Question :
Using these 2007 annual reports for The Coca-Cola Company and PepsiCo, Inc., answer the subsequent questions. Write these up in a Word document, clearly check your response to each lettered item. Show supporting calculations for the items lettered c, f, h, l, m, o, p, r, s and u.
a. What are the primary lines of business of these two companies as given in their notes to the financial statements?
b. Which company has the principal position in beverage sales?
c. Which company has the bigger percentage increase in total assets from 2006 to 2007?
d. Which company had more amortization and depreciation expense for 2007? Give a rationale as to why there is a difference in these amounts between the two companies.
e. What kind of income formats is used by these two companies? Check any differences in income statement format between these two companies.
f. What are the gross profits, net incomes and operating profits for these two companies over the three-year period 2005-2007? Which company has had better financial results over this period of time?
g. What formats did these companies use to show their balance sheets?
h. How much working capital did every of these companies have at the end of 2007? Guess as to their rationale for the amount of working capital they maintain.
i. What is the most important difference in the asset structure of the two companies? What causes this difference?
j. What were the two companies' trends in net cash given by operating activities over the period 2005 to 2007?
k. What were the cash and cash equivalents reported by PepsiCo and Coca-Cola at the end of 2007? What does each company organize as cash equivalents?
l. What were the accounts receivable (net) for PepsiCo and Coca-Cola at the end of 2007? Which company reports the bigger allowance for doubtful accounts receivable (amount and percentage of gross receivable) at the end of 2007?
m. What is the amount of inventory reported by Coca-Cola at 31st December, 2007, and by PepsiCo at 29th December, 2007? What percent of net assets is invested in inventory by each company?
n. What inventory costing methods are used by PepsiCo and Coca-Cola? How does each company value its inventories?
o. Evaluate and compare the inventory turnover ratios and days to sell inventory for PepsiCo and Coca-Cola for 2007. Show why there might be an important difference between the two companies.
p. What amount is reported in the balance sheets as plant, property, and equipment of Coca- Cola at 31st December, 2007, and of PepsiCo at 29th December, 2007? What percentage of net assets is invested in property, equipment by each company, and plant?
q. What depreciation techniques are used by PepsiCo and Coca-Cola for property, equipment and plant? How much depreciation was reported by PepsiCo and Coca-Cola in 2007, 2006, and 2005?
r. Evaluate and compare the subsequent ratios for Coca-Cola and PepsiCo for 2007: Asset turnover, Profit margin on sales, and Rate of return on assets.
s. What amounts for intangible assets were reported in their respective balance sheets by Coca- Cola and PepsiCo? What percentage of net assets is each of these reported amounts?
t. On what basis and over what periods of time did PepsiCo and Coca-Cola amortize their intangible assets?
u. What were PepsiCo's and Coca-Cola's total revenues (sales) for the year 2007? Which company increased its revenues more dollars and percentage from 2006 to 2007?
v. Are the revenue recognition policies of PepsiCo similar and Coca-Cola? Describe.