1. **CheckPoint:**Ratio, Vertical, and Horizontal Analyses

The calculations you perform for this CheckPoint form the basis of your analysis of your capstone project.

**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:

o The Current Ratio for 2005

o The Current Ratio for 2004

o 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

o 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**TheCoca-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:

o The Current Ratio for 2005

o The Current Ratio for 2004

o 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

o 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.