Problem

Analyzing RatiosCoke and Pepsi are well-known international brands. Coca-Cola sells more t...

Analyzing Ratios

Coke and Pepsi are well-known international brands. Coca-Cola sells more than $13 billion worth of beverages each year while annual sales of Pepsi products exceed $22 billion. Compare the two companies as a potential investment based on the following ratios:

Ratio

Coca-Cola

PepsiCo

P/E

65.0

26.5

Gross profit margin

69.3

58.4

Profit margin

12.2

8.8

Quick ratio

0.4

0.7

Current ratio

0.6

1.1

Debt-to-equity ratio

0.7

0.4

Return on equity

27.4

29.1

Return on assets

28.0

16.6

Dividend yield ratio

1.0%

1.6%

Dividend payout ratio

65.0%

41.0%

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