Based on the attached ratio, how do the two companies compare?
See attached file for financials.
Comparison of Liquidity ratios
Current Ratio: Pepsi has higher current ratio then Coke in both 2003 and 2004. This means the company has less risk but less growth potential which is better for short-term creditors. But on the other hand Coke's assets are working more to grow the company which is better for the shareholders. Increasing current ratios for the Coke and Pepsi means that both companies' growth rate is decreasing.
Quick Ratio: As we know, quick ratio is a measure of a company's liquidity and ability to meet its obligations. In general, a quick ratio of 1 or more is accepted by most creditors which show a firm's ability to cover its current liabilities by its most liquid assets. Pepsi has a higher quick ratio then Coke (bigger then 1 in both years) which means that the company can be able to meet its obligations in hard times better. On the other hand Coke has a very low quick ratio (0.58 in 2003 and 0.73 in 2004) which means that it is more difficult for the ...
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