Question

Coca-Cola and PepsiCo both produce and market beverages that are direct competitors. Key financial figures (in \( millions) for these businesses for a recent year follow.

Check (1a) 11.3%; (1b) 9.2%

Key Figures (\) millions) Coca-Cola PepsiCo

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(46,542 \)66,504

Net income . . . . . . . . . . . . . . . . . . . . . . . 8,634 6,462

Average assets . . . . . . . . . . . . . . . . . . . . 76,448 70,518

Required 3. Which company is more successful in returning net income from its assets invested?

Short answer

The return on assets of Coca-Cola is better than that of PepsiCo.

Step-by-step solution

Definition of Net Income

The net income of the company is defined as the income which is computed by deducting all the expenses incurred from the revenues generated during the year.

Comparison of Return on Assets

The return on assets of Coca-Cola is 11.3% and the return on assets of PepsiCo is 9.16%. It is observable that the ROA of Coca-Cola is better than that of PepsiCo. This shows that Coca-cola is using its assets more efficiently.