difference could be due to various reasons such as the type of assets each company holds, their useful lives, and depreciation methods used. E. The income format used by the two companies can be found in their income statement. There might be slight difference in how each company presents the information. F. To get an idea about the gross profit, operating profit and net income for these two companies for the three-year period of 2005-2007, we have to look at the income statement, again. Which company had better financial results over this period would depend on multiple factors such as revenue, cost of goods sold, operating expenses, and taxes. G. The format used to present the balance sheet can be found in each company’s balance sheet H. Working capital would be found by subtracting the current liabilities from current assets, this information can be found in the balance sheet of each company. I. Again, this would be information that would be found in the balance sheet of each company. The difference in asset structure could be due to a variety of factors such as the nature of the business, investment strategies, etc. J. This would be information that would be found in the statement of cash flows of each company, comparing the net cash provided by operating activities from 2005-2007. K. Cash and cash equivalents would be found in the balance sheet of each company, and each company would likely describe in their notes to the financial statements what they classify as cash equivalents. L. Accounts receivable would be found in the balance sheet of each company, and the allowance for doubtful accounts receivable would likely be described in the notes to the financial statements. M. This would be information that would be found in the balance sheet of each company, comparing the inventory reported by each company at the end of 2007. Also, looking at total assets, we can calculate the percentage invested in inventory. N. The inventory costing methods and inventory valuation methods used by each company would likely be described in the notes to the financial statements. O. To calculate the inventory turnover ratio, we would divide the cost of goods sold by the average inventory for the year. To calculate the days to sell inventory, we would divide 365 by the inventory turnover ratio. The difference in the inventory turnover ratio and days to sell inventory between the two companies could be due to a variety of factors such as the nature of the business, inventory management practices, etc. P. This would be information that would be found in the balance sheet of each company, comparing the property, plant, and equipment net of each company at the end of 2007. Also, looking at total assets, we can calculate the percentage invested in property, plant and equipment.
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