Compute liquidity, solvency, and profitability ratios for Coca-Cola & Pepsi

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Instructions
(a) Compute the following liquidity ratios for 2004 for Coca-Cola and for PepsiCo and
comment on the relative liquidity of the two competitors.
(1) Current ratio. (4) Inventory turnover.
(2) Receivables turnover. (5) Days in inventory.
(3) Average collection period. (6) Current cash debt coverage.

 (b) Compute the following solvency ratios for the two companies and comment on the
relative solvency of the two competitors.
(1) Debt to total assets ratio.
(2) Times interest earned.
(3) Cash debt coverage ratio.
(4) Free cash flow.

(c) Compute the following profitability ratios for the two companies and comment on
the relative profitability of the two competitors.
(1) Profit margin.
(2) Asset turnover.
(3) Return on assets.
(4) Return on common stockholders’ equity.

Can you please show the computation.

(d) Which company is more profitable? Why?
(e) Which company’s stock would you purchase? Why?