Interpreting Financial Statements

Week 4: Interpreting Financial Statements Report

ACC/400

Learning Team A

1234 Phoenix Street

Phoenix, AZ 4321

20 October, 2013

Kimber Rueff, CEO

1234 Phoenix Street

Phoenix, AZ 4321

Dear Mrs. Rueff,

Learning Team A hereby attach a report analyzing the Coca-Cola Company and PepsiCo, Inc. As per your request, the team has put forth attention in the analysis to the ratios and commentaries derived from the ratios, useful information outside the annual report for investors, determination into which company is more profitable, and the preferable company stock.

This report shows detailed financial ratios for Coca-Cola Company and PepsiCo, Inc. in addition to the team’s observations of all ratios.

Team A’s analysis reveals PepsiCo, Inc is more liquid; however, uses a higher percentage of debt financing than the Coca-Cola Company. The Coca-Cola Company proves more solvent than PepsiCo; however, PepsiCo uses assets more efficiently and the return on stockholders’ equity is higher than Coca-Cola.

Thank you for the opportunity to work with you on this project. Team A will be glad to discuss any questions you may have at your earliest convenience.

Sincerely

Learning Team A

Interpreting Financial Statements Report

Prepared for:

Kimber Rueff, CEO

Submitted: 20 October, 2013

Prepared by: D. Fogel

A. Damas

B. Dennis

V. Barkalov

C. Owens

Executive Summary

With the task of comparing financial analysis of the Coca-Cola Company and PepsiCo, Inc., Team A calculated three sets of ratios to test and compare liquidity, solvency, and profitability. The ratios for analyzing liquidity are current ratio, receivables turnover, average collection period, inventory turnover, days in inventory, and current cash debt coverage. Solvency ratios use debt to total assets, times interest earned, cash debt coverage ratio, and free cash flow. The profitability of the two companies is compared with the following ratios:...