Final answer:
To calculate the ratios for Coca-Cola and PepsiCo, search for their 10-K filings for 2019 on the SEC website. The gross profit ratio can be found by dividing the gross profit by net sales. The inventory turnover ratio can be calculated by dividing the cost of goods sold by average inventory. Compare the ratios to determine which company is more profitable and sells its inventory more quickly.
Step-by-step explanation:
To find the annual reports for Coca-Cola and PepsiCo for the year ended December 2019, you can use the EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) database. Go to the SEC (Securities and Exchange Commission) website and search for Coca-Cola and PepsiCo's 10-K filings for that year. In the 10-K reports, you will find the 'Consolidated Statements of Income' (income statement) and 'Consolidated Balance Sheets.'
To calculate the gross profit ratio, you need to divide the gross profit by the net sales. The formula is: Gross Profit Ratio = Gross Profit / Net Sales. The gross profit is the difference between net sales and the cost of goods sold. The inventory turnover ratio can be calculated by dividing the cost of goods sold by the average inventory. The formula is: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory. Finally, the average days in inventory can be calculated by dividing the number of days in a year (365) by the inventory turnover ratio. The formula is: Average Days in Inventory = 365 / Inventory Turnover Ratio.
After calculating the ratios for both Coca-Cola and PepsiCo, you can compare their management of inventory. The company with a higher gross profit ratio is more profitable, as it indicates that it has a higher margin on its sales. The company with a higher inventory turnover ratio sells its inventory more quickly, which is generally a positive sign as it reduces the risk of obsolescence and storage costs.