Question

Comparative Analysis Case The Coca-Cola Company and PepsiCo., Inc. Instructions Go to the book's companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. a) What amount is reported in the balance sheets as property, plant, and equipment (net) of Coca-Cola at December 31, 2011, and of PepsiCo at December 31, 2011? What percentage of total assets is invested in property, plant, and equipment by each company? (b) What depreciation methods are used by Coca-Cola and PepsiCo for property, plant, and equipment? How much depreciation was reported by Coca-Cola and PepsiCo in 2011? In 2010? o Compute and compare the following ratios for Coca-Cola and PepsiCo for 2011. (1) Asset turnover. (2) Profit margin on sales. (3) Return on assets. (d) What amount was spent in 2011 for capital expenditures by Coca-Cola and Peps(Co? What amount of interest was capitalized in 2011?

Answer 1

(A)Property, plant and equipment (net) of The Coca-Cola company at December 31, 2011(as per Balance Sheet):-$14,939 million

Property, plant and equipment (net) of PepsiCo,Inc at December 31,2011(as per Balance Sheet):-$19,698 million

Percentage of total asset is invested in property, plant and equipment by Coca-Cola company:-Property, plant and equipment/Total asset

$14939\$79974*100= 18.6

Percentage of total asset is invested in property, plant and equipment by PepsiCo company:-Property, plant and equipment/Total asset

$19698/$72882*100= 27

(B)By both Coca-Cola company and PepsiCo company ''straight-line method'' is used in the year 2011.

Depreciation expenses for Coca-Cola company in 2011:-$1,654 million  

                                                                    

                                                                          In 2010:-$1,188 million

Depreciation expenses for PepsiCo company in 2011:-$2,476 million

                                                                  In 2010:-$2,124 million

(C)Ratios of Coca-Cola Company

   Asset Turnover Formula:-Sales/Total Asset= $46,542/$79,974= 0.589(Coca-Cola Company)

                                                                = $66,504/$72,882=0. 912(PepsiCo)

                                                                

Total asset turnover is the number of dollars of sales generated each year for each dollar of total assets.

Profit Margin on Sales:-Net Income/Sales= $8,634/$46,542= 0.1859(Coca-Cola)

                                                            = = $6,443/$66,504=0. 097(PepsiCo)

Return On Asset:-Net Income/Total Asset= $8,634/$79,974= 0.108(Coca-Cola)

                                                            = $6,443/$72,882=0.088(PepsiCo)

(D)Capital Expenditure by Coca-Cola company in 2011:-$2,920 million

   Capital Expenditure by PepsiCo Inc.company in 2011:-$3,339 million