The following financial information (in US$ millions) is for two major corporations for the three years ended December 31:

Instructions

a. Calculate the inventory turnover, days sales in inventory, and gross profit margin for each company for 2016 and 2015.

b. Comment on your findings.

Companies are required to disclose in a significant accounting policies note how they determine the cost of their inventory. Both Pepsi and Coca-Cola state that they use weighted average and FIFO. Under what circumstances would it make sense for a company to use both cost formulas?

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PepsiCo Inc. 2016 2015 2014 $62,799 28,209 Net sales $63,056 28,731 $66,683 30,884 Cost of sales Profit 6,379 5,501 6,558 Inventory 2,723 2,720 3,143 Соса-Cola Company Net sales $41,863 $44,294 $45,998 Cost of sales 16,465 17,482 17,889 Profit 6,550 7,366 7,124 Inventory 2,675 2,902 3,100