Assignment 5 Financial Management
Longtime competitors in the soft drink industry Pepsi Co and Coca Cola continue efforts to gain additional market share Which do you prefer Coke or Pepsi? Let- take a look at these two companies from a financial perspective rather than our drink preference.
To learn more about PepsiCo and Coca-Cola Enterprises, go to the PepsiCo 2009 Annual Report at: http://www.pepsico.com/annual09/ and the Coca-Cola 2009 Annual Report at: http://www.cce2009annualreport.com/ . Review the annual reports for general information.
Required:
1. Read Understanding the Income Statement at: http://www.investopedia.com/articles/04/022504.asp
2. Read Reading the Balance Sheet at: http://www.investopedia.com/articles/04/031004.asp
3. Compute the following financial ratios for both companies and provide as an appendix to the required paper. If you need help understanding the meaning of the ratios or how to they are computed, go to: http://www.investopedia.com/university/ratios/
o Liquidity measurement ratio:
 Current ratio
o Profitability indicator ratios:
 Return on assets
 Return on equity
o Debt ratio:
 Debt ratio
o Operating performance ratio:
 Fixed asset turnover ratio
o Cash flow indicator ratio:
 Dividend payout ratio
o Investment valuation ratio:
 Price / Earnings ratio
You are to write a five to six (5-6) page paper that answers the following:
1. Based on your analysis, determine which company is better able to pay current liabilities (debt). Explain your rationale.
2. Determine what profitability ratios can tell you about a company- performance and how that information would influence investing decisions.
3. Determine which financial ratios you would use and how you would use them to determine which company has the most satisfied stockholders.
4. Create a list of financial-based guidelines that you should follow when selecting which of these two companies to invest in.
5. Determine which single piece of non-financial data is the most important to consider when making decisions about whether or not to invest in accompany. Explain your reasoning.
The format of the paper is to be as follows:
• Typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format.
• Use headers for each of the criteria, followed by your response.
• In addition to the five to six (5-6) pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor- name, the course title, and the date.
Note: You will be graded on the quality of your answers, the logic/organization of the report, your language skills, and your writing skills.
Outcomes Assessed • Evaluate the sources of short-term and long-term financing to identify the effective use and associated risks of these sources in managing working capital and in capital budgeting.
• Use technology and information resources to research issues in the functions and processes within a business enterprise and key factors affecting productivity.
Grading Rubric for Assignment 5 - Financial Management
Criteria 0
Unacceptable 20
Developing 30
Competent 40
Exemplary
1. Based on your analysis, determine which company is better able to pay current liabilities (debt). Explain your rationale. Did not complete the assignment or did not determine which company is better able to pay current liabilities (debt). Did not explain your rationale; omitted key information and/or included irrelevant information. Completed with less than 70% accuracy, thoroughness, and logic. Partially determined which company is better able to pay current liabilities (debt). Partially explained your rationale; omitted some key information or included some irrelevant information. Completed with 70-79% accuracy, thoroughness, and logic. Sufficiently determined which company is better able to pay current liabilities (debt). Sufficiently explained your rationale. Completed with 80-89% accuracy, thoroughness, and logic. Fully determined which company is better able to pay current liabilities (debt). Fully explained your rationale. Completed with 90-100% accuracy, thoroughness, and logic.
2. Determine what profitability ratios can tell you about a company- performance and how that information would influence investing decisions. Did not complete the assignment or did not determine what profitability ratios can tell you about a company- performance and how that information would influence investing decisions; omitted key information and/or included irrelevant information. Completed with less than 70% accuracy, thoroughness, and logic. Partially determined what profitability ratios can tell you about a company- performance and how that information would influence investing decisions; omitted some key information or included some irrelevant information. Completed with 70-79% accuracy, thoroughness, and logic. Sufficiently determined what profitability ratios can tell you about a company- performance and how that information would influence investing decisions. Completed with 80-89% accuracy, thoroughness, and logic. Fully determined what profitability ratios can tell you about a company- performance and how that information would influence investing decisions. Completed with 90-100% accuracy, thoroughness, and logic.
3. Determine which financial ratios you would use and how you would use them to determine which company has the most satisfied stockholders. Did not complete the assignment or did not determine which financial ratios you would use and how you would use them to determine which company has the most satisfied stockholders; omitted key information and/or included irrelevant information. Completed with less than 70% accuracy, thoroughness, and logic. Partially determined which financial ratios you would use and how you would use them to determine which company has the most satisfied stockholders; omitted some key information or included some irrelevant information. Completed with 70-79% accuracy, thoroughness, and logic. Sufficiently determined which financial ratios you would use and how you would use them to determine which company has the most satisfied stockholders. Completed with 80-89% accuracy, thoroughness, and logic. Fully determined which financial ratios you would use and how you would use them to determine which company has the most satisfied stockholders. Completed with 90-100% accuracy, thoroughness, and logic.
4. Create a list of financial-based guidelines that you should follow when selecting which of these two companies to invest in. Did not complete the assignment or did not create a list of financial-based guidelines that you should follow when selecting which of these two companies to invest in; omitted key information and/or included irrelevant information. Completed with less than 70% accuracy, thoroughness, and logic. Partially created a list of financial-based guidelines that you should follow when selecting which of these two companies to invest in; omitted some key information or included some irrelevant information. Completed with 70-79% accuracy, thoroughness, and logic. Sufficiently created a list of financial-based guidelines that you should follow when selecting which of these two companies to invest in. Completed with 80-89% accuracy, thoroughness, and logic. Fully created a list of financial-based guidelines that you should follow when selecting which of these two companies to invest in. Completed with 90-100% accuracy, thoroughness, and logic.
5. Determine which single piece of non-financial data is the most important to consider when making decisions about whether or not to invest in accompany. Explain your reasoning. Did not complete the assignment or did not determine which single piece of non-financial data is the most important to consider when making decisions about whether or not to invest in accompany. Did not explain your reasoning; omitted key information and/or included irrelevant information. Completed with less than 70% accuracy, thoroughness, and logic. Partially determined which single piece of non-financial data is the most important to consider when making decisions about whether or not to invest in accompany. Partially explained your reasoning; omitted some key information or included some irrelevant information. Completed with 70-79% accuracy, thoroughness, and logic. Sufficiently determined which single piece of non-financial data is the most important to consider when making decisions about whether or not to invest in accompany. Sufficiently explained your reasoning. Completed with 80-89% accuracy, thoroughness, and logic. Fully determined which single piece of non-financial data is the most important to consider when making decisions about whether or not to invest in accompany. Fully explained your reasoning. Completed with 90-100% accuracy, thoroughness, and logic.
6. Clarity
Did not complete the assignment or explanations are unclear and not organized.
(Major issues) Explanations generally unclear and not well organized.
(Many issues) Explanations generally clear and/or organized. (Minor issues) Explanations very clear and well organized.
(Added helpful details)
7. Writing - Grammar, sentence structure, paragraph structure, spelling, punctuation, APA usage.
Did not complete the assignment or had 8 or more different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage. (Major issues) Had 6-7 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage. (Many issues) Had 4-5 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage. (Minor issues) Had 0-3 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage.
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