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Calculate the debt ratio and debt/equity ratio for each company. A B с Coca-Cola Co. Pepsico Inc. 1 2 Debt Ratio 3 Debt/Equity Ratio

Calculate the debt ratio and debt/equity ratio for each company. A B с Coca-Cola Co. Pepsico Inc. 1 2 Debt Ratio 3 Debt/Equity Ratio

FINANCIAL ACCOUNTING
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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**Title: Financial Analysis Exercise: Debt Ratio and Debt/Equity Ratio** Welcome to our educational section on financial analysis. In this exercise, you will learn how to calculate the debt ratio and debt/equity ratio for two major companies, Coca-Cola Co. and Pepsico Inc. **Exercise Instructions:** Below is a table where you are required to calculate and fill in the debt ratio and debt/equity ratio for each company. | | Coca-Cola Co. | Pepsico Inc. | |-------|---------------|--------------| | **Debt Ratio** | | | | **Debt/Equity Ratio** | | | **Definitions:** 1. **Debt Ratio**: This is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is calculated using the formula: \[ \text{Debt Ratio} = \frac{\text{Total Debt}}{\text{Total Assets}} \] 2. **Debt/Equity Ratio**: This ratio indicates the relative proportion of shareholders' equity and debt used to finance a company’s assets. It is calculated as: \[ \text{Debt/Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}} \] For the purpose of the exercise, please use the financial data provided for each company to calculate these ratios and fill in the table. This practice will help you understand the leverage level of these companies and how they manage their financial obligations relative to their equity. Continue exploring other sections of our educational resources to further your learning on financial analysis!
Transcribed Image Text:**Title: Financial Analysis Exercise: Debt Ratio and Debt/Equity Ratio** Welcome to our educational section on financial analysis. In this exercise, you will learn how to calculate the debt ratio and debt/equity ratio for two major companies, Coca-Cola Co. and Pepsico Inc. **Exercise Instructions:** Below is a table where you are required to calculate and fill in the debt ratio and debt/equity ratio for each company. | | Coca-Cola Co. | Pepsico Inc. | |-------|---------------|--------------| | **Debt Ratio** | | | | **Debt/Equity Ratio** | | | **Definitions:** 1. **Debt Ratio**: This is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is calculated using the formula: \[ \text{Debt Ratio} = \frac{\text{Total Debt}}{\text{Total Assets}} \] 2. **Debt/Equity Ratio**: This ratio indicates the relative proportion of shareholders' equity and debt used to finance a company’s assets. It is calculated as: \[ \text{Debt/Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}} \] For the purpose of the exercise, please use the financial data provided for each company to calculate these ratios and fill in the table. This practice will help you understand the leverage level of these companies and how they manage their financial obligations relative to their equity. Continue exploring other sections of our educational resources to further your learning on financial analysis!
### Required Information **Benchmark Assignment - Coca-Cola Co. & PepsiCo Inc.** You will need to use the data below from the two companies to calculate problems and answer the following questions: | Description | Coca-Cola Co. (In millions) | PepsiCo Inc. (In millions) | |------------------------------------|-----------------------------|----------------------------| | Net Revenue (Sales) | $38,655 | $79,474 | | Net Income | $9,771 | $7,618 | | Current Assets | $22,545 | $21,783 | | Current Liabilities | $19,950 | $26,220 | | Cash & Cash Equivalents | $12,625 | $5,988 | | Accounts (Trade) Receivables | $3,512 | $8,680 | | Total Assets (12/31/21) | $94,354 | $92,377 | | Total Assets (12/31/20) | $87,296 | $92,918 | | Total Liabilities (12/31/21) | $69,494 | $76,226 | | Total Liabilities (12/31/20) | $68,614 | $74,091 | | Stockholders Equity (12/31/21) | $23,000 | $16,043 | | Stockholders Equity (12/31/20) | $19,300 | $13,454 | Use this data to analyze and compare the financial health, performance, and position of Coca-Cola Co. and PepsiCo Inc. This information includes significant figures such as Net Revenue (Sales), Net Income, Current and Total Assets, Current and Total Liabilities, Cash & Cash Equivalents, Accounts Receivables, and Stockholders Equity for the years 2020 and 2021. For more focused analysis, consider key financial ratios like liquidity ratios (Current Ratio), profitability ratios (Net Profit Margin), and leverage ratios (Debt to Equity Ratio). Consider the trends over time and the relative size and performance of each company.
Transcribed Image Text:### Required Information **Benchmark Assignment - Coca-Cola Co. & PepsiCo Inc.** You will need to use the data below from the two companies to calculate problems and answer the following questions: | Description | Coca-Cola Co. (In millions) | PepsiCo Inc. (In millions) | |------------------------------------|-----------------------------|----------------------------| | Net Revenue (Sales) | $38,655 | $79,474 | | Net Income | $9,771 | $7,618 | | Current Assets | $22,545 | $21,783 | | Current Liabilities | $19,950 | $26,220 | | Cash & Cash Equivalents | $12,625 | $5,988 | | Accounts (Trade) Receivables | $3,512 | $8,680 | | Total Assets (12/31/21) | $94,354 | $92,377 | | Total Assets (12/31/20) | $87,296 | $92,918 | | Total Liabilities (12/31/21) | $69,494 | $76,226 | | Total Liabilities (12/31/20) | $68,614 | $74,091 | | Stockholders Equity (12/31/21) | $23,000 | $16,043 | | Stockholders Equity (12/31/20) | $19,300 | $13,454 | Use this data to analyze and compare the financial health, performance, and position of Coca-Cola Co. and PepsiCo Inc. This information includes significant figures such as Net Revenue (Sales), Net Income, Current and Total Assets, Current and Total Liabilities, Cash & Cash Equivalents, Accounts Receivables, and Stockholders Equity for the years 2020 and 2021. For more focused analysis, consider key financial ratios like liquidity ratios (Current Ratio), profitability ratios (Net Profit Margin), and leverage ratios (Debt to Equity Ratio). Consider the trends over time and the relative size and performance of each company.
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