You are considering making a loan to The Coca Cola

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You are considering making a loan to The Coca Cola Company

You are considering making a loan to The Coca-Cola Company. The following information is
from the financial statements included in Form 10-K for fiscal years 2013 and 2012 (in millions
of dollars):

Net operating revenues for the year ended:

December 31, 2013 ...................................... $46,854

December 31, 2012 ..................................... 48,017

Trade accounts receivable, less allowances

of $61, $53, and $83, respectively:

December 31, 2013 ...................................... 4,873

December 31, 2012 ..................................... 4,759

December 31, 2011 ..................................... 4,920

The following information is from the financial statements included in Form 10-K for fiscal years
2013 and 2012 for PepsiCo, Inc. (in millions of dollars):

Net revenue for the year ended:

December 28, 2013 .............................. $66,415

December 29, 2012 .............................. 65,492

Accounts and notes receivable, net:

December 28, 2013 ............................... 6,954

December 29, 2012 ............................... 7,041

December 31, 2011 ............................... 6,912

Part A. The Ratio Analysis Model

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 A lender must assess how well a company is managing its accounts receivable before making a
loan. The accounts receivable turnover ratio tells us how many times in a year a company
collects its receivables. Replicate the five steps in the Ratio Analysis Model on pages 332-333
to analyze the accounts receivable turnover ratios for The Coca-Cola Company and PepsiCo:

1. Formulate the Question

2. Gather the Information from the Financial Statements

3. Calculate the Ratio

4. Compare the Ratio with Other Ratios

5. Interpret the Ratios

Part B. The Business Decision Model

A lender must consider a variety of factors, including financial ratios, before making a loan.
Replicate the five steps in the Business Decision Model on page 333 to decide whether to loan
money to The Coca-Cola Company:

1. Formulate the Question

2. Gather Information from the Financial Statements and Other Sources

3. Analyze the Information Gathered

4. Make the Decision

5. Monitor Your Decision

You are considering making a loan to The Coca Cola Company

ANSWER
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