ACC $318$ Module Two Assignment Guidelines and Rubric

Overview

Financial ratios are used by organizations to analyze balances from different periods or against competitors. Investors can learn much information about an organization from the ratios. In this assignment you will explore debt$-$to$-$assets ratios, times$-$interest$-$earned ratios, and foreign debt. This assignment will provide you with practice to explore the concepts in the projects in this course.

Directions

This assignment will use the cash flow statement of The Coca$-$Cola Company and PepsiCo, Inc. presented in Appendices C and D$,$ respectively, which are linked in the Supporting Materials Section. The companies' complete annual reports, including the notes to the financial statements, are also available online. Analyze the results of the financial ratios for The Coca$-$Cola Company and PepsiCo, Inc. Remember, you will need to look at both sets of financials for each company and address the rubric criteria for both companies. Be sure to include citations for any answers you need to explain.

Specifically, you must address the following rubric criteria:

Debt$-$to$-$Assets Ratios

$1.$ Calculate the quality of the debt$-$to$-$assets ratios for both companies.

$2.$ Explain the quality of the debt$-$to$-$assets ratios for both companies.

$3.$ Determine which company is more highly leveraged.

Times$-$Interest$-$Earned Ratios

$1.$ Calculate the times$-$interest$-$earned ratios for both companies.

$2.$ Explain the times$-$interest$-$earned ratios for both companies. Address the following questions in your response:

A$.$ Are the times$-$interest$-$earned ratios adequate?

B$.$ Is the times$-$interest$-$earned ratio greater than or less than $2\mathrm{.}5?$ What does that mean for the companies' income?

C$.$ Can the company afford the interest expense on a new loan?

Foreign Debt

$1.$ Explain why The Coca$-$Cola Company and PepsiCo, Inc. may use foreign debt to finance their operations.

$2.$ Explain the risks involved in using foreign debt to finance operations. Complete this template by replacing the bracketed text with the relevant information.

Debt$-$to$-$Assets Ratios

$1.$ Calculate the quality of the debt$-$to$-$assets ratios for both companies. $[$Insert text.$]$

$2.$ Explain the quality of the debt$-$to$-$assets ratios for both companies.

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$3.$ Determine which company is more highly leveraged.

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Times$-$Interest$-$Earned Ratios

$1.$ Calculate the times$-$interest$-$earned ratios for both companies.

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$2.$ Explain the times$-$interest$-$earned ratios for both companies. Address the following questions in your response:

A$.$ Are the times$-$interest$-$earned ratios adequate?

B$.$ Is the times$-$interest$-$earned ratio greater than or less than $2\mathrm{.}5?$ What does that mean for the companies' income?

C$.$ Can the company afford the interest expense on a new loan?

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Foreign Debt

$1.$ Explain why The Coca$-$Cola Company and PepsiCo, Inc. may use foreign debt to finance their operations.

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$2.$ Explain the risks involved in using foreign debt to finance operations.

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References

Include any references used to complete this assignment. This section is for the full citation. Sources