ACT350 Portfolio Project

Using these 2007 annual reports for The Coca-Cola Company
and PepsiCo, Inc., answer the following questions. Write these up in a Word
document, clearly identifying your response to each lettered item.

Show supporting calculations for the items lettered c, f, h,
l, m, o, p, r, s and u.

a. What are the primary lines of business of these two
companies as shown in their notes to the financial statements?

b. Which company has the dominant position in beverage

c. Which company has the greater percentage increase in
total assets from 2006 to 2007?

d. Which company had more depreciation and amortization
expense for 2007? Provide a rationale as to why there is a difference in these
amounts between the two companies.

e. What type of income format(s) is used by these two
companies? Identify any differences in income statement format between these two

f. What are the gross profits, operating profits, and net
incomes for these two companies over the three-year period 2005-2007? Which
company has had better financial results over this period of time?

g. What format(s) did these companies use to present their
balance sheets?

h. How much working capital did each of these companies have
at the end of 2007? Speculate as to their rationale for the amount of working
capital they maintain.

i. What is the most significant difference in the asset structure
of the two companies? What causes this difference?

j. What were the two companies’ trends in net cash provided
by operating activities over the period 2005 to 2007?

k. What were the cash and cash equivalents reported by
Coca-Cola and PepsiCo at the end of

2007? What does each company classify as cash equivalents?

l. What were the accounts receivable (net) for Coca-Cola and
PepsiCo at the end of 2007? Which company reports the greater allowance for
doubtful accounts receivable (amount and
percentage of gross receivable) at the end of 2007?

m. What is the amount of inventory reported by Coca-Cola at
December 31, 2007, and by PepsiCo at December 29, 2007? What percent of total
assets is invested in inventory by each company?

n. What inventory costing methods are used by Coca-Cola and PepsiCo?
How does each company value its inventories?

o. Compute and compare the inventory turnover ratios and
days to sell inventory for Coca-Cola and PepsiCo for 2007. Indicate why there
might be a significant difference between the two companies. ACT350 Portfolio

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 2007, 2006, and


r. Compute and compare the following ratios for Coca-Cola
and PepsiCo for 2007: Asset turnover,

Profit margin on sales, and Rate of return on assets.

t. On what basis and over what periods of time did Coca-Cola
and PepsiCo amortize their intangible assets?

u. What were Coca-Cola’s and PepsiCo’s net revenues (sales)
for the year 2007? Which company increased its revenues more (dollars and
percentage) from 2006 to 2007?

v. Are the revenue recognition policies of Coca-Cola and
PepsiCo similar? Explain