The purpose of this assignment is to calculate asset ratios, then analyze and compare them between two competitors in the same industry.
Review the most recent annual reports of The Coca Cola Company and PepsiCo and focus on the balance sheet and inventory note included in the notes to the financial statements (I have included the link to both websites for Â the annual reports at the bottom). Calculate the following ratios for each company for the last 2 years using Microsoft Excel. Be sure you are utilizing the correct formulas and a separate tab for each ratio:
- Inventory turnover
- Average days in inventory
In a Microsoft Word file, prepare a memo to the instructor discussing the following. Be sure to include a minimum of one paragraph per company to support your findings. I have included a link to example memo templates. It does not need to be exactly like those. Just a generic memo needed.Â
- Explain the meaning of each ratio and what the calculated results tell you about each of the companies. Refer to the calculated ratios in your analysis. Your explanation should consider how the ratios have changed in the last 2 years. Your explanation should include a separate paragraph for each ratio.
- Summarize how effective each company is in managing inventory based upon the type(s) of products the company sells and the industry in which it competes. Include discussion about whether the inventory turnover ratio is increasing or decreasing, what is causing the ratio increase/decrease, and whether the total value of inventory is increasing or decreasing on the balance sheet.
Included should be an excel file (by formatting formulas) with separate tabs for each ratio. And a memo word file(include reference page).
Inventory Turnover = cost of goods/ average inventoryÂ
Average days of inventory = 365days/ inventory turnoverÂ