Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc.

(a) What method of computing net cash provided by operating activities does Coca-Cola use? What method does PepsiCo use? What were the amounts of cash provided by operating activities reported by Coca-Cola and PepsiCo in 2007?

(b) What was the most significant item reported by Coca-Cola and PepsiCo in 2007 in their investing activities sections? What is the most significant item reported by Coca-Cola and PepsiCo in 2007 in their financing activities sections?

(c) What were these two companies’ trends in net cash provided by operating activities over the period 2005 to 2007?

(d) Where is “depreciation and amortization” reported by Coca-Cola and PepsiCo in their statements of cash flows? What is the amount and why does it appear in that section of the statement of cash flows?

(e) Based on the information contained in Coca-Cola’s and PepsiCo’s financial statements, compute the following 2007 ratios for each company. These ratios require the use of statement of cash flows data. (These ratios were covered in Chapter 5.)

(1) Current cash debt coverage ratio.

(2) Cash debt coverage ratio.

(f) What conclusions concerning the management of cash can be drawn from the ratios computed in (e)?