The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Selected data from hypothetical consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc. are presented here (in millions). 

a. Compute the following liquidity ratios for Coca-Cola and for PepsiCo and comment on the relative liquidity of the two competitors. 

1. Current ratio. 

2. Accounts receivable turnover. 

3. Average collection period. 

4. Inventory turnover. 

5. Days in inventory. 

b. Compute the following solvency ratios for the two companies and comment on the relative solvency of the two competitors. 

1. Debt to assets ratio. 

2. Times interest earned. 

3. Free cash flow. 

c. Compute the following profitability ratios for the two companies and comment on the relative profitability of the two competitors. 

1. Profit margin. 

2. Asset turnover. 

3. Return on assets. 

4. Return on common stockholders’ equity.

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Coca-Cola PepsiCo Total current assets $17,551 $12,571 Total current liabilities 13,721 8,756 Net sales 30,990 43,232 Cost of goods sold 11,088 20,099 Net income 6,824 5,946 Average (net) accounts receivable for the year 3,424 4,654 $ 2,271 Average inventories for the year Average total assets Average common stockholders' equity Average current liabilities Average total liabilities Total assets $ 2,570 44,595 37,921 22,636 14,556 13,355 8,772 21,960 23,466 48,671 39,848 Total liabilities 23,872 23,044 Income taxes 2,040 2,100 Interest expense Net cash provided by operating activities Capital expenditures 355 397 6,796 8,186 1,993 2,128 Cash dividends 3,800 2,732