The annual reports of the Coca-Cola Co. and PepsiCo Inc. indicate the following for the year ended December 31, 2017 (amounts inmillions):РеpsiCo Inс.$63,5254,90873,49062,29168,82310,981Соса-Сola Со.$35,4101,28387,27064,05068,91918,977Net revenuesNet incomeTotal assets, January 1, 2017Total liabilities, January 1, 2017Total liabilities, December 31, 2017Total stockholders' equity, December 31, 2017Required:a. Calculate ROI and ROE for each company for 2017. (Hint. You will need to calculate some of the numbers used in the denominator ofthese ratios.) (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)Соcа ColaPepsico%%ROI%ROEb. Based on the results of your ROI and ROE analysis in part a, do you believe that either firm uses financial leverage more effectivelythan the other? (Hint: Compare the percentage differences between ROI and ROE for each firm.)YesO Noc. Calculate the debt ratio and debt/equity ratio for each firm at the end of 2017. (Enter your answers as a percentage rounded to 1decimal place (i.e., 32.1).)Соcа ColaРepsiCoDebt ratio%%Debt/Equity ratio%%

Formula: ROI=Net IncomeTotal Assets×100 ROE=Net IncomeStockholders' Equity×100 Debt…

The annual reports of the Coca-Cola Co. and PepsiCo Inc. indicate the following for the year ended December 31, 2017 (amounts in millions): Coca-Cola Co. Pepsico Inc. $63,525 4,908 $35,410 1,283 87,270 64,050 68,919 18,977 Net revenues Net income Total assets, January 1, 2017 Total liabilities, January 1, 2017 Total liabilities, December 31, 2017 Total stockholders' equity, December 31, 2017 73,490 62,291 68,823 10,981 Required: a. Calculate ROI and ROE for each company for 2017. (Hint. You will need to calculate some of the numbers used in the denominator these ratios.) (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) Соcа Cola Pepsico ROI % ROE % b. Based on the results of your ROI and ROE analysis in part a, do you believe that either firm uses financial leverage more effectively than the other? (Hint. Compare the percentage differences between ROI and ROE for each firm.) O Yes O No c. Calculate the debt ratio and debt/equity ratio for each firm at the end of 2017. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) Coca Cola PepsiCo Debt ratio % % Debt/Equity ratio % %

The annual reports of the Coca-Cola Co. and PepsiCo Inc. indicate the following for the year ended December 31, 2017 (amounts in millions): Coca-Cola Co. Pepsico Inc. $63,525 4,908 $35,410 1,283 87,270 64,050 68,919 18,977 Net revenues Net income Total assets, January 1, 2017 Total liabilities, January 1, 2017 Total liabilities, December 31, 2017 Total stockholders' equity, December 31, 2017 73,490 62,291 68,823 10,981 Required: a. Calculate ROI and ROE for each company for 2017. (Hint. You will need to calculate some of the numbers used in the denominator these ratios.) (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) Соcа Cola Pepsico ROI % ROE % b. Based on the results of your ROI and ROE analysis in part a, do you believe that either firm uses financial leverage more effectively than the other? (Hint. Compare the percentage differences between ROI and ROE for each firm.) O Yes O No c. Calculate the debt ratio and debt/equity ratio for each firm at the end of 2017. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) Coca Cola PepsiCo Debt ratio % % Debt/Equity ratio % %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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