You are considering making a loan to The Coca-Cola Company. The following information is from the financial

Question:

You are considering making a loan to The Coca-Cola Company. The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 (in millions of dollars):

Net operating revenues for the year ended:

December 31, 2014 ................................. $45,998

December 31, 2013 .................................. 46,854

Trade accounts receivable, less allowances of $331, 61, and 53, respectively:

December 31, 2014 ................................ 4,466

December 31, 2013 ................................ 4,873

December 31, 2012 ................................ 4,759

The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 for PepsiCo, Inc. (in millions of dollars):

Net revenue for the year ended:

December 27, 2014 .................................. $66,683

December 28, 2013 ................................... 66,415

Accounts and notes receivable, net:

December 27, 2014 .................................. 6,651

December 28, 2013 .................................. 6,954

December 29, 2012 .................................. 7,041

Required

Part A. The Ratio Analysis Model

A lender must assess how well a company is managing its accounts receivable before making a loan. The accounts receivable turnover ratio tells us how many times in a year a company collects its receivables. Replicate the five steps in the Ratio Analysis Model on pages 320-321 to analyze the accounts receivable turnover ratios for The Coca-Cola Company and PepsiCo:

1. Formulate the Question

2. Gather the Information from the Financial Statements

3. Calculate the Ratio

4. Compare the Ratio with Other Ratios

5. Interpret the Ratios

Part B. The Business Decision Model

A lender must consider a variety of factors, including financial ratios, before making a loan. Replicate the five steps in the Business Decision Model on page 321 to decide whether to loan money to The Coca-Cola Company:

1. Formulate the Question

2. Gather Information from the Financial Statements and Other Sources

3. Analyze the Information Gathered

4. Make the Decision

5. Monitor Your Decision

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...