 In accounting, the term liquidity is defined as the

ability of a company to meet its financial obligations

as they come due.
 The liquidity ratio, then, is a computation that is used
to measure a company's ability to pay its short-term
debts.
 Liquidity
Ratio

Current
Quick Ratio
Ratio
 The current ratio indicates a company's ability to pay
its current liabilities from its current assets. This ratio
is one used to quickly measure the liquidity of a
company. The formula for the current ratio is:
 Current Ratio = Current Assets / Current Liabilities
 The current ratio is called “current” because, unlike
some other liquidity ratios, it incorporates all
current assets and liabilities.
 The current ratio is also known as the working capital
ratio.
 COCA COLA
 Current Ratio for
the quarter that ended
in Jun. 2018 is calculated as
 Current Ratio (Q: Jun. 2018
)=Total Current Assets (Q:
Jun. 2018 )/Total Current
Liabilities (Q: Jun. 2018 )
=36024/31398
=1.15
 Coca-Cola Co has a current
ratio of 1.15. It generally
indicates good short-term
financial strength.
PEPSI CO
 PepsiCo Inc's Current Ratio
for the quarter that ended
in Jun. 2018 is calculated as
 Current Ratio (Q: Jun. 2018
)=Total Current Assets (Q:
Jun. 2018 )/Total Current
Liabilities (Q: Jun. 2018
)=30370/24558=1.24
 PepsiCo Inc has a current
ratio of 1.24. It generally
indicates good short-term
financial strength.
 Chart Title
1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2015 2016 2017 2018
Pepsi Co 1.31 1.28 1.51 1.15
Coco Cola 1.24 1.28 1.34 1.24

Comments: Both Companies do not satisfy the ideal ratio of 2:1

 The quick ratio is an indicator of a company’s short-
term liquidity, and measures a company’s ability to
meet its short-term obligations with its most liquid
assets. Because we're only concerned with the most
liquid assets, the ratio excludes inventories from
current assets. Quick ratio is calculated as follows:
 Quick ratio = (current assets – inventories) / current
liabilities, or
 Quick ratio = (cash and equivalents + marketable
securities + accounts receivable) / current liabilities
 The quick ratio is also known as the acid-test ratio.
 COCA COLA
 Coca-Cola Co's Quick Ratio
for the quarter that ended
in Jun. 2018 is calculated as
 Quick Ratio (Q: Jun. 2018
)=(Total Current Assets-Total
Inventories)/Total Current
Liabilities
=(36024-2881)/31398
=1.06
 Coca-Cola Co has a quick
ratio of 1.06. It generally
indicates good short-term
financial strength.
PEPSI CO
 PepsiCo Inc's Quick Ratio for
the quarter that ended in Jun.
2018 is calculated as
 Quick Ratio (Q: Jun. 2018
)=(Total Current Assets-Total
Inventories)/Total Current
Liabilities
=(30370-3491)/24558
=1.09
 PepsiCo Inc has a quick
ratio of 1.09. It generally
indicates good short-term
financial strength.
 Chart Title
1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2015 2016 2017 2018
Pepsi Co 1.13 1.18 1.34 1.06
Coco Cola 1.16 1.15 1.25 1.09

Comments: The ideal quick ratio of 1:1 is satisfied by both

companies in the year 2015,2016 and 2018