Week 9 Capstone Question

For the Liquidity of both companies
The current ratio is a widely used measure for evaluating a company’s liquidity and short-term debt-paying ability.
The current ratio for 2005 current assets = current ratio = 10250 Current liabilities 9836 = 1.04

The current ratio for the Coca Cola Company in 2005 is 1.042:1

While the current ration for Pepsi Co. in 2005 is 1.12:1

The current ratio for 2005 current assets = current ratio = 10554 current asset = 1.12 Current liabilities 9406 current liability
The profitability Profit margin is a measure of the percentage of each dollar of sales that results in net income. Profit margin is also called the rate of return on sales.
For Pepsi Co. 2005
Profit Margin = Net Income 4078 Net Sales 4977(1716+3261) = 0.819 or 81.9%

For The Coca Cola Company 2005 Net income 4872 Net sales 6982= (4701+2281) =0.698 or 69.8%

Solvency ratios measure the ability of a company to survive over a long period of time.
For Pepsi Co.
Debt to total assets Ratio = Total debts 17476 Total Assets 31727 = 0.550 or 55%

The Coca Cola Company
Debt to total assets Ratio = Total debts 19644 Total Assets 29427 = 0.668 or 66.8%

I must admit, looking at the numbers Pepsi Co. is the stronger of the two, but if I were to invest in either of these companies, I would go with The Coca Cola Company. Not because the numbers point to the more financially stable or the healthier of the two, but because I do not like Pepsi. I know they make & sell other products, but in my mind Pepsi is the #2