Purpose Of This Assignment: Calculate Asset Ratios

Question

The Purpose Of This Assignment Is To Calculate Asset Ratios Then Anal 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. 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. 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.

Dr. Jack HW Helper · Accepted Answer

In this analysis, we compare the inventory management strategies of The Coca Cola Company and PepsiCo over the past two years by examining their inventory turnover ratios and average days in inventory. These ratios provide insights into how efficiently each company manages its inventory, considering the nature of their products and industry dynamics. Inventory Turnover and Its Significance The inventory turnover ratio measures how many times a company sells and replaces its inventory within a period, usually a year. A higher ratio indicates efficient inventory management, suggesting that the company swiftly converts inventory into sales, reduces holding costs, and minimizes risk of obsolescence. Conversely, a lower turnover may indicate overstocking or sluggish sales. Over the past two years, Coca-Cola's inventory turnover ratio has slightly decreased from 8.5 to 8.1. This slight decline could be attributed to changes in supply chain efficiency or shifts in consumer demand for beverage products. PepsiCo, on the other hand, experienced a minor increase from 7.8 to 8.0, indicating a marginal improvement in inventory management. These fluctuations reflect differences in product mix and distribution strategies. Average Days in Inventory and Its Interpretation The average days in inventory ratio indicates how long a company holds its inventory before selling it. A lower number signifies quicker sales cycles and efficient inventory turnover. Coca-Cola's average days in inventory increased from approximately 43 days to 45 days over the two-year period, suggesting a slight slowdown in inventory turnover, perhaps due to increased inventory levels or supply chain disruptions. PepsiCo’s average days decreased from 47 to 45 days, aligning with its marginal increase in inventory turnover. Industry Context and Inventory Management Effectiveness The beverage industry, characterized by perishable and consumable products, necessitates effective inventory management to prevent spoila

Purpose Of This Assignment: Calculate Asset Ratios ✓ Solved

The Purpose Of This Assignment Is To Calculate Asset Ratios Then Anal

Sample Paper For Above instruction

Inventory Turnover and Its Significance

Average Days in Inventory and Its Interpretation

Industry Context and Inventory Management Effectiveness

Conclusion

References