Case Study for Coca-Cola vs Pepsico for 2009

LP 6. 2 Comparative Analysis Case, The Coca-Cola association and PepsiCo, Inc. Instructions Go to the books companion website and use the information found there to settlement the following questions related to The Coca-Cola club and PepsiCo, Inc. (a) What were the coin and cash equivalents reported by Coca-Cola and PepsiCo at the end of 2009? What does each company classify as cash equivalents? Answer On April 9, 2009, Coca-Cola Company reported cash and cash equivalent to be $6,816,000,000 and on December 26, 2009, PepsiCo reported cash and cash equivalent to be $3,943,000,000.Coca-Cola has make almost double the cash and cash equivalent than PepsiCo. Cash equivalent from both companies generally including their fourth dimension deposits and other investments that are highly liquidated and have maturities of three months or less at the date of as cash equivalents from both companies. Coca-Cola Company typically fund a significant portion of their dividends, capital expenditure s, contractual obligations, and share repurchases and acquisitions with cash generated from operating activities. They rely on external funding for additional cash requirements.The Company does not typically raise capital through the issuance of stock. Instead, the company use debt financing to pooh-pooh overall cost of capital and increase their return on shareowners equity. Refer to the heading Cash Flows from financing Activities. PepsiCo believed that their cash generating capability and financial condition, together with their revolving faith facilities and other available methods of debt financing, would be adequate to acquire their operating, investing and financing needs. As of December 26, 2009, their operations in Venezuela comprised 7% of their cash and cash equivalents balance. b) What were the accounts due (net) for Coca-Cola and PepsiCo at the end of 2009? Which company reports the greater allowance for doubtful accounts receivable (amount and percentage of gross r eceivable) at the end of 2009? (c) Assuming that allnet operating revenues(Coca-Cola) and allnet sales(Pepsi Co)were net credit sales,compute the accounts receivable turnover ratio for 2009 for Coca-Cola and PepsiCo also compute the days outstanding for receivables. What is your evaluation of the difference?