Write in 100 to 200 words an explanation of the three tools of financial statement analysis and the function of each.

Examine PepsiCo, Inc.’s Consolidated Balance Sheet on p. A6 in Appendix A of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.

Calculate the following for PepsiCo, Inc. and show your work:

• The Current Ratio for 2005

• The Current Ratio for 2004

• Two measures of vertical analysis—for example, compute the current assets divided by total assets for each year, and express your result as a percentage

• Two measures of horizontal analysis—for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities

Examine The Coca-Cola Company’s Consolidated Balance sheet on p. B2 in Appendix B of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.

Calculate the following for Coca-Cola and show your work:

• The Current Ratio for 2005

• The Current Ratio for 2004

• Two measures of vertical analysis—for example, compute the current assets divided by total assets for each year, and express your result as a percentage

• Two measures of horizontal analysis—for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities

Post your explanation and calculations.