Week 4 : Interpreting Financial Statements Report ACC/400 Based on the financial analysis report comparing The Coca - Cola Company and PepsiCo, Inc., evaluate the liquidity, solvency, and profitability of both companies. Using the ratios provided, determine which company would be a better investment for future investors. In your answer, consider factors such as profitability, liquidity, and solvency ratios. Additionally, explain the strengths and weaknesses of both companies, and provide a well - justified recommendation on which company's stock is the most profitable for potential shareholders. Word Count Requirement: 800 - 1000 words ii Learning Team B 1234 Phoenix Street Phoenix, AZ 4321 17 May 2010 Mrs. Lydia Sneed, CEO Learning Team B 1234 Phoenix Street Phoenix, AZ 4321 Dear Mrs. Sneed Further to your request, we hereby attach our report analyzing the Coca - Cola Company and PepsiCo, Inc. As outlined in your request, we have paid particular attention in our analysis to the ratios and commentaries derived from the ratios, useful information outside the annual report for investors, which company is more profitable, and preferable company stock. This report provides detailed financial ratios for Coca - Cola Company and PepsiCo, Inc. in addition to our observations of such ratios. Our analysis reveals PepsiCo, Inc is more liquid but uses a higher percentage of debt financing than The Coca - Cola Company. Therefore, The Coca - Cola Company proves more solvent than PepsiCo. However, PepsiCo uses assets more efficiently and the return on stockholders’ equity is higher than Coca - Cola. We thank you for affording us the opportunity to work with you on this project. We will be glad to discuss any questions you may have at our meeting next week. Sincerely Learning Team B ii A REPORT OF COCA - COLA COMPANY AND PEPSICO, INC. Prepared for: Lydia Sneed, CEO Submitted: 17 May, 2010 Prepared by: A. ADOLF M. CASTILLO C. FRANKLIN J. HILL R. NICHOLSON