PepsiCo, Inc. (PEP), the parent company of Frito-Lay snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years:

a. Determine the (1) current ratio and (2) quick ratio for both years.
b. What conclusions can you draw from these data about PepsiCo’s liquidity?

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Cash and cash equivalents Short-term investments, at cost Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Short-term obligations Accounts payable Current Year (in millions) $ 5,509 229 7,822 3,338 747 2,920 17,541 Previous Year (in millions) $ 8,721 2,269 7,142 3,128 633 4,026 18,112