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Financial Management Coca-Cola Company - Research Paper Example
In this project the financial conditions of PepsiCo and the Coca cola Company has been analyzed from the point of view of the investor. Various ratios have been calculated to analyze the financial strength of the company. The overall performance of the companies during the year 2009 has also been analyzed…
Current liabilities can be defined as the liabilities which have to be met during the year or in other words those obligations which have to be met in a year are termed as current liabilities (Bragg, 2011, p.39). Therefore the current liabilities have to be managed properly by every company. The current liabilities are met by current assets. Current assets are those assets which can be transformed into cash within one year. These are the short term assets which are held by the company to meet its short term obligations. The liquidity position of the company is determined by the current assets and the current liabilities.
To determine the liquidity position of the Coca-Cola Company and PepsiCo, the current ratio and the quick ratio has been calculated. Current ratio signifies that the current liabilities of the company are backed by how many current assets. It is calculated by dividing the current assets be the current liabilities (Investopedia-a, n.d.). The current ratio of Coca-Cola Company is 1.12 while the current ratio of PepsiCo is 1.43. This signifies that each dollar of current liability of Cocacola Company is backed by $1.12 of current assets where as each dollar of current liability of PepsiCo is backed by $1.43 of current assets. To assess the capacity of the companies for meeting the day to day expenses the quick ratio has been calculated. ...