Direct answer:The liquidity, solvency, and profitability ratios of Coca-Cola and PepsiCo were compared to determine their relative performance. In terms of liquidity ratios, both firms outperformed their rivals. In terms of solvency, PepsiCo appears to be in better shape than Coca-Cola. On the other hand, Coca-Cola has greater profit margins than PepsiCo, despite the fact that the latter has higher returns on equity.Explanation:For the given two companies Coca-Cola and PepsiCo, a comparison of liquidity ratios, solvency ratios, and profitability ratios was performed relative to the industry averages and to the competitor. Below is the comparison of the two companies with respect to these ratios:1. Liquidity Ratios: It measures the ability of a firm to meet its current liabilities. The following liquidity ratios were used to compare the two firms:Current Ratio = Current Assets / Current LiabilitiesAcid Test Ratio = (Current Assets - Inventory) / Current LiabilitiesCoca-ColaPepsiCoCurrent Ratio1.271.21Acid Test Ratio0.960.73Both firms are highly liquid. Coca-Cola outperforms PepsiCo in terms of current ratios. Meanwhile, PepsiCo has a better acid-test ratio.2. Solvency Ratios: It measures the ability of a company to meet its long-term liabilities. The following solvency ratios were used to compare the two firms:Debt to Equity Ratio = Total Liabilities / Shareholders’ EquityFinancial Leverage Ratio = Total Assets / Shareholders’ EquityCoca-ColaPepsiCoDebt to Equity Ratio1.491.90Financial Leverage Ratio3.795.11PepsiCo appears to be in better shape than Coca-Cola in terms of solvency. PepsiCo has a debt-to-equity ratio that is less than Coca-Cola's. PepsiCo, on the other hand, has a higher financial leverage ratio.3. Profitability Ratios: It measures the profitability of a company. The following profitability ratios were used to compare the two firms:Net Profit Margin = Net Income / SalesReturn on Equity = Net Income / Shareholders’ EquityReturn on Assets = Net Income / Total AssetsCoca-ColaPepsiCoNet Profit Margin26.36%9.90%Return on Equity45.61%64.42%Return on Assets11.24%11.31%Coca-Cola has greater profit margins than PepsiCo, despite the fact that the latter has higher returns on equity. Furthermore, Coca-Cola has a greater return on assets. As a result, Coca-Cola outperforms PepsiCo in terms of profitability ratios.