Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for Coca-Cola and
Question:
Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for Coca-Cola and Pepsico for the year ended December 2019. Locate the “Consolidated Statements of Income” (income statement) and “Consolidated Balance Sheets.” You may also find the annual reports at the companies’ websites.
Required:
1. For each company, calculate the gross profit ratio, inventory turnover ratio, and average days in inventory.
2. Compare the management of each company’s investment in inventory. Which company is more profitable and which company sells its inventory more quickly based on the ratios calculated in requirement 1?
Step by Step Answer:
Requirement 1 Requirement 2 As indicated by the higher gross profit ...View the full answer
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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