Coca-Cola Reported Net Sales Revenues of $18

question 104

Multiple Choice

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

• A)While PepsiCo generated more revenues than Coca-Cola,PepsiCo generated a lower gross profit percentage.
• B)Coca-Cola generated a lower gross profit percentage because their sales revenue was lower.
• C)PepsiCo did a better job of controlling product costs as a percentage of sales than did Coca-Cola as shown by their $13.0 billion gross profit.
• D)None of the above.

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Definitions:

MACRS Depreciation

The Modified Accelerated Cost Recovery System is a method of depreciation used for tax purposes in the United States, allowing for faster depreciation in the early years of an asset's life.

Deferred Tax Liability

A tax obligation that arises when taxable income and accounting income differ, to be paid in future periods when those differences reverse.

Effective Income Tax Rate

The average rate at which an individual's or corporation's pre-tax income is taxed, calculated by dividing the total tax expense by the taxable income.

Deferred Tax Liability

A tax obligation that a company owes but does not have to pay until a future date, often due to temporary differences between accounting and tax rules.