EXERCISE2

The following table shows 2017 total revenues, cost of goods sold, earnings available for common stockholders, total assets, and
stockholders’ equity for three companies competing in the bottled drinks market: The Coca-Cola Company, PepsiCo Inc., and Dr. Pepper
Snapple Group. All dollar values are in thousands.

Coca-Cola PepsiCo Dr. Pepper

Revenues $35,410 $63,525 $6,690
Cost of goods sold $13,256 $28,785 $2,695
Earnings $1,248 $4,857 $1,076
Total assets $87,896 $79,804 $10,022
Shareholders equity $17,072 $11,045 $2,451

a. Use the information given to analyze each firm’s profitability in as many different ways as you can. Which company is most profitable?
Why is this question difficult to answer?
b. For each company, ROE > ROA. Why is that so? Look at the difference between ROE and ROA for each company. Does that difference
help you determine which firm uses the highest percentage of debt to finance its activities?