Presented here is 2004 information for PepsiCo, Inc. and The Coca-ColaCompany .

Question

Presented here is 2004 information for PepsiCo, Inc. and The Coca-ColaCompany.

Using the cash-based ratios presented in this chapter, computethe (a) liquidity and (b) solvency of the two companies.

Liquidity - Current cash debt coverage (Roundanswers to 2 decimal places.)
PepsiCo times
Coca-Cola times

Solvency - Cash debt coverage (Round answers to2 decimal places.)
PepsiCo. times
Coca-Cola times

Solvency - Free cash flow
PepsiCo. $
Coca-Cola $

($ inmillions) PepsiCo Coca-Cola Cash provided byoperations $ 5,054 $ 5,968 Average currentliabilities 6,584 9,429 Average totalliabilities 13,959 14,322 Net income 4,212 4,847 Sales 29,261 21,962           Capitalexpenditures 1,387 755          Dividends paid 1,329 2,429

Explanation / Answer

Current Cash Debt CoverageRatio Net Cash provided by operating activities /Average Current Liabilities Pepsi Cola 5054 / 6584 0.77 Coca Cola 5968 / 9429 0.65 Solvency - Cash Debt CoverageRatio Net Cash provided by operating activities / Averagetotal Liabilities Pepsi Cola 5054 / 13959 0.36 Coca Cola 5968 / 14322 0.42 Solvency - Free Cash Flow Net Cash provided by operating activities -Capital Expenditures - Dividends Pepsi Cola 5054 - 1387 -1329 2,338.00 Coca Cola 5968 - 755 - 2429 2,784.00

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