Problem $1-11$A

Computing and interpreting return on assets

A$2$

Coca$-$Cola and PepsiCo both produce and market beverages that are direct competitors. Key financial figures for these businesses for a recent year follow.

Required

Compute return on assets for $($a$)$ Coca$-$Cola and $($b$)$ PepsiCo.

Check $(1$a$)11\mathrm{.}3\%$; $(1$b$)9\mathrm{.}2\%$

Which company is more successful in its total amount of sales to consumers?

Which company is more successful in returning net profit from its assets invested?

Analysis Component

Write a one$-$paragraph memorandum explaining which company you would invest your money in and why. $($Limit your explanation to the information provided.$)$

Problem $1-12$BA

Identifying risk and return

${?}^{A}3$

All business decisions involve aspects of risk and return. Rank order the following investment activities from $1$ through $4,$ where $"1"$ reflects the highest expected return and $"4"$ the lowest

expected retum.

a$.$ Low$-$risk corporate bond

b$.$ Stock of a successtul company

c$.$ Money stored in a fireproof vaut

d$.$ U$.$S$.$ Treasury bond

Problem $1-13$B ${?}^B$

Describing business activities

C$5$

A start$-$up company often engages in the following activities during its first year of operations. Classify each of the following activities into one of the three major activities of an organization.

F$.$ Financing

I. Investing

o$.$ Operating

Providing client services

Obtaining a bank loan

Purchasing machinery

Research for its products

Supervising workers

Owner investing in business

Renting office space

Paying utitities expenses